Homeowners have five business days to void a "stop foreclosure " contract under the Idaho Consumer Foreclosure Protection Act that took effect July 1.
But Meridian-based attorney Lance Churchill says the law - detailed in Idaho Code 45-16 - lacks a provision found in some other states' similar laws. He teaches real estate investment and asset protection through his Frontline Seminars entity. Many states have a similar cooling or rescission period, along with an exception saying the period can be shortened if a foreclosure auction is scheduled within five days after the contract is signed, he said. Such an exception would allow a home to be sold before it is lost at auction, he said.
The Idaho law's five-day waiting period protects consumers, Churchill said. "Many times, these decisions are made in haste or under pressure," he said.
"Offers that would have bought the home and cured the default cannot be closed until five days have passed. For the meantime, within the five-day period, the home could be sold at foreclosure auction," he said.
This situation would arise rarely, said Anthony Polidori, senior examiner with the Idaho Department of Finance Consumer Finance Bureau. "From our experience, we haven't seen those types of entities get involved that late in the foreclosure process," Polidori said.
The Idaho Department of Finance said in a statement that the Idaho Consumer Foreclosure Protection Act aims to address foreclosure rescue scams "in which innocent homeowners facing foreclosure are defrauded of their title, equity interest, or other value in their homes" by companies promising to postpone or stop a foreclosure sale.
The new law states all contracts entered while a home is in foreclosure must be in writing. It requires warnings about foreclosure rescue scams to be included in foreclosure notification papers and in any written contract.
As for the five-day rescission period, Idaho Code 45-16 reads, in part, that the consumer "has the right to cancel or rescind any and all contracts or agreements relating to such property entered into during the foreclosure period within five business days of entering into such contract or agreement. Neither funds nor an interest in the property shall be transferred until the five days have passed. Cancellation occurs when such person gives written notice of cancellation to all other parties to the contract." Senate Bill 1392 was passed the Idaho Legislature this year. It was sponsored by Sen. Elliot Werk (Dem.) and Representatives Bill Killen (Dem.) and Phylis King (Dem.), all of Boise.
Difficulties in timing a foreclosure-curing sale with a quickly approaching foreclosure auction could arise regardless of the cooling period's length, Werk said. "The cooling period is really important for the people who have the home that is in foreclosure," he said. "You want to give them the opportunity to sit back and evaluate the decisions they are making, and to perhaps seek legal counsel and counsel from family or friends."
Owners of such properties should act as soon as they encounter difficulty, before the foreclosure process starts, Werk said. Legislators will follow the new law and consider whether it needs to be amended later, he said.
Default filings remained high in June in Ada and Canyon counties, IdahoDataProviders.com said in a report. Monthly filings peaked in the two-county area in April. IdahoDataProviders viewed May's decline as a positive sign for the local real estate market.
"However, foreclosure filings for second quarter are back up to previous levels, continuing the trend of steadily non stop foreclosures," the company said in a release. Ada County saw 224 default notices filed June, down 8 filings from May. But the June total was the fourth highest since January 2007 and compared to 101 in June 2007. Canyon County saw 165 default notices filed in June compared to 113 a month earlier and 64 in June 2007. "These new foreclosure numbers support IDP's position that the number of Idaho homes entering into foreclosure will continue to climb for the rest of 2008," the company said.
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