Y2K Act Guards Owners Against Home Foreclosure (San Jose Mercury News)greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Protection under the new law depends, in part, on the consumer being aware that something is amiss.
Published Saturday, November 6, 1999, in the San Jose Mercury News
REAL ESTATE/BRODERICK PERKINS
Y2K act guards owners against home foreclosure
Y2K act protects owners of homes
[Fair Use: For Educational/Research Purposes Only]
A LITTLE-known provision of the federal Year 2000 Readiness and Responsibility Act (H.R. 775) protects homeowners from foreclosure if a computer glitch results in unprocessed mortgage payments.
But don't let the provision lull you into neglecting your mortgage payment record-keeping habits or from being certain your mortgage lender posts payments during the next few months.
Federal regulators have seen to it that banking institutions have tested their computers' readiness for the new year, but there's no guarantee the year will begin without some computer glitch that could affect your loan. Generally, the year 2000 concern stems from an early computer design technique created to save data space. The design could cause some computers to see the year 2000 as ``1900,'' and perhaps shut down, causing everything from Excedrin headache No. 2000 for computers to a global recession, depending upon the doomsayer.
Congress passed the federal Y2K law this summer, primarily to limit lawsuits directed at companies with computers that fail to recognize the year 2000. However, legislators considered potential problems with recording mortgage payments significant enough to devote more than two pages of the 49-page law to the issue.
``From a practical standpoint there are probably going to be some glitches, and you'll have the banks pointing fingers at the mortgage servicer and the mortgage servicer blaming the bank,'' said Bruce Hahn, president of the non-profit American Homeowners Foundation in Arlington, Va.
Protection under the new law depends, in part, on the consumer being aware that something is amiss. Here's where all those warnings about keeping good records toward the end of this year come into play.
The Y2K act says that if early next year you know you've made a mortgage payment on time but you get a late notice and believe a computer glitch is at fault, you must act immediately. You have seven days from the date of the late notice to supply, in writing, proof that you made your payment on time.
The law doesn't identify who -- you or the loan servicer -- must bear the burden of proof, but a canceled check, a money order receipt or other documentation should suffice for compliance on your part. Send your proof by certified, return-receipt mail to obtain the best protection.
To avoid needing the law it's not a bad idea to make your January mortgage payment as early as possible in December. If you make the payment in person or early enough in the month, you'll receive a proof-of-payment receipt that shows you made the January payment in 1999. As a benefit, you'll also receive an additional mortgage interest write-off on your 1999 tax return.
Hahn says Y2K protection is also afforded those who already have mortgage payments automatically deducted from their checking account or other personal bank account.
``There is the presumption that on an automatic payment, particularly if it's been made for some time previously, the liability is out of your hands, if for some reason it doesn't get transferred in January 2000 and your bank was previously instructed to transfer it,'' Hahn said.
You should also learn now who, specifically, should receive your complaint should there be a problem and you need to quickly invoke the federal law's provision. For example, you might have to address your query to an individual assigned to handle Y2K-related problems at the lender's office, the mortgage servicer's office or some other location, depending upon your mortgage.
And don't even try to use the law to gain a mortgage payment holiday.
If, four weeks after 2000 or four weeks after you've informed the lender of what you believe is a Y2K-related error (whichever is later), the mortgage servicer hasn't granted you, in writing, an extension to clear up the matter, the servicer can begin foreclosure proceedings.
Loans in default, or facing default actions before Dec. 15, 1999, and loans involving Y2K-related complaints filed after March 14, 2000, are not protected by the Y2K act.
``At first the language was very open and flexible. We had to tighten the language so that poor payers couldn't use it as an excuse or defense not to pay on time,'' said Gene Swanzey, director of legislative affairs for the Washington, D.C.-based Mortgage Bankers Association of America.
IF YOU'RE INTERESTED
The complete text of the Year 2000 Readiness and Responsibility Act (H.R. 775) is available at http://commerce.senate.gov/issues/y2k.htm
Broderick Perkins is editor of DeadlineNews.com, a real estate news and consulting Web site. Contact him at email@example.com
-- Diane J. Squire (firstname.lastname@example.org), November 12, 1999
how are you going to "supply,in writing",in seven days?,when the postal system is down and the city centres are battlegrounds?
They KNOW this ain't going to work
-- matt (email@example.com), November 12, 1999.
This wasn't at the top of my list of worries, frankly. Possession is 90% of the law: how are the banks going to enforce mass evictions, even if they were stupid enough to try?
-- Colin MacDonald (firstname.lastname@example.org), November 12, 1999.
I got so excited when I saw the topic! I thought it would answer one of my last minute questions: What do I do if our payckeck doesn't come through? Is this scenario part of my lender's y2k contingency plan?
So Congress used two pages to say that if you paid and can prove it you shouldn't be treated as if you didn't pay?
-- Becky (email@example.com), November 12, 1999.
interesting. burden of proof on the homeowner in seven days. sounds like Social Security's deal with having to notify them immediately of incorrect statements or the record stands. one interesting piece of information i read or heard (i believe it came from larry burkett or steve farrar) was that during the depression, they foreclosed FIRST on those homes THAT WERE CLOSEST TO BEING PAID OFF!!!!! sounds like the same bankers that would lie to us about being ready for Y2K??
-- tt (firstname.lastname@example.org), November 12, 1999.
From: Y2K, ` la Carte by Dancr (pic), near Monterey, California
foreclosed FIRST on those homes THAT WERE CLOSEST TO BEING PAID OFF!!!!!
I guess the reason would be that when they sell such houses, they could accept an obnoxiously low price for a quick sale, and let the owner eat the loss. Whereas, if the bank owned 80% or more of the original value of the house, they may have trouble getting even that much in a sale.
-- Dancr (email@example.com), November 12, 1999.
The grace period ONLY applies "if a computer glitch results in unprocessed mortgage payments". And who decides it is a computer glitch? All sorts of reasons you were in default, only some will be covered. And the grace period only applies from mid December to March. I see nothing that says you are protected from a late payment fee.
If the mortgage company wants to keep your busy, it will work something out with you. If not, y2k could be a great excuse to toss your account.
-- Brooks (firstname.lastname@example.org), November 12, 1999.
I'd say... get to know your lender... on sight... and within walking distance. And on day six... ask them... how's it going? Then hand write something and hand deliver it.
(Could be quite a mess. Don't ya just l-o-v-e politicians?)
-- Diane J. Squire (email@example.com), November 12, 1999.
Right, what if the economy crashes and people can't pay--and what about renters??? On 12/31, they should pass a law preventing any evictions. Of course Congress has already gone home for the year!!!!!!! (What date, I'm not sure?) Anyway, we will have no Congress anymore. Not that I have any respect for these people!
-- Mara (MaraWayne@aol.com), November 12, 1999.
Don't those idiots remember?!!! The FSLIC (Savings & Loan insurance) crashed because they had too many repossessed properties on their hands (real estate was in a slump) and the oil industry had taken a nosedive. No money, no way to unload the real-estate!
If these turkeys try to repossess all of these homes, they'll wish they hadn't:
1. Consumer rights groups will scream!
2. If the economy takes a dive, then the FDIC will take a dive that will make the S & L crash look like a cake-walk!
-- Deb M. (firstname.lastname@example.org), November 12, 1999.