The legal picture just got brighter for homeowners facing foreclosure in the District.
Yesterday, the D.C. Office of the Attorney General (“OAG”) put teeth into the provision of D.C. law that requires a lender to record its interest in a property. In an enforcement statement issued labeled “Statement of Enforcement Intent Regarding Deceptive Foreclosure Sale Notices,” OAG stated that a foreclosure notice that contains the standard language that the security interest is duly recorded, when that interest has not been duly recorded, is misrepresenting a material fact in violation of the D.C. Consumer Protection Procedures Act. The Statement is strengthened by a clarification that each prior assignment of interest must also be recorded (presumably so that a homeowner can ascertain whether or not the current holder properly obtained the note). The icing on the cake, however, is that the Statement explicitly states that “a document that lists MERS [Mortgage Electronic Registration System] as a nominee, but does not identify the actual holder of the security interest, will not suffice.” Many lenders have contended that registration with MERS makes recording their interest with the state recorder of deeds unnecessary.
Although this statement does not change the law in D.C., it gives advocates and homeowners a strengthened position from which to challenge foreclosures where all of the assignments of the security interest in the property have not been recorded. Hopefully, it will change the behavior of lenders who will now have an additional reason to follow the recording laws of D.C. Anyone facing foreclosure can go to the Recorder of Deed’s website at https://gov.propertyinfo.com/DC-Washington/ or go its offices at 1101 4th Street, SW, 5th Floor, Washington, D.C. 20024 to see what interests have been recorded against their property. Although homeowners will still have to affirmatively raise this issue in court, the Statement should help bolster their arguments that only a lender who has followed all of the relevant laws in D.C, should be able to foreclose on their homes.