27 May Connecticut and Maryland Legislative Update
The Connecticut legislature recently amended its laws governing mortgage servicers, mortgage loan originators, financial institutions, reverse mortgage transactions, and foreclosure mediation. This memorandum will discuss those provisions effective May 14, 2014, unless otherwise stated. The Maryland legislature recently passed legislation, effective June 1, 2014, prohibiting the state or any political subdivision from acquiring a mortgage or deed of trust by condemnation from June 1, 2014 to May 30, 2016. The legislature also mandated a study of ways to restore equity to underwater homeowners.
CONNECTICUT HOUSE BILL 5353
“Branch office” now includes a location at which a licensee or any person on behalf of a licensee acts as a mortgage loan originator.
The requirements under any federal or state law regarding the privacy or confidentiality of any information or material provided to the Nationwide Mortgage Licensing System and Registry (“NMLSR”) and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to such information or material, continue to apply to the information or material after the information or material has been disclosed to the NMLSR. The information and material may be shared with all federal and state regulatory officials with mortgage or other financial services industry oversight authority without the loss of privilege or the loss of confidentiality protection provided by federal or state law.
A surrender of a license on the NMLSR is not effective until the request to surrender is accepted by the Banking Commissioner.
The provisions regarding the foreclosure mediation program have been extended to July 1, 2016 (previously July 1, 2014). Effective July 1, 2014, the foreclosure mediation program will be funded with available appropriations and available until June 30, 2016. The size of the program will be determined by available funding and the number and need of participants in the program.
The Chief Court Administrator will develop a premediation review protocol according to which a mediator must request that any documents submitted to the mediator for initial review that are incomplete, contain errors, or are likely to be found unacceptable by the lender be completed or corrected and that the completed or corrected documents be resubmitted to the mediator for review.
The premediation review, including any recommendations to complete or correct documents, must not be construed to be the practice of law on behalf of any party to the mediation or the provision of legal advice by the mediator.
A task force has been established to study the reverse mortgage industry. The study will include, but not be limited to, an examination of:
- State-wide best practices of the reverse mortgage industry, including, but not limited to, the practices concerning consumer protection;
- Existing federal regulations and any proposed new or revised federal regulations governing consumer protection requirements in the context of reverse mortgage transactions; and
- Any decisions rendered by a federal court, Connecticut court or other state court that impact the reverse mortgage industry and reverse mortgage transactions in Connecticut.
Not later than January 1, 2015, the task force must submit a report on its findings and recommendations to the joint standing committees of the legislature having awareness of matters relating to banks and aging. The task force will terminate on the date that it submits such report or January 1, 2015, whichever is later.
MARYLAND SENATE BILL 850
The Department of Housing and Community Development (“Department”) will conduct a study of ways of restoring equity for underwater homeowners. The study will identify and evaluate methods, including the use of eminent domain by local governments, for restoring equity to homeowners with private label securities in their mortgages who have been unable to obtain mortgage loan modifications that would allow the homeowners to keep their homes.
In conducting the study, the Department will:
- Monitor the development of and legal challenges to the use of eminent domain to assist underwater homeowners in other parts of the country;
- Hold a minimum of 2 public hearings; and
- Consult, as appropriate, with:
- Housing counselors;
- State and local elected officials;
- Local housing departments;
- Local government legal counselors;
- Homeowners and their advocates;
- Civil rights and community organizations;
- Legal experts; and
- Any other stakeholders identified by the Department.
On or before November 1, 2015, the Department will report on the results of the study and on any recommendations the Department has on ways of restoring equity to underwater homeowners with private label securities.