SENATE BILL 46
56th legislature - STATE OF NEW MEXICO - first session, 2023
Katy M. Duhigg
RELATING TO FINANCIAL INSTITUTIONS; ENACTING THE WRONGFUL FORECLOSURE PROTECTION ACT; DEFINING TERMS; PROVIDING REQUIREMENTS FOR FORECLOSURE COMPLAINTS; PROHIBITING CERTAIN CONDUCT; PROVIDING CIVIL REMEDIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new Section 58-21C-1 NMSA 1978 is enacted to read:
"58-21C-1. [NEW MATERIAL] SHORT TITLE.--Chapter 58, Article 21C NMSA 1978 may be cited as the "Wrongful Foreclosure Protection Act"."
SECTION 2. A new Section 58-21C-2 NMSA 1978 is enacted to read:
"58-21C-2. [NEW MATERIAL] DEFINITIONS.--As used in the Wrongful Foreclosure Protection Act:
A. "borrower" means a person who is liable for a home loan or who is alleged to be liable for a home loan;
B. "home loan" means a loan, including an open-end credit plan, a reverse mortgage transaction or the modification, novation or reaffirmation of any such 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;
C. "homeowner" means a person who owns the property that is subject to a foreclosure suit or home loan or who is alleged to own the property that is subject to a foreclosure suit or home loan;
D. "manufactured home" means a structure, transportable in one or more sections, that in the traveling mode is eight body feet or more in width or forty body feet or more in length or, when erected on site, is three hundred twenty or more square feet and that is built on a permanent chassis and designed to be used as a dwelling with a permanent foundation when erected on land secured in conjunction with the real property on which the manufactured home is located and connected to the required utilities and includes the plumbing, heating, air conditioning and electrical systems contained therein. "Manufactured home" includes any structure that meets all the requirements of this subsection except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the secretary of the federal department of housing and urban development and complies with the standards established under the federal National Manufactured Housing Construction and Safety Standards Act of 1974. "Manufactured home" does not include rental property, second homes or manufactured homes when not secured in conjunction with the real property on which the manufactured home is located;
E. "misleading statement" means an oral or written representation or omission of any kind that is false, is misleading or tends to mislead any person, including any court official, and that could be or is material to the enforceability of a home loan or the outcome sought or obtained in the foreclosure judgment;
F. "person" means a natural person, corporation, trust, partnership, association, cooperative association, club, company, firm, joint venture, syndicate and any representative, agent or assignee of that person or entity; and
G. "time-barred" means a home loan that is unenforceable because the time for filing a lawsuit in New Mexico to enforce the home loan has expired."
SECTION 3. A new Section 58-21C-3 NMSA 1978 is enacted to read:
"58-21C-3. [NEW MATERIAL] FORECLOSURE COMPLAINTS--REQUIREMENTS.--In addition to any other requirement provided by law, a complaint for foreclosure shall include:
A. the amount of principal and interest currently owed on the home loan;
B. the amount of any additional fees, costs or sums, other than principal and interest, currently owed on the home loan;
C. the date of the first default that forms the basis of the foreclosure complaint;
D. the date of the last payment made and, if applicable, the date of the last payment that was attempted to be made;
E. the dates of all instances in which the home loan was accelerated or in which the periodic payments owed on the home loan were demanded to be repaid at once;
F. the dates of all instances in which the home loan was decelerated or in which the borrower or homeowner was allowed to resume periodic payments after a demand for repayment of the full amount of the home loan had been made;
G. whether the borrower or homeowner has applied for loss mitigation options and whether any requests for loss mitigation are pending at the time of filing; and
H. whether the home loan is time-barred or the person filing to enforce the home loan has reason to believe the home loan may be time-barred."
SECTION 4. A new Section 58-21C-4 NMSA 1978 is enacted to read:
"58-21C-4. [NEW MATERIAL] PROHIBITED CONDUCT.--
A. A person shall not make a misleading statement or omission of fact or law in a complaint for foreclosure of a home loan or in any motion for summary or default judgment filed when seeking foreclosure of a home loan.
B. A person shall not obtain or attempt to obtain from any borrower or homeowner any payment, admission, affirmation, acknowledgment, promise to pay or waiver of any claims or defenses related to any home loan that the person knows or has reason to know is time-barred, unless the person first discloses clearly and conspicuously the following information to the borrower or homeowner in writing:
(1) that the home loan is or may be unenforceable through a lawsuit because the time for filing has expired or may have expired;
(2) that the borrower or homeowner cannot be required to pay the home loan through a lawsuit if the home loan is time-barred;
(3) that the borrower or homeowner is not required by the law to make any admission, affirmation, acknowledgment of, payment or new promise to pay the home loan; or to waive any of the borrower's or homeowner's rights with regard to the effect of the running of any applicable statute of limitations; and
(4) an explanation of the legal consequences of any payment or promise of payment, admission, affirmation or acknowledgment of the home loan; or the waiver of the borrower's or homeowner's legal rights or claims with regard to the revival of an otherwise time-barred home loan."
SECTION 5. A new Section 58-21C-5 NMSA 1978 is enacted to read:
"58-21C-5. [NEW MATERIAL] CIVIL ACTION--REMEDIES.--
A. A borrower, a homeowner or the representative of a borrower's estate or a homeowner's estate may bring a civil action for a violation of the Wrongful Foreclosure Protection Act to recover or obtain:
(1) actual damages, including compensatory, consequential and incidental damages;
(2) additional statutory damages equal to five thousand dollars ($5,000) or ten percent of the amount of the loan, judgment or lien, whichever is higher, for each discrete violation;
(3) punitive damages for violations that are willful, malicious or reckless;
(4) costs and reasonable attorney fees paid or incurred, as determined by the court; and
(5) injunctive, declaratory and other such relief as the court deems appropriate in an action to enforce compliance with the Wrongful Foreclosure Protection Act.
B. The civil action and remedies provided in this section are not exclusive and are in addition to any other action or remedies available to a borrower under any other applicable law.
C. A civil action based on this section need not be brought in the foreclosure suit and may be brought as a counterclaim in the foreclosure suit or as a separate claim in a separate proceeding.
D. A claim or civil action based on this section shall be brought no later than four years after the date of the entry of the judgment or the date of the foreclosure sale for the property or, if no judgment is obtained or no sale takes place, four years after the date of the violation.
E. In a civil action based on this section, a defendant to a claimed misleading-statement violation of the Wrongful Foreclosure Protection Act shall not rely on a defense of litigation privilege or other common-law assertion that the misleading statements are not actionable because they were made in the context of a lawsuit."
SECTION 6. A new Section 58-21C-6 NMSA 1978 is enacted to read:
"58-21C-6. [NEW MATERIAL] LIBERAL INTERPRETATION--CONFLICT.--The Wrongful Foreclosure Protection Act shall be liberally construed to carry out its purpose. In the event of a conflict between a requirement of the Wrongful Foreclosure Protection Act and a requirement of the Home Loan Protection Act, the requirement of the Home Loan Protection Act shall control."
SECTION 7. A new Section 58-21C-7 NMSA 1978 is enacted to read:
"58-21C-7. [NEW MATERIAL] PROSPECTIVE APPLICATION.-- Claims arising solely from acts or omissions that occurred prior to the effective date of this 2023 act may not be brought pursuant to the Wrongful Foreclosure Protection Act."
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