In response to the increasing number of foreclosures in this state, the lack of uniform compliance with the Home Affordable Modification Program (HAMP), and the failed or delayed loss mitigation efforts between lender-servicers and mortgagor-debtors, Chief Justice Jean H. Toal issued an order on May 2, 2011 altering the procedure with which lenders may foreclosure on primary residences.
The May 2, 2011 South Carolina Supreme Court Order is intended to ensure that mortgage foreclosure actions are not unnecessarily dismissed or inappropriately concluded while loan modification or other loss mitigation efforts are within the works. The newly implemented procedures are summarized below:
- If your foreclosure was pending as of May 9, 2011, the lending company or servicer must file with the court and serve upon the borrower a notice of the borrower’s right to foreclosure intervention.
- Lenders filing foreclosure actions after May 9, 2011 must issue the same notice described above when filing complaints.
- All foreclosure proceedings must be stayed during loss mitigation discussions unless the borrower chooses not to participate or fails to respond for 30 days.
The real meat to this order that probably provides greater protection for South Carolina homeowners whose primary residence is facing foreclosure follows:
The real meat to this order that probably provides greater protection for South Carolina homeowners whose primary residence is facing foreclosure follows:
- No foreclosure hearing or sale can take place until the parties certify
- that the homeowner received notice of his/her right to foreclosure intervention,
- that the lender has examined all relevant modification eligibility documents and other information submitted by the borrower, and
- that the lender has determined the borrower is not eligible for a modification or other alternative and has notified the borrower of that decision.
Furthermore, if the parties do reach a resolution through the loan intervention efforts, Toal’s order mandates that it must be put in writing and served on all parties. Once this agreement is reached, the foreclosure is stayed, and no foreclosure sale can take place for 90 days unless the borrower fails to comply with the agreement. Finally, if the borrower is in compliance with the agreement after 90 days, the lender’s attorney must file a notice of dismissal for the foreclosure action.
Furthermore, if the parties do reach a resolution through the loan intervention efforts, Toal’s order mandates that it must be put in writing and served on all parties. Once this agreement is reached, the foreclosure is stayed, and no foreclosure sale can take place for 90 days unless the borrower fails to comply with the agreement. Finally, if the borrower is in compliance with the agreement after 90 days, the lender’s attorney must file a notice of dismissal for the foreclosure action.
NOTE: This article is not a substitute for proper legal advice and is not intended to provide legal counsel. This is a general discussion of legal issues surrounding the topic area. No attorney / client relationship has been formed through the publication of this article with any of its readers, and readers should contact an attorney at the McGrath Law Firm, P.A. with any questions concerning any of the above-addressed topics.