Law Office of Melanie Murray Mfume, LLC -
Resources for District of Columbia
The FTC cracks down on forensic loan audits, finding that the audits were unlikely to help homeowners in default. Click here for full text of the article.
As soon as you determine that you will have problems making your mortgage payment, contact your loan servicer to see what your loan assistance options are.  Note:  your servicer is the entity that sends you your monthly mortgage statements and who you pay your monthly mortgage payments to. The servicer is not necessarily the same entity that owns your loan.  The entity that owns your loan is called the secured party or the investor.
  • Home Affordable Modification Program (HAMP)
  • Investor/in-house/traditional modification
  • Repayment plan
  • Forebearance
  • Assumption
  • Home Affordable Foreclosure Alternative (HAFA)
  • Short sale
  • Deed-in-Lieu
  • Deed-for-lease
  • Cash for Keys
  • SUN Initiative Program
If your loan is owned or guaranteed by Fannie Mae or Freddie Mac, you must be reviewed for a HAMP modification.
If your servicer is participating in HAMP, your loan must be reviewed for HAMP, however it will be the investor's decision as to whether you are approved for a HAMP modification.
To see if your servicer is participating in any HAMP or HAFA programs, visit the Making Home Affordable website.
Visit Making Home Affordable at to conduct your own net present value (NPV) evaluation of your mortgage for the Home Affordable Modification
Program (HAMP).
Borrowers can input the values provided in the Notice of Non-Approval received after
being denied for a HAMP modification or substitute with estimated NPV values to
compare the respective outcomes.
Please note that this calculator provides only an estimate of the servicer's NPV
IMPORTANT: IF YOU ARE NOT WORKING WITH A HOUSING COUNSELOR, GET A HOUSING COUNSELOR!  Please see below for information on finding an approved non-profit housing counselor in your area.

One of the most important things to remember is that there is a difference between being in "foreclosure status" with your mortgage servicer and being in legal foreclosure.  Once you are served with the Complaint to Foreclose, your case is now in legal foreclosure and you are a party to a lawsuit.  At this point, you are responsible for timely participating in your modification/work out situation with your servicer AND timely participating in your foreclosure case in the court. (NOTE:  the lender has an should too!)
Servicer - This is the entity that sends you your monthly mortgage statements and it is who you send your payments to.  The servicer is not necessarily the entity that owns your loan.
Investor / Secured Party - This is the entity that owns your loan. The investor/secured party is not necessarily the entity that services your loan.
Substitute Trustee - These are the individuals that are acting as the foreclosing attorneys on behalf of the investor for your loan. The Substitute Trustees will be the named Plaintiffs on the Order to Docket.
Notice of Default - This document is the very first document that the lender must send to the borrower and file with the Recorder of Deeds Office in order to commence the foreclosure mediation process with DISB. The notice will contain the lender's information, the current unpaid principal balance, the past due payments, penalties, amount required to reinstate the loan. The Notice of Default will include contact information for housing counselors, a description of available loss mitigation programs, loss mitigation application and a Mediation Election Form.

Notice of Intent to Foreclose - This document is the official notice of the foreclosure sale date and must be sent to the borrower and record owners via certified and first class mail. The Notice of Intent must also be filed in the Recorder of Deeds Office along with the Final Mediation Certificate.

Reinstatement - This is the amount of money (for arrears, late fees, attorney's fees and costs) that you can pay to immediately bring the loan current. Note: it will take the substitute trustee and/or the bank a few days to obtain this figure so do not wait until the day before the foreclosure sale to request it.  By law, you are permitted to reinstate the loan up to one (1) business day prior to the foreclosure sale. 

Modification - This loss mitigation option changes or "modifies" terms of your mortgage loan.  Changes can include interest rate reduction, term extension, capitalization of the arrears (when the arrears are added to the back of the loan) and/or principal reduction or deferment. A modification does not remove any named borrowers from the loan nor does it extinguish a named borrower's responsibility for repaying the loan (even if that borrower has executed a quit claim deed and no longer owns the property).

Forbearance - This loss mitigation option allows you to make a reduced mortgage payment for a short period of time. Once the period expires, you will be required to resume making the regular monthly payment and possibly more.  You will still owe the remainder of the monthly payment that is actually due during the forbearance period, so be sure to confirm when and how you will pay that back. A forbearance does not change any term of your loan.

Repayment plan - This loss mitigation option allows you to pay off the arrears over a set period of time (typically one (1) year).  The servicer may or may not require an upfront contribution.  You will still make your regular mortgage payment during the repayment period so the total amount that you will pay monthly will be higher than what you normally pay.  A repayment plan does not change any term of your loan.

Assumption - This option allows someone to "assume" or step into the shoes of the named borrower and take complete responsibility for repaying the loan. Not many investors offer assumptions because it is less risky for them to have more than one (1) person responsible for paying the loan.  Assumption is the only option that removes a named borrower from the loan.

Short sale - This liquidation option requires the borrower to list the property for at least 90 days in an attempt to procure a buyer.  The property will be listed at an amount that is less than fair market value and/or less that what is owed on the loan so there may be a deficiency issue. Be sure that you are working with a realtor that is a short sale specialist.  You will still be required to apply for short sale consideration with your servicer by submitting your listing agreement and your financials. Be sure to have an attorney review the short sale agreement and ask for a deficiency waiver. Your investor will have to approve the purchase price for the property (after a sales contract is executed) in order for the short sale to go through. Note: there is no legal authority requiring an investor to accept any short sale offer.  There is no guarantee that the short sale offer will be accepted by your investor. Your property will not be eligible for short sale if there are other liens on the property.

Deed-in-lieu - This liquidation option permits you to "give the property to the bank". You will be required to attempt to short sale the property prior to being considered for a deed-in-lieu. You will also be required to apply for deed-in-lieu consideration by submitting your financials to the servicer.  Note: this option is not automatic and is subject to a review process. Be sure to have an attorney review the deed-in-lieu agreement and ask for a deficiency waiver. Your property will not be eligible for short sale if there are other liens on the property.

Deficiency - This is the amount of money that represents the difference between the purchase price for the property and what is still owed on the loan. You are still legally responsible for repaying this amount but you can ask that the investor waive the deficiency. Note: do not let anyone tell you that a deficiency waiver is automatic because it is not!  If the deficiency is waived, there may be tax consequences so consult with a tax professional.  The servicer will issue you a 1099 form if the deficiency is waived. NOTE: the federal Mortgage Debt Forgiveness Relief Act expired December 31, 2013. Consult a CPA or tax attorney to determine whether you will have to pay income tax on a deficiency balance that has been waived.

Cash for Keys - This post-liquidation option refers to the amount of money that the purchaser (at the foreclosure sale) will offer you as consideration for agreeing to leave the property by a certain date and without destroying the property (it must be left in broom-swept condition).  Not every purchaser will offer cash for keys but be sure to ask about it both before and after the foreclosure sale. The more time that is required to move out typically means a reduction in the amount of money offered.


Effective November 5, 2013, the new Saving DC Homes From Foreclosure Clarification and Title Insurance Clarification Amendment Act of 2013 changed the scope of foreclosure in the District of Columbia yet again.  A lender may now elect to either either participate in foreclosure mediation through the Department of Insurance, Banking and Securities (DISB) or file a Complaint to Foreclose in the Superior Court.  The processes are very different and place different obligations on the lender and borrower.


One of the most important things to note about the mediation law is that once offered by the lender, the borrower must CHOOSE to participate in mediation. It is not automatic!
The Substitute trustee or agent must send the borrower and record owner of the property a Notice of Default by regular mail.  The Notice of Default must include: (a) contact information through which the borrower can reach an agent or representative of the lender that can explain the mediation process; (b) a recommendation that the borrower seek housing counseling services: (c) contact information for at least one (1) local HUD approved housing counseling agency; (d) a description of all loss mitigation options that the lender offers and the eligibility requirements for those programs; (e) a loss mitigation application and instruction for completing the application; (f) a Mediation Election Form; and (g) envelopes addressed to the lender and Mediation Administrator. 
Within two (2) business days of sending the Notice of Default to the borrower, the lender must send the Notice of Default and Mediation Election Form to the Mediation Administrator and must record both forms with the Recorder of Deeds of the District of Columbia.
The lender cannot proceed with foreclosure prior to obtaining a final mediation certificate from the Mediation Administrator.  If a borrower does not elect to participate in mediation, a final mediation certificate will be issued permitting the trustee to move forward with scheduling the foreclosure sale. 

After obtaining a mediation certificate, the Substitute trustee or agent must send borrower and record owner a Notice of Intent to Foreclose by certified and regular mail at least thirty (30) days prior to the foreclosure sale.  This notice will also be filed with the Recorder of Deeds.
For more information, visit the Department of Insurance, Securities and Banking.
If the borrower does provide notice that he/she wants to participate in foreclosure mediation by timely returning the Mediation Election Form and Loss Mitigation Application (and non-refundable $50 fee), mediation will be scheduled
  • The Mediation Election Form that comes with Notice of Default, as well as the requested documents (see below), must be returned to the Mediation Administrator within 30 days of the date that the form was mailed
Mediation is only available for owners of residential properties which are improved by four or fewer single family dwellings, including condominiums  or cooperative units that receive a Notice of Default on Residential Mortgage.
What to expect at mediation
The mediation session will be conducted by a mediator. The mediator is there to help build understanding about the dispute, think about solutions, and reach an agreement. The mediator is a neutral party and therefore cannot make any decisions about the dispute. Think of the of mediator as more of a referee or counselor.
Mediation is not a court hearing or official proceeding despite the fact that the actual mediation session may be held inside of a courthouse.
All discussions that occur during mediation are confidential and cannot be used in any subsequent court proceedings. Additionally, the mediator cannot be called as a witness in any subsequent court proceedings.
If the lender sends a representative to mediation, that representative must have the authority to negotiate and/or modify the terms of the loan.

Document exchange
The following documents must accompany the Mediation Election Form that is returned to the Mediation Administrator:
  • Most recent signed federal tax return (including schedules and attachments).
  • W-2.
  • Last two (2) pay stubs.
  • Any other documentation of household income including benefit statements, bank statements, alimony or child support documentation.
  • Non-refundable $50 fee.
The following documents must accompany the Mediation Election Form that is returned to the lender
  • Completed loss mitigation application
  • Most recent signed federal tax return (including schedules and attachments).
  • W-2.
  • Last two (2) pay stubs.
  • Any other documentation of household income including benefit statements, bank statements, alimony or child support documentation.

The lender must provide documents including but not limited to NPV calculation, FDIC mod in a box calculation, proof of standing, and applicable portion of investor guidelines relative to loss mitigation options.

What to expect after mediation

No later than ten (10) days after the final mediation, the mediator must submit a report to the Mediation Administrator stating that the matter should be deemed concluded.

No later than ten (10) days after receiving the mediator's report, the Mediation Administrator will either: (1) issue a Preliminary Mediation Certificate (if the lender participated in good faith); (2) issue a determination that the lender did not participate in good faith; or (3) refer the matter to another mediator.  NOTE: Good faith is a term specifically defined by D.C. Code 42-815.02.

The parties have thirty (30) days to appeal the Mediation Administrator's decision to the Superior Court. All foreclosure activity is stayed during the appeal period.

If no appeal is taken by the borrower, the lender may request a Final Mediation Certificate.  If no appeal is taking by the lender, the decision becomes final and the Notice of Default becomes null and void.

 If the lender elects to proceed with judicial foreclosure, the Substitute Trustee will file the Complaint to Foreclosure in the Superior Court for the District of Columbia. NOTE:  this is a lawsuit. Borrowers/record owners are strongly cautioned against not fully and timely participating in the court process. There will be multiple hearing dates, status hearing dates and mediation dates during the foreclosure case. Please visit the D.C. Bar website for a list of pro bono legal service providers that may be able to assist you.

What to expect in court

All borrowers and record owners of the property must be named as defendants and served.  The service of process will include the date of the Initial Conference in the Superior Court. 

If borrower/record owner does not file an Answer to the Complaint, a Notice of Default will be issued by the court and will provide the date of the Initial Conference. All defendants MUST attend the Initial Conference!

Mediation with Multi-Door Dispute Resolution Division

At the Initial Conference, the borrower/record owner will notify the court regarding his/her desire to participate in mediation. If mediation is not requested, the court can proceed with setting relevant dates for the remainder of the case in preparation for trial.

If mediation is requested, the court will issue an Early Mediation Scheduling Order. This order will provides dates that the loss application must be provided to the borrower and when the borrower must return the application to the lender's attorney.The court may schedule a status hearing in order to address issues of compliance if not all documents were returned or received.

Two (2) weeks prior to mediation, a Confidential Mediation Statement (CMS) must be filed with Multi-Door Dispute Resolution Division.  The CMS is confidential and serves only to provide the mediator with background on the borrower/record owner situation and what the borrower/record owner wants to resolve the situation.  The lender's attorney will never see the CMS.

If an agreement is reached at mediation, the mediator will draft the agreement during mediation.

After mediation, if no agreement is reached, the court will schedule a status hearing to either allow the loss mitigation process to move forward or to assign a case track and Scheduling Order providing for relevant dates for the remainder of the case in preparation for trial.

Visit Housing Counseling Services, Inc., a nonprofit housing counseling agency that can assist you with submitting your loss mitigation package to your servicer.

Visit District of Columbia HomeSaver Phase I(for mortgage assistance) and Phase II Restore Program (for property tax arrears) to determine if you qualify for financial assistance from the District.

Visit Neighborhood Works, a nonprofit organization that provides legal services to
families fighting to save their homes from foreclosure.  Neighborhood Works provides
comprehensive information about emergency loan assistance, how to locate a
HUD approved housing counselor near you, scam alerts and information about the
HAMP program.
Visit Hope Now for additional homeowner resources, listings of events in your
area, HOPE hotline information and housing counselor information.
For a list approved non-profit housing counselors, visit the Department of Housing and Urban Development.
Visit Bread for the City  for a information regarding how to meet with an attorney in their free legal clinic.
Realtors are notorious for giving incorrect legal advice. Realtors should not be giving
legal advice beyond the logistics of actually effectuating the sale of the property.
Always consult with an attorney for issues related to sales contracts, closing documentation, waiver of deficiency, filing bankruptcy or other legal issues.
Always consult with a tax professional for issues related to loan forgiveness or waiver of deficiency.
If you are considering short selling your property, make sure that you are working with a realtor that is a "short sale specialist".  

There are online search vehicles that may assist you in locating new housing. As with any business arrangement, be sure to do your homework and make sure that your prospective landlord is reputable and has a valid rental license.

Beware of scams! Confirm that the property actually exists and is owned by the purported landlord. Confirm that the landlord's agent and/or property manager is validly licensed with the state. Do no sign a lease or transfer funds for deposit or rent until you have visited the property and met with the landlord, agent or property manager in person.

Rule of thumb....if it sounds to good to be true it usually is!  No person, not even an
attorney can guarantee that you will receive a loan modification.
Housing counselors are the best resource to assist you in applying for a loan modification
(see "Free Resources" section above).
Do NOT stop paying your mortgage or redirect mortgage payments through any other
person or entity.If your servicer stops accepting your mortgage payments because you are in default, deposit the funds that you would have applied toward your mortgage payment into a separate savings account.
If you paid a company to obtain a loan modification for you, or you have been a victim of
foreclosure rescue scam, visit the Department of Insurance, Banking and Securities to file a complaint.