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Introduced Version House Bill 4259 History

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hb4259 intr
H. B. 4259


(By Delegates Beach, Fleischauer, Marshall,

Eldridge, Rodighiero, Manypenny)


[Introduced February 1, 2010; referred to the

Committee on the Judiciary.]



A BILL to amend and reenact §38-1-3 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new article, designated §38-1B-1, §38-1B-2, §38-1B-3, §38-1B- 4, §38-1B-5, §38-1B-6, §38-1B-7, §38-1B-8, §38-1B-9, §38-1B-10 and §38-1B-11, all relating to establishing a system for foreclosure mediation; defining terms; requiring that notice of the right to request foreclosure mediation be given; giving discretion to magistrate courts in granting requests for foreclosure mediation; providing procedure for mediation proceedings; directing the Supreme Court to adopt rules concerning foreclosure mediation; providing exemptions to the Foreclosure Mediation Act; and providing immunity from civil liability.

Be it enacted by the Legislature of West Virginia:

That §38-1-3 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code be amended by adding
thereto a new article, designated §38-1B-1, §38-1B-2, §38-1B-3, §38-1B-4, §38-1B-5, §38-1B-6, §38-1B-7, §38-1B-8, §38-1B-9, §38-1B- 10 and §38-1B-11, all to read as follows:
ARTICLE 1. VENDOR'S AND TRUST DEED LIENS.

§38-1-3. Sales under trust deeds.
The trustee in any trust deed given as security shall, whenever required by any creditor secured or any surety indemnified by the deed, or the assignee or personal representative of any such creditor or surety, after debt due to such creditor or for which such surety may be liable shall have become payable and default shall have been made in the payment thereof, or any part thereof, by the grantor or other person owing such debt, and if all other conditions precedent to sale by the trustee, as expressed in the trust deed, shall have happened, sell the property conveyed by the deed, or so much thereof as may be necessary, at public auction, having first given notice of such sale as prescribed in the following section. If the trust agreement involves owner-occupied property, the trustee shall also comply with the requirements of article one-b of this chapter.
ARTICLE 1B. FORECLOSURE MEDIATION ACT.
§38-1B-1. Short Title.
This article is known and may be cited as the Foreclosure Mediation Act.
§38-1B-2. Definitions.
"Mediation administrator" means the magistrate court for the county in which the property is situated.
"Noncommercial lender" means a lender which makes a loan secured by a deed of trust on owner-occupied housing and which is not a bank, financial institution or other entity regulated pursuant to this code.
"Owner-occupied housing" means a detached single unit residence owned by the individual living within the unit.
§38-1B-3. Applicability of article.

(a) In addition to the requirements of this chapter, the exercise of the power of sale pursuant to section three, article one of this chapter with respect to any trust agreement which concerns owner-occupied housing is subject to the provisions of this article.
(b) A noncommercial lender is not excluded from the application of this article.
§38-1B-4. Sales of owner-occupied housing under trust deeds.
The trustee may not exercise a power of sale of owner-occupied housing pursuant to section three, article one of this chapter unless the trustee:
(a) Includes with the notice of default and election to sell
which is mailed to the grantor or the person who holds the title of
record as required by section four, article one of this chapter:
(1) Contact information which the grantor or the person
who holds the title of record may use to reach a person with
authority to negotiate a loan modification on behalf of the
beneficiary of the deed of trust;
(2) Contact information for at least one local housing
counseling agency approved by the United States Department of
Housing and Urban Development; and
(3) A form upon which the grantor or the person who holds
the title of record may indicate his or her request to enter into mediation or to waive the right to request mediation and one envelope addressed to the trustee and one envelope addressed to the mediation administrator, which the grantor or the person who holds the title of record may use to comply with the provisions of section five;
(b) Serves a copy of the notice upon the mediation
administrator; and
(c) Causes to be recorded in the office of the
county clerk in which the trust property, or some part thereof, is situated:
(1) The certificate provided to the trustee by the Mediation
Administrator pursuant to subsection (b), section five or subsection (c), section seven of this article which provides that
no mediation is required in the matter; or
(2) The certificate provided to the trustee by the Mediation
Administrator pursuant to section eight of this article which provides that mediation has been completed in the matter.
§38-1B-5. Request of foreclosure mediation; waiver of right to

request mediation; failure of grantor or person who
holds title of record to respond.
(a) The grantor or the person who holds the title of record
shall, not later than thirty days after service of the notice upon four, article one of this chapter, complete the form required by him or her in the manner required by section subdivision (3), subsection (a), section four of this article and return the form to the trustee by certified mail, return receipt requested. If the grantor or the person who holds the title of record indicates on the form his or her request to enter into mediation, the trustee shall notify the beneficiary of the deed of trust and every other person with an interest, by certified mail, return receipt requested, of the request of the grantor or the person who holds the title of record to enter into mediation and file the form with the Mediation Administrator.
(b) If the grantor or the person who holds the title of record indicates on the form his or her election to waive a request for mediation or fails to return the form to the trustee as required by subsection (a) of this section, the trustee shall execute an affidavit attesting to that fact under penalty of perjury and serve a copy of the affidavit, together with the waiver of mediation by the grantor or the person who holds the title of record, or proof of service on the grantor or the person who holds the title of record of the notice required by section four of this article and section four, article one of this chapter, upon the Mediation Administrator. Upon receipt of the affidavit and the waiver or proof of service, the Mediation Administrator shall provide to the trustee a certificate which provides that no mediation is required in the matter.
§38-1B-6. Discretion to grant or deny requests for mediation; scheduling of mediation; attorney mediators required.

(a) Within three days of receiving notification of a request for foreclosure mediation, the mediation administrator shall determine whether the request is granted or denied. The mediation administrator has sole discretion in determining whether to grant or deny a request for foreclosure mediation.
(b) If the Mediation Administrator grants a request for foreclosure mediation, then the matter shall be assigned to a mediator and schedule the matter for mediation. No further action may be taken to exercise the power of sale until the completion of the mediation.
(c) Any mediation conducted pursuant to this article shall be conducted by an attorney pursuant to the rules adopted pursuant to section nine of this article.
§38-1B-7. Attendance required; termination of mediation for grantor absence; sanctions.

(a) The grantor or his or her representative, or the person who holds the title of record, or his or her representative shall attend the mediation.
(b) The beneficiary of the deed of trust or his or her representative shall attend the mediation. The beneficiary of the deed of trust shall bring to the mediation the original or a certified copy of the deed of trust, the mortgage note and each assignment of the deed of trust or mortgage note. If the beneficiary of the deed of trust is represented at the mediation by another person, that person must have authority to negotiate a loan modification on behalf of the beneficiary of the deed of trust or have access at all times during the mediation to a person with such authority.
(c) If the grantor or the person who holds the title of record fails to attend the mediation, the Mediation Administrator shall provide to the trustee a certificate which states that no mediation is required in the matter.
(d) If the beneficiary of the deed of trust or his or her representative fails to attend the mediation, fails to participate in the mediation in good faith or does not bring to the mediation each document required by subsection (b) of this section or does not have the authority or access to a person with the authority required by that subsection, the mediator shall prepare and submit to the Mediation Administrator a petition and recommendation concerning the imposition of sanctions against the beneficiary of the deed of trust or his or her representative. The court may issue an order imposing such sanctions against the beneficiary of the deed of trust or his or her representative as the court determines appropriate, including, without limitation, requiring a loan modification in the manner determined proper by the court.
§38-1B-8. Termination of mediation.
If the mediator determines that the parties, while acting in good faith, are not able to agree to a loan modification, the mediator shall prepare and submit to the Mediation Administrator a recommendation that the matter be terminated. The Mediation Administrator shall provide to the trustee a certificate which provides that the mediation has been completed in the matter.
§38-1B-9. Supreme Court to adopt rules.
The Supreme Court shall adopt rules necessary to carry out the provisions of this article. The rules must, without limitation, shall include provisions:
(a) Designating the magistrate court of each county to serve as the Mediation Administrator pursuant to this article.
(b) Ensuring that mediation occurs in an orderly and timely
manner.
(c) Requiring each party to a mediation to provide such information as the mediator determines necessary.
(d) Establishing procedures to protect the mediation process from abuse and to ensure that each party to the mediation acts in good faith.
(e) Establishing a total fee of not more than $400 that may be charged and collected by the Mediation Administrator for mediation services pursuant to this article and providing that the responsibility for payment of the fee must be shared equally by the parties to the mediation.
§38-1B-10. Exemptions to this article.

Except as otherwise provided in subsection eleven, the provisions of this article do not apply if:

(a) The grantor or the person who holds the title of record has surrendered the property, as evidenced by a letter confirming the surrender or delivery of the keys to the property to the trustee, the beneficiary of the deed of trust or the mortgagee, or an authorized agent thereof; or
(b) A petition in bankruptcy has been filed with respect to the grantor or the person who holds the title of record under chapter 7, 11, 12 or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing
the case or granting relief from a stay of foreclosure.
§38-1B-11. Civil liability; immunity.
The mediation administrator and each mediator who acts
pursuant to this article in good faith and without gross negligence
is immune from civil liability for those acts.




NOTE: The purpose of this bill is to establish foreclosure mediation procedures and to require that notice be given of the right to request foreclosure mediation before a sale of owner-occupied property under a deed of trust may occur.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
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