AB137: Bill Text

AB137,5,20 (3) If the mortgagee or mortgage servicer and borrower have agreed to modify the residential mortgage loan within the previous 3 years and the mortgagee or mortgage servicer has complied with the terms of the agreement, but the borrower has not complied with the terms of the agreement, the mortgagee or mortgage servicer may commence an action to foreclose on the residential mortgage loan without complying with subs. (4) to (9).

AB137,5,24 (4) Before commencing an action to foreclose on a residential mortgage loan, a mortgagee or mortgage servicer shall provide to the borrower at his or her last-known address by certified mail a written notice that contains all of the following information:

AB137,6,3 (a) That the residential mortgage loan is in default and a mortgage foreclosure action may be commenced, the reason that the residential mortgage loan is in default, and the action required of the borrower to cure the default.

AB137,6,4 (b) The name, address, and telephone number of the mortgagee negotiator.

AB137,6,8 (c) The names and addresses of adjustment service companies licensed under s. 218.02, and of independent nonprofit organizations approved by the federal department of housing and urban development, that offer credit counseling services to homeowners.

AB137,6,11 (d) That the borrower may request modifications to the residential mortgage loan by sending the request to the mortgagee negotiator by 1st class mail within 10 working days after receiving the written notice.

AB137,6,14 (e) A description of the calculations that will be used to determine if the borrower is eligible for a modification and of the criteria used to determine that eligibility.

AB137,6,18 (f) A list of the documents that the borrower needs to provide to the mortgagee negotiator that are reasonably necessary for the mortgagee negotiator to determine the monthly gross income of the borrower in order to make the calculations described in par. (e).

AB137,6,21 (g) That within 20 working days after receiving the written notice the borrower is required to provide the documents described in par. (f) and, if the borrower is unable to provide some or all of the documents, a statement as to why.

AB137,7,2 (h) That, if the borrower requests modifications to the residential mortgage loan within 10 working days after receiving the written notice and provides the materials described in par. (g) within 20 working days after receiving the written notice, the borrower may meet with the mortgagee negotiator to discuss modifications in the residential mortgage loan accompanied by an attorney or an employee or member of a company or organization specified in par. (c), or both.

AB137,7,6 (i) That, if the borrower does not request the modifications within 10 working days after receiving the written notice or submit the materials described in par. (g) within 20 working days after receiving the written notice, the mortgage foreclosure action may proceed.

AB137,7,9 (j) That, if the parties reach an agreement to modify the residential mortgage loan, the mortgage may not be foreclosed if the borrower complies with the terms of the modification agreement.

AB137,7,12 (k) That the process outlined in the written notice does not prohibit the borrower and mortgagee negotiator from agreeing to some other method of resolving the residential mortgage loan default.

AB137,7,19 (5) (a) A borrower may request modifications to the residential mortgage loan by sending the request to the mortgagee negotiator by 1st class mail within 10 working days after receipt of the notice under sub. (4). The borrower may contact an adjustment service company licensed under s. 218.02, or an independent nonprofit organization approved by the federal department of housing and urban development, that offers credit counseling services to homeowners to assist him or her in making this request and in negotiating with the mortgagee negotiator.

AB137,7,22 (b) Within 10 working days after receipt of the borrower's request for modifications to the residential mortgage loan, the mortgagee negotiator shall notify the borrower that the request for modifications has been received.

AB137,8,2 (c) A borrower shall, within 20 working days after receipt of the notice under sub. (4), provide the mortgagee negotiator with the documents listed in the notice as provided under sub. (4) (f) and, if the borrower is unable to provide some or all of the documents, a statement as to why.

AB137,8,5 (d) Within 10 working days after receipt of the materials required to be provided under par. (c), the mortgagee negotiator shall notify the borrower that the materials have been received.

AB137,8,7 (e) The mortgagee or mortgage servicer may proceed with the foreclosure action if either of the following occurs:

AB137,8,9 1. The borrower does not submit a request for modifications within 10 working days after receipt of the notice under sub. (4).

AB137,8,11 2. The borrower does not provide the materials required under par. (c) within 20 working days after receipt of the notice under sub. (4).

AB137,8,22 (6) If the borrower makes a timely request for modifications under sub. (5) (a), and timely provides the mortgagee negotiator with the materials required under sub. (5) (c), the borrower and mortgagee negotiator shall meet either in person or by telephone or other communication method agreed upon by both parties to negotiate modifications to the residential mortgage loan. Both parties shall negotiate in good faith. The borrower may have a member of an adjustment service company licensed under s. 218.02, or of an independent nonprofit organization approved by the federal department of housing and urban development, that offers credit counseling services to homeowners assist the borrower at the meeting. Either party may be assisted by an attorney. Any meeting held in person shall be held at a time and place that is convenient to both parties in the county where the residential property is located.

AB137,9,4 (7) (a) Based on the available information, the mortgagee negotiator shall determine if the borrower is eligible for modification of the residential mortgage loan. The borrower is eligible for a modification if his or her current housing-related debt is 38 percent or more of the borrower's gross income. If the borrower is eligible, the mortgagee negotiator shall offer one or more of the following modifications to the residential mortgage loan to lower the borrower's housing-related debt to less than 38 percent of the borrower's gross income:

AB137,9,10 1. An interest rate reduction, subject to a floor of 3 percent, for a fixed period of at least 5 years. A loan modification under this paragraph may allow the mortgagee or mortgage servicer to increase the interest rate after the fixed period of the interest rate reduction expires, but the mortgagee or mortgage servicer may not increase the interest rate by more than 1 percent per year and may not increase the interest rate to more than the rate ceiling.

AB137,9,12 2. An extension of the amortization period for the residential mortgage loan term to 40 years or less from the date of the loan modification.

AB137,9,15 3. The deferral of payment of up to 20 percent of the unpaid balance of the residential mortgage loan, until maturity of the loan, refinancing of the loan, or sale of the residential property.

AB137,9,16 4. The reduction or elimination of late fees or penalties.

AB137,9,18 (b) In determining how to modify the residential mortgage loan under this subsection, all of the following apply:

AB137,9,21 1. If the loan is pooled for sale to an investor that is a governmental body, the mortgagee negotiator shall follow the guidelines established by that governmental body for any modifications.

AB137,9,24 2. If the loan has been sold to a government-sponsored entity, the mortgagee negotiator shall follow the guidelines established by that government-sponsored entity for any modifications.

AB137,10,6 (c) If, after reviewing all of the information available to the mortgagee negotiator and considering all of the possible methods of modifying the residential mortgage loan under par. (a), the mortgagee negotiator determines that it is not possible to lower the borrower's housing-related debt to less than 38 percent of the borrower's gross income, the mortgagee negotiator shall inform the borrower of that determination under sub. (8) (a) 2.

AB137,10,10 (d) This subsection does not prohibit a modification to the residential mortgage loan on other terms, or a loss mitigation strategy other than a loan modification, if the other modification or strategy is agreed to by the borrower and mortgagee negotiator.

AB137,10,13 (8) (a) The mortgagee negotiator shall send by 1st class mail all of the following to the borrower no later than 30 calendar days after receipt of the materials required under sub. (5) (c):

AB137,10,16 1. If the borrower is not eligible for modifications to the residential mortgage loan, a statement explaining the criteria used to determine eligibility and why the borrower has not met these criteria.

AB137,10,20 2. If the borrower is eligible for modifications to the residential mortgage loan, but none of the available modifications lower the borrower's housing-related debt to less than 38 percent of the borrower's gross income, a statement informing the borrower of how that determination was made.

AB137,10,25 3. If the borrower is eligible for modifications to the residential mortgage loan, 2 written copies of the mortgage modification agreement proposed by the mortgagee negotiator with a statement telling the borrower to sign a copy of the proposal and return it to the mortgagee negotiator within 10 working days after receipt of the proposal.

AB137,11,4 4. A copy of all calculations used by the mortgagee negotiator to determine if the borrower was eligible for modifications to the residential mortgage loan and to determine if the available modifications lowered or failed to lower the borrower's housing-related debt to less than 38 percent of the borrower's gross income.

AB137,11,7 5. If requested by the borrower, a copy of the program, process, or guidelines the mortgagee negotiator used to determine which modification or modifications to the residential mortgage loan would be offered to the borrower.

AB137,11,10 (b) The borrower shall mail by 1st class mail his or her signed acceptance of the proposed mortgage modification agreement to the mortgagee negotiator within 10 working days of receipt of the proposal provided under par. (a) 3.

AB137,11,17 (9) (a) If the mortgagee negotiator determines that the borrower is not eligible for a modification to the residential mortgage loan or that none of the available modifications lower the borrower's housing-related debt to less than 38 percent of the borrower's gross income, the mortgagee or mortgage servicer may, not less than 20 working days after the statement is mailed to the borrower under sub. (8) (a) 1., commence an action to foreclose on the mortgage if all of the conditions under sub. (2) are met.

AB137,11,21 (b) If the mortgagee negotiator determines that the borrower is eligible for a modification to the residential mortgage loan, the mortgagee or mortgage servicer may commence an action to foreclose on a mortgage if all the following conditions are met:

AB137,11,23 1. The mortgagee negotiator has in good faith offered the borrower a mortgage modification agreement prepared in compliance with sub. (7).

AB137,12,3 2. For reasons not related to any action or inaction of the mortgagee or mortgage servicer, the borrower does not submit an acceptance of the mortgage modification agreement within the 10 working days specified under sub. (8) (b).

AB137,12,6 (10) If the court in which an action is commenced to foreclose on a residential mortgage loan determines that the mortgagee or mortgage servicer did not comply with this section, the court shall dismiss the action.

AB137,12,9 (11) (a) Except as provided in par. (b), this section applies to foreclosure actions that are commenced on or after the effective date of this paragraph .... [LRB inserts date], and before December 31, 2014.

AB137,12,11 (b) This section applies to a foreclosure action that is commenced after December 31, 2014, if notice under sub. (4) was mailed before that date.

AB137,12,12 (End)