The Mortgage Foreclosure Procedures Reform Act
The Mortgage Foreclosure Procedure Reform Act was a bill passed in the District of Columbia in 2002. The reform act changed the way foreclosure proceedings could be done by banks. The reason for passing the reform act was to protect people from predatory lending.
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Prior Foreclosure Procedure
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The District of Columbia used to have a non-judicial process for foreclosures, which would take about 60 days. The lien holder would send a notice of sale by certified mail. A notice would also be sent to the Mayor of the District of Columbia at least 30 days before the foreclosure sale date. If it wasn't paid in full prior to the auction date, then the sale would continue.
Changes
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The changes made to the original procedure require the lender to also send a notice to the local court after serving the notice to the borrower. The court will then decide whether a default has occurred and either approve the sale or postpone it.
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Significance
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The significance of the reform is that a judge will have the power to fix the amount of the debt due and provide a reasonable time line for the borrower to repay the debt. Before the reform, the lender could foreclose the property giving the borrower only 60 days to repay the default amount in full.
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