On July 1, 2008 new foreclosure Notice provisions became law in Georgia. Under the new Notice law, foreclosing lenders are now required to give thirty (30) days Notice to owner/debtors and the Notice must include, "the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor." OCGA § 44-14-162.2.While lenders may be able to show that they: published in the legal organ and mailed the Notice more than thirty (30) days prior to the foreclosure they may have difficulty proving "that the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor."
As a litigator, this new fuzzy requirement that the lender provide the debtor a person with authority, seems to be the fodder for a wrongful foreclosure suit.
Debtors can vastly improve their potential post foreclosure legal position if they actually attempt to contact the person listed in the Notice and attempt to discuss their loan, mortgage modification or reinstatement. If the debtor calls and calls and calls the person on the Notice and cannot make contact, cannot get through or cannot get any reasonable discussion with the lender or the individual named in the Notice, does the debtor not then have new argument in the tort of wrongful foreclosure?
The lenders will assert that they have listed a person "with authority," who may be reached by the debtor. However, many years of past experience and "please hold for the next available operator," indicate to us that the inability to contact that individual may provide the debtor with a "fact question" concerning whether the lender, in fact, listed a true available human being as required under OCGA § 44-14-162.2.
Failure to provide proper notice, gives rise to one element of the tort of wrongful foreclosure.
Where a foreclosing creditor fails to comply with the statutory duty to provide notice of sale to the debtor in accordance with OCGA § 44-14-162 et seq., the debtor may either seek to set aside the foreclosure or sue for damages for the tort of wrongful foreclosure. Calhoun First Nat. Bank v. Dickens, 264 Ga. 285, 285-286(1), 443 S.E.2d 837 (1994). If the debtor elects to sue for damages, the recovery allowed is "the full difference between the fair market value of the property at the time of the sale and the indebtedness to the seller if the fair market value exceeded the amount of the indebtedness." Roylston v. Bank of America, N.A., et al., 290 Ga.App. 556, 660 S.E.2d 412 (2008).
Listed below is the press release published by the by the Governor's Office of Consumer Affairs on this issue.
Hugh Wood, Atlanta, Georgia
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New Law Adds Fairness To Foreclosure Process
By Sarah Bolling, Staff Attorney, Home Defense Program
On May 13, 2008 Governor Sonny Perdue signed into law Senate Bill 531. The bill, strongly championed by its lead sponsors, Senator Bill Hamrick, the Chairman of the Senate Banking Committee, and Senator Nan Orrock, increases the notice to a homeowner before a lender can foreclose and introduces elements of fairness to the foreclosure process.
The law that has been on the books in Georgia since 1981 only requires a certified letter giving notice of the foreclosure sale to be sent to the homeowner a minimum of 15 days prior to the scheduled foreclosure. An advertisement must be run in a legal newspaper for four consecutive weeks prior to the foreclosure, which has meant that the legal advertisement could begin running before a homeowner had received notice of the foreclosure. Many of the legislators who supported SB 531 felt that out of fairness, a homeowner should receive notice before the advertisement is published, and that 15 days was not a sufficient amount of time. SB 531 therefore lengthens the notice period to at least 30 days prior to the scheduled foreclosure sale.
SB 531 also requires that the certified letter giving the homeowner notice of the foreclosure sale include the name, address, and telephone number of the "individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor." This provision of the bill is important because when homeowners are negotiating with their servicers, they often do not know what entity actually owns their loan. Sometimes a servicer will refuse to offer the homeowner a loan modification or other workout, claiming that they lack authority to do so. If the homeowner wants to reach the company that ultimately has the authority to accept any workout agreement, or if the homeowner wants to pursue a legal claim related to their mortgage loan, he or she needs to know the identity of the current holder of the mortgage loan. This bill requires that identity to be disclosed.
Lastly, SB 531 requires that the current holder of the mortgage loan record the assignment of the security deed, which shows the present owner of the mortgage loan, in the public deed records before conducting the foreclosure sale. The securitization of subprime mortgage loans at a hectic pace in recent years has resulted in some confusion over which loans are in which securitized pools. On many occasions, the wrong entity has commenced foreclosure proceedings against a homeowner. When this happens, it is fundamentally unfair and could mean that a homeowner is still obligated to the true creditor after the foreclosure has been conducted by the wrong entity. Therefore, SB 531 requires a much-needed safeguard against misbehavior and mistake by companies trying to foreclose.
The law that has been on the books in Georgia since 1981 only requires a certified letter giving notice of the foreclosure sale to be sent to the homeowner a minimum of 15 days prior to the scheduled foreclosure. An advertisement must be run in a legal newspaper for four consecutive weeks prior to the foreclosure, which has meant that the legal advertisement could begin running before a homeowner had received notice of the foreclosure. Many of the legislators who supported SB 531 felt that out of fairness, a homeowner should receive notice before the advertisement is published, and that 15 days was not a sufficient amount of time. SB 531 therefore lengthens the notice period to at least 30 days prior to the scheduled foreclosure sale.
SB 531 also requires that the certified letter giving the homeowner notice of the foreclosure sale include the name, address, and telephone number of the "individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor." This provision of the bill is important because when homeowners are negotiating with their servicers, they often do not know what entity actually owns their loan. Sometimes a servicer will refuse to offer the homeowner a loan modification or other workout, claiming that they lack authority to do so. If the homeowner wants to reach the company that ultimately has the authority to accept any workout agreement, or if the homeowner wants to pursue a legal claim related to their mortgage loan, he or she needs to know the identity of the current holder of the mortgage loan. This bill requires that identity to be disclosed.
Lastly, SB 531 requires that the current holder of the mortgage loan record the assignment of the security deed, which shows the present owner of the mortgage loan, in the public deed records before conducting the foreclosure sale. The securitization of subprime mortgage loans at a hectic pace in recent years has resulted in some confusion over which loans are in which securitized pools. On many occasions, the wrong entity has commenced foreclosure proceedings against a homeowner. When this happens, it is fundamentally unfair and could mean that a homeowner is still obligated to the true creditor after the foreclosure has been conducted by the wrong entity. Therefore, SB 531 requires a much-needed safeguard against misbehavior and mistake by companies trying to foreclose.
The successful passage of the bill was made possible by the tireless advocacy of Senator Orrock, the leadership of Chairman Hamrick, the collaboration of Representative Wendell Willard, Chairman of the House Judiciary Committee, and Representative Ed Lindsey, Chairman of the House Judiciary Subcommittee which addressed this bill, and the efforts of the Working Families Caucus, Georgia State Trade Association of National Developers, Atlanta Housing Association of Neighborhood-based Developers, and the Home Defense Program of Atlanta Legal Aid. The bill takes effect July 1, 2008.
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