Senate Bill 425 - Summary

• Establishes a mandatory foreclosure dispute resolution program allowing owner-occupants of residential property to elect mediation between themselves and lenders before nonjudicial foreclosure proceeds

• Requires foreclosing mortgagees to file notice of default with the state division of finance and pay a $550 filing fee within three days of serving notice to mortgagors; the mortgagor then has 30 days to elect participation in dispute resolution

• Provides owner-occupants the right to convert nonjudicial foreclosures to judicial foreclosures within 30 days of receiving notice of default, allowing courts to consider claims and defenses

• Prohibits foreclosing lenders from pursuing deficiency judgments following nonjudicial foreclosure unless debt is secured by other collateral, but allows deficiency judgments if action is converted to judicial proceeding

• Establishes prohibited foreclosure practices including holding sales at wrong locations, delaying conveyance documents, foreclosing during loan modification negotiations, and foreclosing against mortgagors in federal loan modification programs; violations constitute unlawful merchandising practices