SENATE BILL 30
52nd legislature - STATE OF NEW MEXICO - first session, 2015
INTRODUCED BY
Michael Padilla
AN ACT
RELATING TO REAL PROPERTY; ENACTING THE HOME LOAN LOSS MITIGATION SERVICING STANDARDS ACT; PROHIBITING CERTAIN ACTS; REQUIRING OPPORTUNITY FOR MITIGATION OF LOSS; REQUIRING CERTAIN ACTIONS PRIOR TO FORECLOSURE; PROVIDING FOR REMEDIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Home Loan Loss Mitigation Servicing Standards Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Home Loan Loss Mitigation Servicing Standards Act:
A. "borrower" means a natural person obligated to repay a home loan, including a co-borrower, cosigner or guarantor;
B. "creditor" means a person that makes or holds a home loan, including a servicer but not the seller in a real estate sales contract or reverse mortgage that is otherwise binding pursuant to New Mexico law;
C. "home loan" means a loan, including an open-end credit plan, other than a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by the federal national mortgage association and where the loan is secured by:
(1) a mortgage or deed of trust on real estate in this state upon which there is located or there is to be located a structure:
(a) designed principally for occupancy by one to four families; and
(b) that is or will be occupied by a borrower as the borrower's principal residence; or
(2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence;
D. "loss mitigation" means an alternative to foreclosure offered by the servicer of a home loan that is available through the servicer to the borrower;
E. "robo-signing" means signing foreclosure documents without reviewing and verifying the information contained in the documents as required by law;
F. "servicer" means a person who collects or receives payments, including principal, interest and trust items such as hazard insurance, property taxes and other amounts due, who is the creditor or a person acting on behalf of the creditor in accordance with the terms of a home loan and who works with a borrower on behalf of a creditor to implement available loss mitigation options when the borrower is in financial hardship or default;
G. "single point of contact" means an employee of the servicer whom a borrower can reach by telephone, who has knowledge of the borrower's loan and its status, who provides continuity of contact and who assists the borrower with loss mitigation and foreclosure processes; and
H. "small servicer" means a servicer that services five thousand or fewer home loans nationally.
SECTION 3. [NEW MATERIAL] SMALL SERVICERS EXCEPTED.--The Home Loan Loss Mitigation Servicing Standards Act applies to all home loans except home loans serviced by a small servicer.
SECTION 4. [NEW MATERIAL] PROHIBITED PRACTICES AND PROVISIONS REGARDING HOME LOANS.--
A. Robo-signing is prohibited by the Home Loan Loss Mitigation Servicing Standards Act.
B. A servicer is prohibited from making the first notice or filing required for foreclosure until a home loan is more than one hundred twenty days delinquent.
C. If a home loan is more than one hundred twenty days delinquent and the borrower submits an application for a loss mitigation option before a servicer has made the first notice or filing required for foreclosure, the servicer shall not start foreclosure proceedings unless:
(1) the servicer has reviewed and evaluated the application and has informed the borrower that the borrower is not eligible for any loss mitigation option and any appeal has been exhausted;
(2) the borrower has rejected all loss mitigation offers; or
(3) the borrower fails to comply with the terms of a loss mitigation agreement.
D. If a borrower submits a complete application for a loss mitigation option after foreclosure proceedings have commenced but more than thirty-seven days before a scheduled foreclosure sale, a servicer may not move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until one of the conditions in Subsection C of this section has been satisfied.
SECTION 5. [NEW MATERIAL] LOSS MITIGATION REQUIRED.--
A. No later than thirty-six days after the date of delinquency of a home loan, a servicer shall:
(1) notify the borrower in writing of all available loss mitigation options that are applicable to the borrower's home loan;
(2) notify the borrower in writing of the borrower's right to submit a loss mitigation application if the servicer provides any loss mitigation options;
(3) provide loss mitigation applications and procedures or guidelines that will be used to evaluate the application, including deadlines and a list of documents required to be submitted by the borrower;
(4) provide a current list of contact information for certified mortgage delinquency and default resolution housing counseling agencies that employ housing counselors certified in loss mitigation by the federal department of housing and urban development who are located in New Mexico; and
(5) provide a twelve-month history or a history from the date of delinquency, whichever is longer, of how payments or partial payments have been applied, including the date each payment was received and any action the servicer will take in the event of partial payment.
B. Within forty-five days of the date of delinquency of a home loan, the servicer shall provide the name, mailing address, phone number, facsimile number and email address for the servicer's single point of contact for that borrower. The single point of contact shall:
(1) communicate the process by which the borrower may apply for an available loss mitigation option, the deadline for application and any required submissions to be considered for the loss mitigation option;
(2) respond within three business days after the borrower's inquiry regarding the current status of the borrower's home loan and loss mitigation application;
(3) ensure that the borrower is considered for all loss mitigation alternatives, if any, offered by the servicer; and
(4) provide any other assistance necessary for the borrower to pursue loss mitigation options.
C. A servicer shall acknowledge in writing receipt of a loss mitigation application within five business days and inform the borrower whether the application is complete and, if not, what information is needed to complete the application.
D. When a servicer receives the information needed to complete a loss mitigation application, the servicer shall evaluate the application for all loss mitigation options for which the borrower may be eligible and provide the borrower with a written decision within thirty days.
E. If a loss mitigation application is denied, written notice shall include a detailed explanation of the reasons for denial and the financial calculations that were the basis for the denial.
F. All written and oral communication with the borrower by the servicer required by the Home Loan Loss Mitigation Servicing Standards Act shall be in a language the borrower can understand.
SECTION 6. [NEW MATERIAL] ENFORCEMENT OF PROVISIONS AND ENACTMENT OF RULES.--The financial institutions division of the regulation and licensing department shall:
A. enforce the provisions of the Home Loan Loss Mitigation Servicing Standards Act and, after consulting with the attorney general, shall adopt such rules as are necessary to implement that act; and
B. promulgate multilingual versions of the notices and disclosures required by the Home Loan Loss Mitigation Servicing Standards Act and provide the notices and disclosures to servicers.
SECTION 7. [NEW MATERIAL] REMEDIES.--If a court finds that there has been a material violation of any provision of the Home Loan Loss Mitigation Servicing Standards Act by a servicer, the court may:
A. halt foreclosure proceedings until the servicer complies with the requirements of the law;
B. dismiss the action;
C. impose sanctions, attorney fees and costs; and D. order any other relief provided by law.
SECTION 8. SEVERABILITY.--If any part or application of the Home Loan Loss Mitigation Servicing Standards Act is held invalid, the remainder or its applications to other situations or persons shall not be affected.
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