Governor Signs Homeowner Protections Into Law

Linda Simpson, 2008 PGCAR President April 2008

The Governor signed new foreclosure protections into law effective April 4, 2008. Below is a brief summary of the legislative package. For more in-depth information please refer to

SB 216/HB 365 - Foreclosure Process
STATUS: PASSED - Effective April 4, 2008

Establishes a longer time frame before properties may be sold at foreclosure sale, and requires greater disclosure to consumers about their rights and options. Under the law, a foreclosure action could not be filed with the court before 90 days after a seller is in default. The property could not be sold at a foreclosure sale for another 45 days after that time. The law also requires that the mortgage originator license number or affidavit be attached to the recordable instrument.

SB 217/HB 360 - Mortgage Fraud Protection
STATUS: PASSED - Effective April 4, 2008

Generally defines mortgage fraud and sets significant criminal and civil penalties for individuals committing mortgage fraud. The legislation makes clear than any person intending to defraud another could be subject to penalties of up to $100,000 or imprisonment up to 20 years if engaged in a pattern of mortgage fraud. The law also authorizes the seizure of any property used in connection with mortgage fraud, or gained through mortgage fraud.

SB 218/HB 361 - Prohibition on Certain Foreclosure Transactions
STATUS: PASSED - Effective April 4, 2008

Further regulates foreclosure rescue practices by imposing new duties on foreclosure consultants, providing numerous protections to home sellers dealing with foreclosure consultants and foreclosure purchasers, and prohibits foreclosure reconveyances. The legislation makes clear that real estate licensees are not foreclosure consultants if the agents are engaged in a bona fide real estate transaction where the property is listed in the MLS and a proper settlement occurs with a third party and HUD-1. However, if a real estate agent is representing a buyer in the purchase of a For-Sale-by-Owner (FSBO), the seller will have a 5 day rescission period for the contract. This rescission period cannot be waived and begins after the parties both sign the contract. For a Q & A on SB 218/HB 361 and how it affects REALTORS®, please click here.

For more information on this legislation, go to