HB3806 Summary

• Enacts the Mortgage Foreclosure Prevention Law of 2009, creating a judicial sale deferment program for eligible borrowers with subprime or negative amortization residential mortgage loans that experienced payment increases after origination.

• Eligible borrowers must reside in the property as primary residence for 6 months prior to foreclosure, have household adjusted gross income under $250,000 annually, be legal U.S. residents, and submit an affidavit of deferment signed by both the borrower and a mortgage foreclosure counselor to defer judicial sale for one year from the law's effective date.

• Borrowers must make monthly deferment payments by the 15th of each month equal to either the original monthly payment amount or 65% of the current payment (whichever is less for subprime loans), with lenders prohibited from charging additional fees for exercising the deferment right.

• Lenders must send written notice of the deferment right to eligible borrowers, provide acknowledgment within 10 days of receiving an affidavit, and send monthly payment advice notices; borrowers lose deferment rights if they fail to make required payments or cease residing at the property.

• Establishes binding arbitration process for disputes over whether lenders negotiated in good faith to modify loans, with volunteer arbitrators appointed by the Secretary of Financial and Professional Regulation; violators face liability for actual damages, up to $25,000 statutory damages, punitive damages, costs, and attorney's fees.