CFPB Proposed Rule to Help Homeowners Avoid Foreclosure
On July 10, 2024, the Consumer Financial Protection Bureau (“CFPB”) proposed a new rule that will place additional burdens on mortgage services dealing with delinquent residential mortgage loans. The CFPB’s goal for this rule is to “require servicers to help homeowners before foreclosing, give servicers more flexibility by reducing paperwork requirements, and improve communication with homeowners.”
If the proposed rule becomes a final rule, it will amend the mortgage servicing rules that took effect in 2014. Highlights of the proposed rule include: stopping “dual tracking,” limiting fees charged, streamlining loss mitigation procedures, changing notice and communication requirements, and requiring specific notices to be sent in both English and Spanish. The proposed rule would not apply to small servicers.
“Dual tracking” is attempting to work with the borrower while advancing a pending foreclosure or moving forward with a foreclosure. Under the proposed rule, once a borrower requests loss mitigation assistance, the servicer may not begin or advance the foreclosure process until the loss mitigation cycle ends. The loss mitigation cycle ends when either (1) the servicer reviews the borrower for all available loss mitigation options and no available options remain for the borrower or (2) the borrower becomes and remains unresponsive for a specified period of time.
Streamlining loss mitigation procedures would do away with the requirement that a borrower submit a complete loss mitigation application before a servicer was required to assess loss mitigation options. Under the proposed rule, a servicer would be able to make a loss mitigation determination based on available information and would be able to review a borrower for loss mitigation options sequentially rather than simultaneously.
Finally, the proposed rule seeks to change some notice requirements. Servicers would be required to provide additional information in written early intervention notices, including the name of the owner of the mortgage loan, a description of each type of loss mitigation option that is generally available, and a reference to a website where the borrower can access a list of all loss mitigation options that may be available. When it comes to loss mitigation determination notices, the proposed rule would require that servicers provide a written response that includes key “borrower-provided inputs” that served as a basis for the determination, a list of other loss mitigation options that are still available, and the next steps that the borrower must take to be reviewed for these options. The notice must inform the borrower if the borrower has been reviewed for all available options and that no options remain. Additionally, specific notices must be provided in Spanish.
Please note that this is a proposed rule, and it is subject to change. When a final rule is released, we will send out a more detailed analysis of the final rule. In the meantime, should you have questions or concerns, please do not hesitate to contact an attorney at Sorenson Van Leuven..
Garnishments on Joint Accounts and the Tenancy by the Entirety Exemption
As any Credit Union Collections Department knows, sometimes getting a judgment against a member is the easy part. Between Florida’s debtor-friendly exemptions and trying to find the debtor, actually getting any money back on a judgment can be challenging. One popular option for collecting on a judgment is a garnishment on the debtor’s deposit accounts. This allows the Credit Union to freeze a deposit account and withdraw funds to satisfy the debt. There are several exceptions to an account garnishment, one being that if a judgment is against a single party, a Credit Union cannot garnish any account held as tenancy by the entirety by that debtor. However, a recent case has carved out a small exception to this rule that may be helpful in collecting against debtors.
A garnishment is a legal process by which a creditor, after obtaining a court judgment, can collect funds directly from a debtor’s deposit accounts to settle the unpaid debt. This begins by filing a motion with the Court and obtaining a Court Order that requires the debtor’s financial institution to freeze funds in the debtor’s accounts. Once a Writ of Garnishment is issued, the debtor must be notified, which gives them the opportunity to contest the garnishment, request exemptions, or negotiate repayment terms. Typically, specific types of income, such as Social Security benefits, veteran’s benefits, and disability benefits, are exempt from being garnished.
One other exemption that offers significant protection from creditors are accounts held as tenancy by the entirety. This is a special form of joint ownership available only to married couples. It treats the couple as a single legal entity, meaning that the property or account cannot be divided between them and is entirely owned by the spouses together. In Florida, a financial account owned by tenancy by the entirety cannot be garnished or seized by a creditor of just one spouse. This is because the debt is considered to be the responsibility of the individual, not the couple as a legal entity. As long as the account meets the requirements for tenancy by the entirety, then a creditor has no claim against both spouses jointly; therefore, the account is protected.
Tenancy by the entirety is a common law legal doctrine which has six characteristics: (1)unity of possession (joint ownership and control); (2) unity of interest (the interests in the account must be identical); (3) unity of title (the interests must have originated in the same instrument; (4) unity of time (the interests must have commenced simultaneously); (5) survivorship; and (6) unity of marriage (the parties must be married at the time the property became titled in their joint names).
Whether an account meets the requirements of tenancy by the entirety was in question in the recent case of Loumpos v. Bank One and Dove Investment Corp., coming out of the 2nd District in Florida. Here a creditor of the wife, Linda Loumpos, sought to garnish a bank account titled in her name and the name of her husband. Her husband had opened the account in his name only, then seven months later he and his wife executed new account signature cards that stated that they both owned the account. They also checked the Joint Tenancy by the Entirety box. When the creditor sought to garnish the bank account, the debtor claimed that it was exempt as an entireties account, as the debt was only against Ms. Loumpos. However, the creditor disagreed, arguing that while the later of the signature cards does state their intention to have the account as an entireties account, it does not meet the unities of time and title. The Court held that because the account was originated by the husband individually, only later adding the wife, the mere fact that they added language at that time stating the account was held as an entireties account did not overcome the requirements set forth in common law and cemented in case law. Thus, the account was subject to the garnishment.
Collecting on a debt can be a long, frustrating, and confusing venture, but remember, we are here to help. A judgment in Florida is good for 20 years, so if you have old ones sitting in a drawer, it may be time to dust them off and send them over to your attorney to try and see if there are any options for recovery. If you have any questions about garnishments, or any collection topics, please reach out to us at (850)388-0500.
Staff Spotlight on Asia Ross
Asia is one of our legal assistants in the bankruptcy department. She joined the SVL team in April of this year. Originally from Camden County, Georgia, Asia made her way to Tallahassee, Florida, to attend Florida State University, where she graduated in December 2023 with her bachelor’s degree in political science and a minor in law.
She was interested most in finding a position in the legal field due to its ever-changing nature that continually grows and expands. She feels there will always be something new to learn because the law is continuously changing. This will always keep you on your toes and that is what makes it so exciting! Asia feels that “being a part of the SVL team feels like a big family where everyone wants to see you succeed. They really care about their employees and the firm wants the best for them.” We are proud our culture attracts people like Asia to our team!
In Asia’s time away from the office, she likes spending time outdoors, going on runs with friends, and attending sporting events at the university. A couple fun facts that you may not know about Asia is that she has a love for hikes and she is training to run a 5K in December! She is also currently studying to obtain her Paralegal Certification.
Asia, we are so grateful for you, your dedication to the firm, and all you have learned in such a quick time being here. Thank you for all you do!
Staff Spotlight on Tanya Darbouze
Tanya was born and raised in Miami, Florida, but her family is originally from Haiti and the Dominican Republic. She has lived in Tallahassee for 10 years. She moved to Tallahassee for school and found a job in the early childhood education field, which kept her in Tallahassee after she finished school. During her time in Tallahassee, she has earned her Child Development Associate’s and Director’s Credentials and has over 10 years of experience working in this field.
In May, Tanya transitioned into the legal field after being interested in exploring new opportunities and a new career outside of childcare. She was excited to expand her knowledge and be a part of a supportive and collaborative environment like Sorenson Van Leuven!
While away from work, Tanya frequently visits Miami to spend time with family and enjoy vacation time. She likes spending her free time running, practicing yoga, and traveling. She also enjoys teaching at conferences where she helps educators obtain the credentials they need to run and teach at daycares or schools. Tanya finds so much joy pouring into others!
A few fun facts about Tanya: Haitian Creole is her first language, and she still speaks it fluently; she is a dog mom to two fur babies; and she loves visiting Los Angeles and goes at least once a year. It is her favorite place to travel.
Tanya, you are such a gift to our firm, and we are proud to have you as a part of this team!
SVL SourcExpo 2024
On July 10-12, 2024, Sorenson Van Leuven held a successful SVL SourcExpo Conference at the Renaissance International Plaza Hotel in Tampa. We want to thank everyone who attended – the SVL team thoroughly enjoyed our time spent with each of you. We would also like to thank our sponsors: Allied Solutions, South Bay Remarketing Services, SWBC and United Solutions Company.
The SourcExpo is our annual learning event for Credit Unions that focuses on collections, bankruptcy, foreclosure, and other related issues. The goal of the SVL SourcExpo is to instruct, innovate, and inspire. We do this by having the attorneys from our office provide training over the three-day event. Additionally, we help Credit Union representatives network with other Credit Unions in attendance to share ideas while also working to inspire each Credit Union team to improve its processes.
We are excited to announce we will be hosting again in Tampa at the Renaissance International Plaza Hotal for our SVL SourcExpo 2025. The dates for next year’s conference will be July 9-11, 2025. Be sure to save the date and join us!
More details will be posted in the coming months. We cannot wait to see you in July 2025!