AB 1639 Summary

• Establishes the Facilitated Mortgage Workout (FMW) Program allowing borrowers and lenders to participate in conciliation sessions to develop loan modification plans, contingent on federal funding and operative only until January 1, 2014.

• Requires lenders to include information about the FMW Program with notices of default sent to borrowers with loans originated before January 1, 2009, on owner-occupied residential properties (1-4 family units) with unpaid principal balances not exceeding $729,750.

• Borrowers who elect to participate have 30 days to request inclusion, must submit financial documents within 15 days, and must deposit 50% of their current monthly mortgage payment with the program administrator during participation.

• Appoints a Governor-appointed, Senate-confirmed administrator to establish standards for neutral conciliation officers, manage the program, and report quarterly to the Legislature on performance metrics until January 1, 2015.

• Suspends foreclosure timelines and prohibits negative credit reporting for borrowers who complete the program and accept a loan modification; lenders initially pay administrative fees ($500) and conciliation deposits ($600), with borrowers reimbursing half if a modification is reached.