House Bill 526 Summary

• Requires lenders to provide borrowers with written notice before foreclosing on principal residences, including default details, lender contact information, and a designated person authorized to negotiate modifications.

• Mandates a 90-day waiting period after notice if borrower requests a meeting with the lender's designated contact, with option to involve a HUD-approved housing counselor to facilitate negotiations.

• Establishes loan modification criteria targeting a maximum 38% debt-to-income ratio through interest rate reductions (minimum 3% floor), loan term extensions (up to 40 years), principal deferral (20% or less), or fee elimination.

• Prohibits foreclosure by advertisement if borrower qualifies for modification under the bill's criteria and lender has not made a good-faith modification offer or if borrower has not rejected a valid offer within 14 days.

• Allows borrowers to sue in chancery court to enjoin improper foreclosures or convert them to judicial foreclosure if lender violates procedural requirements, with effective date of July 1, 2016.