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New Hampshire Bill Proposes Change In Foreclosure Process

NEW HAMPSHIRE BILL PROPOSES CHANGE IN FORECLOSURE PROCESS FROM NON-JUDICIAL TO JUDICIAL
By ALFN member Joseph Camillo, Esq., Shechtman Halperin Savage, LLP
 
On January 11, 2018, the New Hampshire House of Representatives Introduced House Bill 1682-FN “An Act relative to procedures for foreclosure” hereinafter “The Bill” for which a Public Hearing will be held on January 24, 2018.  This bill provides that foreclosure of a mortgage would be by a civil action in the superior court in the county in which the mortgaged premises or any part of it is located.  The bill would also repeal the provisions for non-judicial power of sale mortgages pursuant to RSA 479:25 and reenact it to require commencement of foreclosure by civil action.
 
Specifically, the bill sets forth the process for a judicial foreclosure wherein all parties having an interest appearing of record at the registry of deeds up through the time of recording the complaint or clerk's certificate must be joined, except a party in interest having a superior priority to the foreclosing mortgage, whose interest will not be affected by the proceedings.  Parties with a superior interest must be notified of the action by sending a copy of the complaint by certified mail.  Parties without a recorded interest may intervene in the action for purposes being added as party in interest any time prior to the entry of judgment.
 
The action shall be commenced pursuant to superior court rules and the mortgagee shall, within 60 days of commencing the action, record a copy of the complaint or clerk's certificate in each registry of deeds where the mortgaged property lies.  Furthermore, the mortgagee will have to certify and provide evidence that all steps mandated by law to provide notice to the mortgagor have been strictly performed.  The complaint shall also contain a certification of proof of ownership of the mortgage note, as well as produce evidence of the mortgage note, mortgage and all assignments and endorsements of the mortgage note and mortgage.
 
Other requirements include that the complaint contain the street address of the mortgaged property; book and page number of the mortgage; state the existence of any public utility easements recorded after the mortgage but before the commencement of the action; state the amount due and what condition of the mortgage was broken, and by reason of such breach, demand a foreclosure and sale.
 
Within ten (10) days after filing of the complaint, the mortgagee shall provide a copy of the complaint or clerk's certificate as submitted to the court to the municipal tax assessor of the municipality in which the property is located, and if the property is manufactured housing as defined in RSA 674:31, to the owner of any land leased by the mortgagor.
 
A ninety (90) day right of redemption is also being proposed, wherein the property may be redeemed by the mortgagor, by the payment of all demands and the performance of all things secured by the mortgage and the payment of all damages and costs sustained and incurred by reason of the nonperformance of its condition, or by a legal tender thereof, within ninety (90) days after the court's order of foreclosure.
 
Most alarming is the clause that acceptance, before the expiration of the right of redemption and after the commencement of foreclosure proceedings of anything of value to be applied on or to the mortgage indebtedness constitutes a waiver of the foreclosure unless an agreement to the contrary in writing is signed by the person from whom the payment is accepted or unless the bank returns the payment to the mortgagor within ten (10) days of receipt.  The receipt of income from the mortgaged premises by the mortgagee or the mortgagee's assigns while in possession of the premises does not constitute a waiver of the foreclosure proceedings of the mortgage on the premises.
 
The mortgagee and the mortgagor may enter into an agreement to allow the mortgagor to bring the mortgage payments up to date with the foreclosure process being stayed as long as the mortgagor makes payments according to the agreement.  If the mortgagor does not make payments according to the agreement, the mortgagee may, after notice to the mortgagor, resume the foreclosure process at the point at which it was stayed.
 
As such, all mortgage foreclosures would take place following a civil action in superior court.  A mortgage foreclosure would be treated as a routine equity case estimated to have a filing fee of approximately $250.00.

INDUSTRY IMPACT: WHAT IT MEANS FOR SERVICING
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The impact to servicers will be such that what was once a streamlined process, taking approximately 90-120 days, would be significantly extended to the same time frame that exists in other judicial states such as Maine, Vermont and Connecticut.  This would also require careful scrutiny of demands to determine how to comply with the historical non-judicial paragraph 22 language in light of the new judicial process.  Servicers can also expect a spike in contested matters by virtue of borrowers' filing answers, affirmative defenses, counterclaims, and engaging in discovery, as well having to prepare witnesses to testify at trial.  Two aspects of the judicial process that were not mentioned are 1)  the mediation process and 2) a non-judicial notice and publication requirement for the sale, but either could be added to the proposed bill at a later date.  In conclusion, this proposed bill, if passed, would make foreclosing in the granite state much more difficult, time-consuming and expensive; and there is no doubt that all of the issues that have surfaced in the traditional judicial states will have to be similarly addressed and litigated in new Hampshire.  We will provide updates as to future developments when they are available.