2013 -- H 5335 SUBSTITUTE B
A N A C T
PROPERTY -- MORTGAGE AND FORECLOSURE
By: Representatives Gallison,
Date Introduced: February 07, 2013
It is enacted by the General Assembly as follows:
SECTION 1. Chapter 34-27 of the General Laws entitled "Mortgage Foreclosure and
34-27-3.2. Mediation conference. -- (a) Statement of policy. It is hereby declared that
residential mortgage foreclosure actions, caused in part by unemployment and underemployment,
have negatively impacted a substantial number of homeowners throughout the state, creating a
situation which endangers the economic stability of many of the citizens of this state, as the
increasing numbers of foreclosures lead to increases in unoccupied and unattended buildings and
the unwanted displacement of homeowners and tenants who desire to live and work within the
(b) Purpose. The statutory framework for foreclosure proceedings is prescribed under the
provisions of Chapter 34-27 of the general laws. As the need for a mortgage mediation process
has evolved, it is important for the state to develop a standardized, statewide process for
foreclosure mediation rather than a process based on local ordinances that may vary from
municipality to municipality. By providing a uniform standard for an early HUD-approved
independent counseling process in owner-occupied principal residence mortgage foreclosure
cases, the chances of achieving a positive outcome for homeowners and lenders will be enhanced.
(c) Definitions. The following definitions apply in the interpretations of the provisions of
this section unless the context requires another meaning:
(1) "Mediation conference" means a conference involving the mortgagee and mortgagor,
coordinated and facilitated by a mediation coordinator whose purpose is to determine whether an
alternative to foreclosure is economically feasible to both the mortgagee and the mortgagor, and
if it is determined that an alternative to foreclosure is economically feasible, to facilitate a loan
work-out or other solution in an effort to avoid foreclosure.
"Mediation coordinator" means a person designated by a
approved counseling agency to serve as the unbiased, impartial and independent coordinator and
facilitator of the mediation conference, with no authority to impose a solution or otherwise act as
a consumer advocate, provided that such person possesses the experience and qualifications
established by the department.
(3) "Department" means the department of business regulation.
(4) "Good Faith" means that the mortgagor and mortgagee deal honestly and fairly with
the mediation coordinator with an intent to determine whether an alternative to foreclosure is
economically feasible for the mortgagor and mortgagee, as evidenced by some or all of the
(i) Mortgagee provided notice as required by this section;
(ii) Mortgagee designated an agent to participate in the mediation conference on its
behalf, and with the authority to agree to a work-out agreement on its behalf;
(iii) Mortgagee made reasonable efforts to respond in a timely manner to requests for
information from the mediation coordinator, mortgagor, or counselor assisting the mortgagor;
(iv) Mortgagee declines to accept the mortgagor’s work-out proposal, if any, and the
mortgagee provided a detailed statement, in writing, of its reasons for rejecting the proposal;
(v) Where a mortgagee declines to accept the mortgagor’s work-out proposal, the
mortgagee offered, in writing, to enter into an alternative work-out/disposition resolution
proposal that would result in net financial benefit to the mortgagor as compared to the terms of
(5) "HUD" means the United States Department of Housing and Urban Development and
any successor to such department.
(6) "Mortgage" means an individual consumer mortgage on any owner-occupied, one to
four (4) unit residential property which serves as the owner’s primary residence.
(7) "Mortgagee" means the holder of a mortgage.
(8) "Mortgagor" means the owner of the property subject to a mortgage.
(d) No mortgagee may initiate any foreclosure of real estate pursuant to subsection 34-
27-4(b) unless the requirements of this section have been met.
(e) When a mortgage is not more than one hundred twenty (120) days delinquent, the
mortgagee or its mortgage servicer or other agent or representative of the mortgagee shall provide
to the mortgagor written notice, by certified and first class mail at the address of the real estate
and, if different, at the address designated by the mortgagor by written notice to the mortgagee as
the mortgagor's address for receipt of notices, that the mortgagee may not foreclose on the
mortgaged property without first participating in a mediation conference.
(f) A form of written notice meeting the requirements of this section shall be promulgated
by the department for use by mortgagees at least thirty (30) days prior to the effective date of this
section. The written notice required by this section shall be in English, Portuguese and Spanish,
reference the property’s plat and lot information, and may be combined with any other notice
required under this chapter or pursuant to state or federal law.
(g) The mediation conference shall take place in person, or over the phone, at a time and
place deemed mutually convenient for the parties by an individual employed by a HUD-approved
independent counseling agency selected by the mortgagee to serve as a mediation coordinator, but
not later than sixty (60) days following the mailing of the notice. The mortgagor shall cooperate
in all respects with the mediation coordinator including, but not limited to, providing all
necessary financial and employment information and completing any and all loan resolution
proposals and applications deemed appropriate by the mediation coordinator. A mediation
conference between the mortgagor and mortgagee conducted by a mediation coordinator shall be
provided at no cost to the mortgagor. The HUD-approved counseling agency shall be
compensated by the mortgagee at a rate not to exceed five hundred dollars ($500) per engagement.
(h) If, after two (2) attempts by the mediation coordinator to contact the mortgagor, the
mortgagor fails to respond to the mediation coordinator’s request to appear at a mediation
conference, or the mortgagor fails to cooperate in any respect with the requirements of this
section, the requirements of the section shall be deemed satisfied upon verification by the
mediation coordinator that the required notice was sent. Upon verification, a certificate will be
issued immediately by the mediation coordinator authorizing the mortgagee to proceed with the
foreclosure action, including recording the deed. Such certificate shall be recorded along with the
foreclosure deed. A form of certificate meeting the requirements of this section shall be
promulgated by the department for use by mortgagees at least thirty (30) days prior to the
effective date of this section.
(i) If the mediation coordinator determines that after a good faith effort made by the
mortgagee at the mediation conference, the parties cannot come to an agreement to renegotiate
the terms of the loan in an effort to avoid foreclosure, such good faith effort by the mortgagee
shall be deemed to satisfy the requirements of this section. A certificate certifying such good faith
effort will be promptly issued by the mediation coordinator authorizing the mortgagee to proceed
with the foreclosure action and recording of the foreclosure deed. Such certification shall be
recorded along with the foreclosure deed. A form of certificate meeting the requirements of this
section shall be promulgated by the department for use by mortgagees at least thirty (30) days
prior to the effective date of this section.
(j) If the mortgagee and mortgagor are able to reach agreement to renegotiate the terms of
the loan to avoid foreclosure, the agreement shall be reduced to writing and executed by the
mortgagor and mortgagee.
(k) Notwithstanding any other provisions of this section, where a mortgagor and
mortgagee have entered into a written agreement and the mortgagor fails to fulfill his or her
obligations under the written agreement, the provisions of this section shall not apply to any
foreclosure initiated under this chapter within twelve (12) months following the execution of the
written agreement. In such case, the mortgagee shall include in the foreclosure deed an affidavit
establishing its right to proceed under this section.
(l) This section shall apply only to foreclosure of mortgages on owner-occupied,
residential real property with no more than four (4) dwelling units which is the primary dwelling
of the owner and not to mortgages secured by other real property.
(m) Notwithstanding any other provisions of this section, any locally-based mortgagees
shall be deemed to be in compliance with the requirements of this section if:
The mortgagee is headquartered in
The mortgagee maintains a physical office or offices exclusively in
from which office or offices it carries out full-service mortgage operations, including the
acceptance and processing of mortgage payments and the provision of local customer service and
loss mitigation and where
other loss mitigation strategies; and
(3) The deed offered by a mortgagee to be filed with the city or town recorder of deeds as
a result of a mortgage foreclosure action contained a certification that the provisions of this
section have been satisfied.
(n) No deed offered by a mortgagee as a result of a mortgage foreclosure action shall be
submitted to a city or town recorder of deeds for recording in the land evidence records of the city
or town until and unless the requirements of this section are met. The mortgagee shall include in
the foreclosure deed an affidavit of compliance with this section. Failure of the mortgagee to
comply with the requirements of this section shall render the foreclosure void, without limitation
of the right of the mortgagee thereafter to re-exercise its power of sale or other means of
foreclosure upon compliance with this section. The rights of the mortgagor to any redress
afforded under the law are not abridged by this section.
(o) Any existing municipal ordinance or future ordinance which requires a conciliation or
mediation process as a precondition to the recordation of a foreclosure deed shall comply with the
provisions set forth herein and any provisions of said ordinances which do not comply with the
provisions set forth herein shall be determined to be unenforceable.
SECTION 2. This act shall take effect sixty (60) days following passage, and it shall
expire on July 1, 2018.