Bulletin: DC000017

Dear Associates:

As you may know, the "Protections from Predatory Lending and Mortgage Foreclosure Improvements Act of 2000" (D.C. Law 13-263) was passed by the District of Columbia Council, survived a Congressional review period, and became effective April 3, 2001. However, there have not yet been any forms or regulations promulgated by the D.C. government (Office of Banking and Financial Institutions). This has been a cause of major concern for title insurance underwriters, title agents, title attorneys, and foreclosure practitioners, in that it is unclear as to whether foreclosures should proceed under the old law or the new law. It is practically impossible to proceed under the new law since there are no forms or regulations. If one proceeds under the old law, then one most certainly run the risk of having the foreclosure challenged and set aside as being non-compliant with the new law.

Those of you who were present at the D.C. Bar's seminar on May 23, 2001, regarding this new law know that the representatives of the Office of Banking and Financial Institutions (OBFI) are aware of the many flaws in the law, especially with respect to the effective date. The representatives of OBFI proposed that they publish a statement on their website indicating that foreclosures under the new law should not proceed until forms and regulations are promulgated. However, a statement on the website would carry very little weight in a courtroom where a party challenging a foreclosure could point to the effective date of the law as being April 3, 2001. Therefore, it was determined by the General Counsel of OBFI at the seminar that the correct "fix" would be the enactment of an emergency amendment to the law by the District of Columbia Council affirmatively stating that the foreclosure aspect of the new law does not take effect until forms and regulations are promulgated. The passing of an emergency amendment could take several weeks.

It is our position at Stewart Title Guaranty Company that we cannot insure any sales out of foreclosures commenced on, or after, April 3, 2001, until an amendment to the law is passed clarifying the effective date of the foreclosure sections of the new law. Stewart Title agents are not authorized to issue Stewart Title policies on sales out of said foreclosures.

If a foreclosure was commenced under the old law prior to April 3, 2001, and went to sale prior to April 3, 2001, then Stewart Title hereby authorizes issuance of an owner's title insurance policy to the purchaser at the foreclosure sale, and a lender's policy to the lender for the purchaser at foreclosure, if applicable.

If a foreclosure was commenced under the old law prior to April 3, 2001, but did not go to sale until after April 3, 2001, or has not yet gone to sale, please call Rick Harvey or Joe Blume at (410) 547-9100 for assistance on how to proceed.