House Bill 233 Summary

• Establishes an alternative foreclosure procedure for mortgages on principal residences requiring lenders to provide borrowers an opportunity to modify their loans before foreclosure proceedings begin.

• Requires foreclosing parties to mail borrowers written notice containing the default amount, lender contact information, a designated contact person with authority to negotiate modifications, and a list of approved housing counselors.

• Prohibits foreclosure proceedings for 90 days if the borrower requests a meeting within 14 days of receiving notice, and requires the designated contact person to meet and negotiate with the borrower through a housing counselor.

• Establishes loan modification eligibility criteria targeting a maximum housing debt-to-gross income ratio of 38%, achievable through interest rate reductions (minimum 3% floor for 5+ years), loan term extensions up to 40 years, principal deferral up to 20%, or fee reductions.

• Permits foreclosure by advertisement to proceed only if the borrower declines a modification offer or fails to execute a modification agreement within 14 days; otherwise requires judicial foreclosure under existing court procedures.