Vermont Bar Association

Seminar Materials

The Intersection & Overlap of Foreclosure,

Sales, Mediation & Bankruptcy & Their

Impact on Title

May 2, 2013

Capitol Plaza

Montpelier, VT

Faculty:

Andre D. Bouffard, Esq.

Hon. Colleen A. Brown

Heather Zubke Cooper, Esq.

Robert S. DiPalma, Esq.

James E. Knapp, Esq.

Joshua B. Lobe, Esq.

Tavian M. Mayer, Esq.

Hartland L. Miller, III, Esq.

Rebecca A. Rice, Esq.

Jan M. Sensenich, Esq.

Hon. Mary Miles Teachout

Douglas J. Wolinsky, Esq.

The Story of Hubert and Hilda Homeowner

As told from the point of view of numerous parties involved in the foreclosure on MudPit and the

Homeowners’ bankruptcy proceedings.

Our story begins with Hubert Homeowner and Hilda Homeowner, the proud owners of a three

acre parcel of land with a house and barn, and a ten acre parcel of open land adjacent to it in

Tinmouth. The property is generally known as MudPit. The two properties together appear to be

worth about $311,000.00 based on the current tax assessment adjusted for the current common

level of appraisal. The first mortgage is in the original principal amount of $260,000 at an inter-

est rate of 5.35% and was dated as of February 1, 2007 and is recorded in Book 23 at Page 87 of

the Tinmouth Land Records. The original mortgage was granted to BigMortgageCompany, LLC,

and was then assigned to Mortgage Warehousing Services Corp. (no longer exists), and was sub-

sequently assigned to MTGServices, LLC, trustee for Mortgage Conduit Investment Trust

#2791C, March 27, 2007. The mortgage is being serviced by Large Bank Servicing Corp.

(LBSC). There is also a Home Equity Credit Line payable to Local Credit Union with a current

balance of $14,949.54 which is accruing interest at 7.5%. The HELOC is dated as of September

6, 2007, has a principal balance cap of $14,500.00 and is recorded in Book 24 at Page 273 of the

Tinmouth Land Records.

The Homeowners apparently had not made a payment on the First Mortgage since May of 2010

and now owe approximately $276,298.74 and they have not made any payments on the Home

Equity Credit Line for at least 11 months.

MTGServices, LLC filed a foreclosure complaint on July 15, 2012. The Homeowners filed a pro

se answer on August 8, 2012. The process has proceeded to the point where a judgment was is-

sued on October 1, 2012. The period of redemption expired on March 31, 2013 with no redemp-

tion completed by any party. A sale of the property was scheduled to occur on April 21, 2013.

The Homeowners filed a Petition to commence a bankruptcy proceeding under Chapter 13 on

April 2, 2013.

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Time Line of Activities

February 1, 2007 – the Homeowners grant a mortgage to BigMortgageCompany, LLC.

Date Uncertain – BigMortgageCompany. LLC assigns Homeowner Mortgage to Mortgage

Warehousing Services Corp.

Date Uncertain - Mortgage Warehousing Services Corp. assigns the Homeowner Mortgage to

MTGServices, LLC, trustee for Mortgage Conduit Investment Trust #2791C, March 27, 2007

Date Uncertain - Large Bank Servicing Corp. becomes the servicer for the mortgage

September 6, 2007, the Homeowners grant a HELOC to Local Credit Union

May 2010 – the Homeowners allegedly stop paying on the Mortgage

March 2012 – last payment on the HELOC loan

July 15, 2012 - Foreclosure Complaint filed

August 8, 2012 – Pro-se answer filed

October 1, 2012 – Judgment of Foreclosure Entered

March 31, 2013 – Redemption Period expires – no redemption occurs

April 2, 2013 – Homeowners file a petition to start a Chapter 13 Bankruptcy

April 21, 2013 – the day originally scheduled for the foreclosure sale

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Section/Item Title

Intro – 1 Fact Pattern and Timeline

Part I - 1 Foreclosure Complaint and re-

lated documents and Exhibits

Statutory notices, Summons, Certificate of

Service

Part I – 2 Pro se Answer The Answer speaks for itself!

Part I – 3 Motion for Summary Judg-

ment/Default;

Includes Supporting Affidavits and required

materials, Proposed Judgment and Order for

Sale of Property

Part I – 4 Confirmation Order

Part I – 5 VRCP Rule 80.1

Part I – 6 Memo on Amendments to Fore-

closure Law

Part II – 1 Brown v. Branch Banking &

Trust

In re Brown

Part II – 2 Moore v. BAC Home Loan

Svc’ing LP

In re Moore

Part II – 3 Parker v. Mitchell

Part II – 4 Report of the Permanent Edito-

rial Board for the Uniform

Commercial Code

Application of the Uniform Commercial Code

to Selected Issues Relating to Mortgage Notes

Part II – 5 VT LBR 4001-1(g)

Part II – 6 Foreclosure by Judicial Sale

Flowchart

Part II – 7 Judgment and Decree of Fore-

closure by Judicial Sale

Part II – 8 Confirmation Checklist, April

2013

Part II – 9 Strict Foreclosure Flowchart

Part II – 10 Draft Judgment and Decree for

Strict Foreclosure Cases

Part III – 1 Homeowner Petition

Part III – 2 Homeowner Plan

Part III – 3 Creditor Objection to the Plan

Part III – 4 Homeowner Reply to Objection

to the Plan

Part III – 5 Taylor Case In re Leilani Taylor

Part III – 6 Max Gardner Quote Comment on CMP Plans

Part IV – 1 Summary of Proposed Vt.

Mediation Statute

Part IV – 2 VT LBR 4001-7 Mortgage

Mediation Program

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Part V – 1 Foreclosure Sale Pleadings Notice of Sale; Report of Sale; Motion to Con-

firm Sale; Confirmation Order; Purchase

Agreement

Part V – 2 Notice of Foreclosure Sale Sale Pursuant to Court Order

Part V – 3 Notice of Foreclosure Sale Foreclosure by Non-judicial Sale

Part V – 4 Auction Purchase and Sale

Part V – 5 Purchase and Sale Agreement

Part V – 6 Key dates in the foreclosure

process for the title examiner

Part V – 7 Practice tips for purchasing dis-

tressed property

Part VI – 1 A brief summary of Bankruptcy

Avoidance Sections

Part VI – 2 Avoiding Defective Mortgages

in Chapter 13

Part VI – 3 Motion for Order Authorizing

Sale Pursuant to 363(b) (f) and

(m)

Part VI – 4 Exhibits in support of Motion

for Order Authorizing Sale

Part VI – 5 Order Authorizing Sale Pursu-

ant to 363(b) (f) and (m)

Part VI – 6 Trustee’s Deed

Part VI – 7 Lawlor Judgment Order

Part VI – 8 VT LBR 6004-1 Local Rules on Sale of Estate Property

STATE OF VERMONT SUPERIOR COURT CIVIL DIVISION Rutland Unit Docket No. S553-11CnC MCG SERVICES, LLC, as Trustee ) For Mortgage Conduit Investment Trust #2791C, ) ) Plaintiff, ) v. ) ) HUBERT HOMEOWNER, ) HILDA HOMEOWNER, and LOCAL ) CREDIT UNION, ) Defendants. )

ANSWER We are responding to this Complaint as best we can. We knowing anything about the law

and can’t afford a lawyer.

1. We deny the allegations about who is suing us because as far as we know we had

a mortgage with BigMortgageCompany, LLC. We got lots of different letters from different

servicers and other parties about where we should send our payments, and sent them when we

could afford to.

2. We deny that we should be found in default because we did our best to pay when

we could and asked the mortgage company to help us out but they never responded. We sent

documents into the mortgage company but someone from India told us on the phone that the

papers got lost on the way there.

3. We deny that foreclosure should be allowed because we can make some payments

as soon as one of us can get another job.

We ask the court to please deny foreclosure because it is not our fault we could not make

some of the payments and the mortgage company should understand that everyone is better off if

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we are allowed to stay in the property and make payments once the job market improves and we

can make more income.

Date:

__________________________ Hubert Homeowner ________________________ Hilda Homeowner 14120086

STATE OF VERMONT

SUPERIOR COURT CIVIL DIVISION ____________ UNIT DOCKET NO. _________ ____________________ ) ) Plaintiff, ) ) v. ) ) ____________________ ) ) Defendants. )

CONFIRMATION ORDER

A Judgment and Decree of Foreclosure was entered on September 4, 2012. Upon

consideration of the Report of Sale and Motion for Confirmation filed by Plaintiff, and with

reference to the public sale held on December 14, 2012,

It is ORDERED, ADJUDGED, and DECREED as follows:

1. That the power of sale was duly executed pursuant to 12 V.S.A., chapter 172, subchapter 3, that statutory requirements of notice were met and the conduct of the sale met statutory requirements for a public sale, and that the sale price for the property of $________________ is reasonable under the circumstances and is confirmed;

2. That the premises which were the subject of the sale are described as follows:

[property description] 3. That the sale as reported is hereby confirmed and title to the premises shall be

transferred to ___________________. 4. That the parties whose interests are hereby foreclosed are:

___________________________________, and all persons claiming under them, and Plaintiff is entitled to a writ of possession, to be issued by the Clerk upon request, against possession by these parties.

5. That title shall transfer to ________________________ free and clear of the

interests of the above named defendants and any other parties who have recorded interests in the property which arose after the filing of the Complaint for

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Foreclosure in the land records and who did not intervene in this action, but subject to any liens for property taxes and municipal assessment.

6. That the recording of this order shall effectuate the transfer of title to the above-

described premises to _______________________. Dated at _____________________, Vermont this ____ day of January, 2013.

______________________________ Presiding Judge

13871092.1

Rule 80.1. Foreclosure of Mortgages and Judgment Liens.

Vermont Rules

RULES OF CIVIL PROCEDURE

XI. SPECIAL RULES FOR CERTAIN ACTIONS

As amended through October 31, 2011

Rule 80.1. Foreclosure of Mortgages and Judgment Liens

(a) Remedy in Ejectment Abolished. The action of ejectment for foreclosure of a mortgage is

hereby abolished. Proceedings for foreclosure shall be by civil action under the Rules of Civil

Procedure as modified by this rule. Complaint; Process.

(1) Complaint. The complaint in an action for foreclosure shall set forth the name of the mortgagor

and mortgagee, the date of the mortgage deed, the description of the premises, the debt or claim

secured by the mortgage, any attorney's fees claimed under an agreement in the mortgage or

other instrument evidencing indebtedness, any assignment of the mortgage, the condition

contained in the mortgage deed alleged to have been breached, the names of all parties in interest

and, as to each party in interest, the date of record of the instrument upon which the interest is

based, shall pray that defendants' equity of redemption in the premises be foreclosed and explain

that the defendant or defendants must enter their appearance in order to receive notice of the

foreclosure judgment which will set forth the amount of money they must deposit to redeem the

premises and the period of time allowed them to deposit this amount. The plaintiff shall attach to

the complaint copies of the original note and mortgage deed and proof of ownership thereof,

including copies of all original endorsements and assignments of the note and mortgage deed.

The plaintiff shall plead in its complaint that the originals are in the possession and control of the

plaintiff or that the plaintiff is otherwise entitled to enforce the mortgage note pursuant to the

Uniform Commercial Code. All parties in interest shall be joined as parties defendant. Failure to

join any party in interest shall not invalidate the action nor any subsequent proceedings as to

those joined. A claim for foreclosure in an action under this paragraph may not be joined with a

claim for a deficiency except when a defendant in the answer has requested foreclosure pursuant

to a power of sale in the mortgage.

(2) Service of Process. The summons and complaint shall be served upon all persons joined as

parties defendant by any appropriate method provided in Rule 4 of these rules, except that if the

present whereabouts of a person claiming an interest in the premises by virtue of an attachment

thereof under judicial process cannot by due diligence be ascertained so as to permit service in

person by mail under Rule 4(d), (e), (f), or (k), the summons and complaint may be served

personally upon the person's attorney of record in the proceeding in which such attachment was

levied. If service cannot by due diligence be made by any of the foregoing methods it may be

made by publication as provided in Rule 4(g).

(3) Notice to be Served and Filed with Summons and Complaint. Subdivision (b)(3) effective until

December 31, 2011. A copy of the notice appended to this paragraph must be served and filed as

the top page of the summons and complaint in any action to foreclose a mortgage on a residence.

If the notice is not incorporated, the clerk will not accept the complaint for filing under Rule 3, and

the summons and complaint may not be served by an officer, attorney, or other authorized person

under Rule 4.

NOTICE TO HOMEOWNER

THIS IS A FORECLOSURE CASE AGAINST YOU.

YOU MAY LOSE YOUR HOME.

THE VERMONT SUPREME COURT REQUIRES THAT THIS NOTICE BE GIVEN TO YOU.

THIS IS NOT LEGAL ADVICE.

________________________________________________________________________

TO BE INFORMED OF THE NEXT STEPS IN THE COURT CASE, YOU MUST GIVE THE

COURT YOUR MAILING ADDRESS AS SOON AS POSSIBLE. THE COURT'S ADDRESS IS ON

THE "SUMMONS" ATTACHED TO THIS NOTICE.

READ THE SUMMONS THAT IS PART OF THE PACKAGE OF PAPERS ATTACHED TO THIS

NOTICE. IT EXPLAINS OTHER IMPORTANT INFORMATION ABOUT YOUR COURT CASE.

YOU SHOULD ALSO TALK TO A LAWYER IF POSSIBLE.

TO GET FREE HELP IN WORKING WITH YOUR LENDER TO TRY TO KEEP YOUR HOME, OR

IN DECIDING WHETHER YOU CAN AFFORD TO KEEP YOUR HOME, YOU CAN CALL THE

NUMBERS BELOW:

1. Vermont Homeownership Centers: (call the one closest to your residence)

Barre Office: 802-476-4493 www.cvclt.org

Brattleboro Office: 802-246-2109 www.windhamhousingtrust.org

Burlington Office: 802-660-0642 www.getahome.org

Lyndonville Office: 802-535-3554 www.NEKHome.org

Rutland Office: 802-438-2303 www.nwwvt.org

Springfield Office: 802-885-1856 www.raclt.org

St. Albans Office: 802-527-2361 www.getahome.org

2. Vermont Department of Banking, Insurance, Securities & Health Care Administration

(BISHCA):

Tollfree Mortgage Assistance Program 1-888-568-4547

(c) Summary Judgment; Default. If within the time allowed under Rule 12(a) a party defendant

files a verified answer or answer supported by affidavits, disclosing facts alleged to constitute a

defense to plaintiff's claim, plaintiff may within 10 days after service of the answer move for

summary judgment. The complaint shall be treated as though supported by affidavit and the

matter shall proceed as provided in Rule 56. The clerk shall enter a default, in accordance with

Rule 55(a), against any defendant who fails to file such answer.

(d) Adjudication of Claims. The court shall adjudicate all claims of party defendants necessary to

establish a redemption schedule, or otherwise necessary to formulate a judgment of foreclosure,

prior to the entry of such judgment.

(e) Time of Redemption. The time of redemption shall, unless otherwise ordered, be as provided

by law and shall run from the date of the entry of judgment. Motions to shorten the time of

redemption may be filed and served with the complaint or at any time during the course of the

proceedings. Such motions shall be heard on oral testimony, unless otherwise ordered by the

court, with reasonable notice to those parties who have appeared.

(f) Accounting; Attorney's Fees. If default has been entered as provided in subdivision (c) and

the parties have not agreed upon the sum due and included it in a form of judgment, the clerk,

upon request of the plaintiff accompanied by an affidavit as to the amount due and upon six days'

notice to all parties who have appeared, shall proceed to take an accounting and find the amount

of principal, interest to date, and costs due. Such accounting shall be made upon forms furnished

by the state. If defendant is an infant or incompetent person, a plaintiff entitled to judgment by

default shall proceed as provided in Rule 55(b)(2). If the entry is not by default, an accounting shall

be taken at such time and in such manner as the court may order. Reasonable attorney's fees

claimed by the plaintiff under the mortgage or other instrument evidencing indebtedness in an

amount not exceeding two percent of the total of principal, interest, and costs due, or in a greater

amount expressly agreed upon in the mortgage or other instrument, shall be allowed and included

in the amount found due to the accounting without hearing, unless defendant objects, or plaintiff

claims a higher fee in the demand for judgment. Upon such objection or claim, attorney's fees

shall be set by the court after notice and hearing.

(g) Judgment.

(1) Form; Entry. Plaintiff shall file and serve upon all named defendants who have appeared a

form of judgment together with a copy of any accounting taken in accordance with subdivision (f)

of this rule, within 30 days after the entry of default or, if the case has been heard, within such time

as the court may order. The court shall thereupon proceed in accordance with Rule 58 to approve

and sign the form of judgment, and the clerk shall enter it. The judgment shall set forth the amount

agreed to be due by the parties or found due at the accounting. The amount necessary to redeem

the mortgaged premises shall include interest on the amount, exclusive of interest, found due at

the accounting from the date of the accounting until the date of redemption. Such interest shall be

calculated at the rate provided in the mortgage or other evidence of indebtedness, or at the rate

allowed on judgments by law, whichever is higher. The form of judgment must contain the

following statement in bold print: "If you wish to appeal this judgment, you must request

permission to appeal by motion filed with the Court within ten days of the date of entry of

the judgment not including that date or Saturdays, Sundays, or legal holidays."

(2) Owner-occupied Residences of Four Units or Less. In any foreclosure action involving a

dwelling house of four units or less that is currently occupied by the owner as a principal residence

at the time a foreclosure judgment or confirmation order is applied for:

(A) A judgment and decree of foreclosure may not issue, or if a decree has been issued a sale will

not be confirmed by the court, until plaintiffs counsel has submitted a Certification of Counsel in

the following form:

[heading and caption]

CERTIFICATION OF COUNSEL

I, ____________, certify as follows:

I am an attorney duly licensed to practice in the state of Vermont and am the attorney of record for

plaintiff in the above-captioned mortgage foreclosure action. As such, I am fully aware of the

proceedings in this case.

On ____________ (date) I communicated with ____________ (name and title), a representative of

plaintiffs who informed me that [he] [she] (a) has personally reviewed plaintiff's documents and

records relating to this case; (b) has reviewed the summons and complaint and affidavits and

other papers filed in this matter in support of foreclosure; and (c) has confirmed both the factual

accuracy of these court filings and the accuracy of the notarizations contained therein.

Based upon my communication with the named representative, as well as upon my own inspection

of the papers filed with the court and other diligent inquiry, I certify that, to the best of my

knowledge, information, and belief, the summons, complaint, affidavits, and all other documents

filed in support of this action for foreclosure are complete and accurate in all relevant respects.

I understand my continuing obligation to amend this Certification in light of newly discovered facts

following its filing. I understand that the court will rely on this Certification in considering any

motion or request for relief.

Dated: __________________ Signed: __________________

(B) A judgment and decree of foreclosure may not issue in a case in which plaintiff's counsel or

plaintiff has submitted an affidavit for default, summary judgment, or amounts due, unless the

affidavit is signed by or on behalf of the plaintiff and states the following:

(i) the title and status of the affiant as employee or agent, as well as the fact that the affiant is

authorized to act for the plaintiff in the proceeding and a description of the source of such authority

(and, if by power of attorney or corporate resolution, a copy must be attached);

(ii) that the affiant has personally reviewed the records relating to the affidavit and has personal

knowledge of the facts set forth in the affidavit; and

(iii) a description of the records reviewed to determine the facts set forth.

(C) The court may request supplemental documents relating to the authority of the signer of any

affidavit or document to execute the instrument and may request supplemental information

regarding the relationship between the entity and the plaintiff or any other matter related to

adjudication of the case.

(D) Until all required affidavits have been filed, any sales of the property shall be stayed and the

court shall not issue or authorize the issuance of foreclosure decrees, certificates of

nonredemption, confirmations of sale, or writs of possession.

(h) Foreclosure by Sale. When foreclosure by sale is authorized and has been requested in

accordance with law, the plaintiff shall provide in the form of judgment for the sale of the premises

upon the expiration of the time of redemption. The form of judgment shall prescribe (1) the place

and date of the sale, (2) the person who shall conduct the sale, (3) the terms upon which the sale

is to be made, (4) whether the premises are to be sold as a whole or in parcels, (5) the notice to

be given of said sale as provided by law, and (6) the custodian of the proceeds of the sale pending

confirmation by the court.

(i) Appraisal of the Premises. The plaintiff in the form of judgment may provide for, or the court

upon motion of a party at any time thereafter may order, an independent appraisal made of the fair

market value of the premises.

(j) Proceeds of the Sale; Surplus, Deficiency.

(1) Surplus. In the event that the proceeds of the sale, after first deducting the reasonable

expenses incurred in making the sale, exceed the amount due the plaintiff as determined by the

court or by the clerk as provided in subdivision (f) of this rule, the court in its order of confirmation

shall provide for the payment of the surplus to other parties defendant in order of the priority of

their liens and to the defendant mortgagor. Each party defendant shall be entitled to the principal

amount secured by his lien, interest to date, expenses of collection as authorized by law, and

costs. If the amount secured by any lien is disputed, the court may issue a partial confirmation

order including the provisions specified in subdivision (k) and an authorization that the sale

expenses, the claim of the mortgagee and the claim of any persons with interests superior to that

in dispute be paid. The court shall issue a final confirmation order to distribute the remaining

proceeds. In the event that the proceeds of the sale exceed the amount due the plaintiff and the

amounts due other parties defendant, the excess shall be paid to the defendant mortgagor.

(2) Deficiency. In the event that the proceeds of the sale are insufficient to meet the expenses

incurred in making the sale and the amount due the plaintiff, the court shall provide in its order of

confirmation for the payment of the reasonable expenses incurred in making the sale and the

payment of the balance of the proceeds to the plaintiff on account of the amount due the plaintiff. If

the plaintiff so requests in the complaint, the court may assess a judgment against the mortgagor

for the deficiency. Where the mortgagee is the purchaser at the sale, any deficiency shall be

limited to the difference between the fair market value of the premises at the time of sale, as

determined by the court based on the appraisal provided in subdivision (i) and such other

evidence as may be received, and the amount due the plaintiff plus the reasonable expenses

incurred in making the sale.

(k) Order of Confirmation; Form. The order of confirmation shall state the names of all persons

whose interest in the premises is foreclosed, including the defendant mortgagor, the plaintiff

mortgagee and all parties defendant whose liens are junior to that of the plaintiff mortgagee; the

name of the person to whom title is to be transferred; a legal description of the premises; and the

name of each party defendant, if any, whose interest is superior to that of the plaintiff mortgagee

and subject to whose interest in the premises the same are transferred.

(l) Foreclosure of Judgment Liens. This rule shall apply to foreclosure of a judgment lien

pursuant to statute. In such an action, the complaint shall state the name of the judgment creditor

and the judgment debtor; a description of the judgment to include the court, docket number of the

underlying action, the date of issuance and the amount; the amount of the outstanding debt; the

date and place of recording of the judgment; a description of the property; whether the amount of

the outstanding debt is claimed to exceed the value of the real property being foreclosed; an

allegation that the judgment lien has not been satisfied in accordance with law and a prayer that

defendant's equity of redemption in the property be foreclosed and, if appropriate, that the

property be sold.

(m) Permission to Appeal. When the judgment is for foreclosure of the mortgage, the permission

to appeal, required by law, shall be requested by motion filed within 10 days of the date of the

entry of the judgment or order to be appealed from. The running of the time for filing a motion is

terminated to the extent provided, and for the reasons stated, in V.R.A.P. 4. The running of the

time of redemption shall be tolled and the effectiveness of the judgment shall be stayed when a

motion is filed under this subdivision and continue until the motion to appeal is decided adversely

to the moving party or until the appeal is decided. The court may condition the appeal or the stay

under this subdivision upon such terms as to bond or otherwise as it considers proper for the

security of the rights of the adverse party.

History. Amended March 12, 1975, eff. April 1, 1975; Dec. 11, 1980, eff. Feb. 2, 1981; Dec. 28, 1981, eff. March 1,

1982; Jan. 9, 1985, eff. March 15, 1985; Nov. 9, 1987, eff. March 1, 1988; Oct. 19, 1999, eff. Dec. 31, 1999; June 28,

2001, eff. Sept. 1, 2001; Dec. 17, 2008, Jan. 1, 2009; Dec. 10, 2009, Jan. 1, 2010; 2009, No. 132 (Adj. Sess.), § 13,

eff. July 1, 2010; Dec. 21, 2010, eff. Dec. 21, 2010.

Note:

Reporters Notes-2009 Emergency Amendment

Rule 80.1(b)(3) is added as an emergency amendment to provide relief to homeowners faced with foreclosure in the

present financial situation. The number of foreclosures has been increasing in Vermont as it has across the country.

Resources are available through state and nonprofit agencies to assist homeowners in such cases. Most foreclosure

defendants are unrepresented and may not be aware of these resources, or learn of them in time to take effective

advantage of them. The amended rule will require plaintiffs filing residential foreclosure actions to include as the top

page to be served with all foreclosure complaints the following notice (in the same format and font size), a copy of

which must also be filed with the court. Failure to include the form will result in refusal of the summons and complaint

for service and filing.

Reporter's Notes-2010 Amendment

The emergency amendment adding V.R.C.P. 80.1(b)(3) to require a notice informing defendants in residential

foreclosure cases of free resources available to assist them in trying to arrange to keep their homes, or, where

appropriate, make the most favorable arrangements for selling the homes and paying off the debt, was promulgated

on December 17, 2008, effective January 1, 2009, with a direction that the Civil Rules Advisory Committee report on

any comments received by September 30, 2009. No comments were received. The rule has been found beneficial

and is continued for two additional years while other amendments to Rule 80.1, designed to allow it to operate more

fairly in the present financial climate, are being considered.

Reporter's Notes-2010 Emergency Amendment

Rule 80.1(g) is amended to address a pressing problem that has emerged in recent months. There have been public

disclosures, both in the media and in individual cases filed in Vermont courts, that affidavits filed by lenders and

servicers in foreclosure cases have contained significant inacurracies. These have included statements that the

affiants had reviewed files they had not reviewed, statements that affiants had reviewed attached military service

records that were actually dated after the date of the affidavit, and notarizations by notaries who had not witnessed

the signatures they were notarizing. These inacurracies in numerous affidavits raise serious questions for judges

about the reliability of all of the other information in the affidavits, and about the reliability of affidavits filed in other

cases. The problem is especially acute, because many lenders are national concerns with which Vermont counsel

have little or no personal contact, and the affidavits are often the basis for the granting of summary judgment or

default motions, or for the amounts the borrowers are ordered to pay to save the property from foreclosure in

situations in which the property is the borrower's primary residence. The amended rule is necessary to establish

statewide uniformity in dealing with these matters.

Accordingly, former Rule 80.1(g) is designated Rule 80.1(g)(1), and Rule 80.1(g)(2) is added to make special

provision, consistent with 12 V.S.A. §4531a(a), for all foreclosure actions involving owner-occupied residences of four

units or less. In these actions, subparagraph (2)(A) provides that judgment and decree will not issue or a sale will not

be confirmed until plaintiff's counsel certifies, in a form set out in the amended rule, that counsel's communication with

a plaintiff's representative, inspection of papers that have been filed, and other diligent inquiry have established the

completeness and accuracy of all documents supporting the claim to the best of counsel's knowledge, information,

and belief. This certification is a specific application of the requirements of Rule 11 to the foreclosure situation. The

terms of the certification make clear that it must be updated in light of factual changes and will be relied upon by the

court.

Further, subparagraph (2)(B) provides that judgment and decree will not issue on the basis of an affidavit submitted

for the plaintiff to support default, summary judgment, or amounts due unless the affidavit sets forth the status and

authority of the affiant and the affiant's personal review of specific records and personal knowledge of the facts sworn

to. Under subparagraph (C), the court may request supplemental documents or information concerning these matters

and other issues, such as standing, that the affidavits do not resolve. Subparagraph (D) provides that, until all required

affidavits have been filed, sales of the property are stayed, and the court may not issue or authorize issuance of

foreclosure decrees, certificates of non-redemption, confirmations of sale, or writs of posession.

To: Lobe & Fortin Foreclosure Clients

From: Joshua B. Lobe, Esq.

Re: 2012 Statutory Revisions to Vermont Foreclosure Process

Date: May 17,2012

A. INTRODUCTION

This month the Govemor signed Vermont Bill H-403 into law. This bill

recodifies Vermont's foreclosure statute. For the most part, the bill addresses the form of

the statute rather than implementing new substantive requirements. Under prior law, the

three types of Vermont's foreclosure Gudicial strict foreclosure, judicial foreclosure by

sale, non-judicial foreclosure) were not separately codified. This created great confusion

as to the applicability of various portions of the foreclosure statute in different types of

foreclosure. However, certain substantive changes have been made and will be outlined

herein. Please be aware that no new documentary requirements are imposed on

servicers as a result ofthis legislation.

B. SUBSTANTIVE CHANGES

The overwhelming majority of foreclosures conducted within the State of

Vermont are Foreclosures by Judicial Sale. All of the foreclosures conducted by this

office are by Judicial Sale. For that reason, this memo outlines changes to Vermont's

foreclosure statute as they pertain to Judicial Sale only. A complete copy of the bill as

passed, is attached and can be referred to relative to changes pertaining to Judicial Strict

Foreclosure or Non-Judicial Foreclosure. Changes to the Judicial Sale process are as

follows:

1. 12 VSA § 4946(a) is amended to require that the judicial sale take place

within six months of the expiration of the redemption period set forth in the decree,

unless otherwise amended by Court order. This is a codification of prior language in the

standard foreclosure decree which was not previously mandated by statute.

2. 12 VSA § 4946(d) is amended to provide that a writ of possession shall be

issued where non-owner occupied property after the expiration of the redemption period

and prior to confirmation of sale. In the case of owner-occupied properties, issuance of a

wlit at such time is discretionary with the Court.

3. 12 VSA § 4947(b) eliminates a 30-day requirement for the recording of a

certified copy of the judgment order in the land records in order to extinguish the interest

ofliens filed after the lis pendens. Under new law, the certified copy of the judgment

order must still be required but the 30-day requirement is eliminated. Significantly, this

will prevent situations where the benefit of the lis pendens is lost due to failure to comply

with time requirement previously imposed.

4. 12 VSA § 4948 has been amended to specifically allow the reinstatement

of the mortgage after the expiration of redemption period and prior to sale. Prior law was

interpreted by the title companies, to create a defect in title when reinstatement occurred

under such circumstances. This statute eliminates any such defect. This new statutory

section will expand the loss mitigation options by explicitly allowing mortgagors to

revert to their pre-foreclosure position as if no foreclosure had occurred.

5. 12 VSA § 4949 has been added to explicitly provide that a property may

be redeemed upon agreement of the parties for less than the amount required by the

foreclosure decree. This new statutory section explicitly allows for redemption in short

sale situations.

6. 12 VSA § 4951 provides that any foreclosure judgment may be vacated

and the parties will be restored to their original pre-foreclosure positions. This generally

allows any type of loss mitigation workout after the expiration of the redemption period

and prior to judicial sale. Significantly, the statutory section is effective retroactively and

applies to any such workouts which have taken place prior to the passage of the new law.

7. 12 VSA § 4942(c) amends the notice requirement to mortgagor prior to

sale. The procedure changes to one notification given not less than 30 days prior to the

foreclosure sale date. Under prior law, two notices were required. One 60 days prior to

sale and the second 21 days prior to sale. This section will allow sales to take place more

quickly after expiration of the redemption period.

8. 12 VSA § 4943. This new statutory section allows the foreclosure sale to

be adjourned for one or more times for a total of not more than 30 days without Court

Order or additional publication.

9. 12 VSA § 4943(c). This new statutory section explicitly states that neither

the mortgagee, nor its designee shall not be required to pay the deposit required at

foreclosure sale.

10. 12 VSA § 4954 makes the post-sale confirmation hearing discretionary

with the Court rather than mandatory.

11. 12 VSA § 4954(d). This statute codifies prior court procedure where the

deficiency judgment must be requested at the time of confinnation or the request waived.

12. 12 VSA § 4954(e). This new statutory section allows the property to be

sold to the second highest bidder in the event the high bidder at sale does not complete

the sale transaction.

C. EFFECTIVE DATE

The effective date of the above changes is effective with foreclosures filed on or

after July 1, 2012. As mentioned above, those provisions allowing post redemption

workouts are effective retroactively.