New Law Offers Relief to Struggling Utah Homeowners

June 10, 2011

Despite signs of economic recovery, the home foreclosure crisis is far from over. Utah homeowners still face considerable threats: in February, Utah had the fourth highest per capita rate of foreclosure filings in the nation and over 32,000 homeowners were slapped with foreclosure notices in 2010. In other words, last year an astonishing one in 29 homes was affected.

State lawmakers have taken notice. A new bill aimed at stemming wrongful foreclosures in Utah, SB261, was recently signed into law by Governor Gary Herbert. While SB261 seems to be a step in the right direction, some experts are wondering whether it will be enough to help the thousands of underwater Utah homeowners.

Goals of the New Legislation

Utah has a defined legal process for proceeding with a foreclosure to which lenders are expected to adhere. However, with the wave of foreclosures that swept over the state in recent months, some banks failed to provide adequate notice to homeowners or otherwise follow proper procedures. A significant group of homeowners who thought they were living up to their mortgage holder's demands, while at the same time pursuing a loan modification, instead wound up in foreclosure.

One of the primary aims of SB261 is deterring such improper behavior by lending institutions. Under the new legislation, lenders are required to provide written notice when a foreclosure sale is moving forward irrespective of any lowered payment agreement. Furthermore, if this notice is not provided, is inadequate or if the mortgage provider crosses the law in any other aspect of the foreclosure process, SB261 allows homeowners to seek attorney's fees and monetary damages of up to $2,000.

Strengths and Weaknesses of the New Legislation

Is SB261 strong enough to protect Utah's struggling homeowners? Many fear that the law does not go far enough. Homeowner advocacy groups believe that in addition to facing penalties, lenders who proceed with an illegal foreclosure should be precluded from completing a valid sale of the home. Even though mortgage providers who do not follow the correct procedures will be subject to a monetary penalty, the sale of the foreclosed home is permitted to move forward.

The Utah Attorney General's Office staunchly supported SB261. They view the bill as a small measure that will help alleviate the greater problem of large, out-of-state mortgage providers failing to adhere to Utah foreclosure law. Although the Attorney General's Office may have envisioned grander protections for Utah homeowners, in the end complications with title companies blunted SB261's teeth: there were concerns that providing for anything more than financial penalties may cloud titles and prevent the acquisition of insurance on later transactions.

SB261 also provides for the recovery of attorney's fees. This is important for struggling homeowners as it means that a claim can be pursued without worrying about how to pay for it. The provision is an added incentive for individuals who have been wronged by mortgage companies to hold their lenders responsible.

Government Inaction

While the new provisions provide some measure of protection for Utah homeowners against illegal foreclosures, it may seem like too little, too late. In February alone, 3,488 foreclosure notices were filed. The affected homeowners are actually the lucky ones; unlike the thousands who have lost their homes through illegal foreclosures in previous years, they will likely at least benefit from the minimal protections provided by SB261.

Why did the Utah legislature not act sooner? Generally, foreclosure relief has been slow to materialize across the country, both at the federal level and in state capitals. But some states were quicker on the draw than Utah: both New Jersey and Vermont, for example, enacted emergency amendments earlier this year that set up extensive requirements to ensure only valid foreclosures based on thoroughly vetted information were being processed.

The Future

Concern is growing among Utah citizens about the lack of more sweeping reforms to combat wrongful foreclosures. A group of homeowner advocates, legal experts, and others are currently in the process of drafting new legislation that may be able to more fully address Utah's foreclosure crisis. Once the major nuts and bolts are in place, a special session of the Utah Legislature could be called to consider the new law.

If you are facing foreclosure, do not wait for government assistance to materialize. Contact a Utah foreclosure defense attorney today. Your attorney will ensure your legal rights are respected, will help you pursue every avenue for saving your home and can secure monetary damages if you have been the victim of an illegal foreclosure.

Article provided by Wasatch Advocates Trial Attorneys
Visit us at www.homeowner-defense.com