Bulletin: ID2008001

Dear Associates:

Effective July 1, 2008, Idaho has enacted the Consumer Foreclosure Protection Act ("ACT"). ICA § 45-1601 et seq. Seeking to protect people experiencing default proceedings against their residences from individuals or entities that would defraud homeowners out of title or equity, Idaho is requiring special notice and an opportunity to rescind contracts. In addition, ICA § 45-1505 has been amended requiring the trustee of a trust deed foreclosing by advertisement and sale to mail the "Notice Required by Idaho Law" ("NOTICE," see below) to anyone who owns an interest in the property. Penalties and damages are imposed for violations of the ACT in accordance with Title 48, Chapter 6 of the Idaho Code.

Special Notice Required

If a homeowner is in default on their trust deed and a foreclosure has been commenced under ICA § 45-1506, any contract or agreement with that homeowner that involves the transfer of any interest in their residential property must be in writing and accompanied by and affixed to the NOTICE. ICA § 45-1603. The NOTICE must be in twelve (12) point boldface type and on a separate sheet of canary yellow or some similarly colored yellow paper no smaller than eight and one-half (8 1/2) inches by eleven (11) inches:

NOTICE REQUIRED BY IDAHO LAW

Mortgage foreclosure is a legal proceeding where a lender terminates a borrower's interest in property to satisfy unpaid debt secured by the property. This can mean that when a homeowner gets behind on his or her mortgage payments, the lender forces a sale of the home on which the mortgage loan is based. Some individuals or businesses may say they can "save" your home from foreclosure. You should be cautious about such claims. It is important that you understand all the terms of a plan to "rescue" you from mortgage foreclosure and how it will affect you. It may result in your losing valuable equity that you may have in your home. If possible, you should consult with an attorney or financial professional to find out what other options you may have. Do not delay seeking advice, because the longer you wait, the fewer options you may have.

You may find helpful information online. One excellent source is the Department of Housing and Urban Development (HUD) website which can be found at http://www.hud.gov/foreclosure/index.cfm. HUD also maintains on its website a list of approved housing counselors who can provide free information to assist homeowners with financial problems. Another good source of information is found at the Office of the Attorney General's website at https://www.ag.idaho.gov/.  

Under Idaho law, you have five (5) days to rescind or undo certain contracts or agreements that relate to transferring interests in property or money in a foreclosure situation. An attorney or financial professional can tell you more about this option.

Recission or Cancellation

If a homeowner is in default on their trust deed and foreclosure proceedings have been commenced, including the recording of a notice of default, the homeowner can rescind or cancel any contract relating to their home. ICA § 45-1603(1). If such homeowner desires to cancel or rescind a contract, it is effective when all parties to the contract have written notice. Notice of cancellation, if given by mail, is effective when deposited in the mail properly addressed with postage prepaid. ICA § 45-1603(2). Notice by certified mail shall be conclusive proof of notice of service. ICA § 45-1603(3).

Excluded Parties from the Act's Provisions

• Regulated lenders, as defined in ICA § 28-41-301(37).
  
• Any person licensed or chartered under the laws of any state or of the United States as a bank, trust company, savings and loan association, credit union, or industrial loan company. The terms "bank," "trust company," "savings and loan association," "credit union" and "industrial loan company" shall include affiliates or wholly-owned subsidiaries of such organizations, provided that the affiliate or subsidiary is regularly examined by the chartering state or federal agency for consumer compliance purposes.
  
• Mortgage lenders and mortgage brokers licensed under the Idaho residential mortgage practices act, ICA §§ 26-3101 et seq.
  
• Family member or members of the owner or owners of record of any interest in residential real property subject to foreclosure. "Family member or members" means a natural person or the spouse of a natural person who is related to such owner or owners of record by blood, adoption or marriage within the second degree of consanguinity or a grandchild or the spouse of a grandchild.

Important Procedures

• If during your title search you find a notice of default recorded against the property in question, you must confirm that any contract to purchase that property was accompanied by THE NOTICE and that 5 business days have elapsed from the date of contract with no evidence of cancellation or recission. In the absence of such cancellation or recission, obtain a notarized affidavit from the seller substantially in the form of Exhibit "A."
  If under the circumstances described above, you cannot obtain evidence that THE NOTICE accompanied the contract, you must require the contract be amended to include THE NOTICE and you cannot record and fund until 5 business days have elapsed from the amendment.
  
  • If you find a notice of default recorded against your property during the period after you have issued a commitment but before you have closed, you must require an amendment to the contract to include THE NOTICE and you cannot record and fund until 5 business days have elapsed from the amendment.
    
• If you find a notice of default recorded against your property during the period after you have issued a commitment but before you have closed, you must require an amendment to the contract to include THE NOTICE and you cannot record and fund until 5 business days have elapsed from the amendment.

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