06 Jun Louisiana and New Hampshire Legislative and Colorado, New York and Texas Regulatory Update
The Louisiana legislature amended Louisiana laws governing the erasure or cancellation of mortgages effective August 1, 2012. The New Hampshire legislature recently amended the exemptions under the Licensing of Nondepository First Mortgage Bankers and Brokers Act (the “New Hampshire Act”) effective May 29, 2012 and enacted legislation governing debt-related mortgage disability and mortgage accidental death insurance, effective July 28, 2012. The Colorado Board of Mortgage Loan Originators (the “Board”) recently issued a Position Statement addressing the definition of a “mortgage company” under the Colorado Mortgage Loan Originator Licensing and Mortgage Company Registration Act (the “Colorado Act”), effective May 22, 2012. New York Emergency Regulations were extended effective May 17, 2012. The Texas Department of Savings and Mortgage Lending issued a Policy Notice onMay 9, 2012.
LOUISIANA HOUSE BILL 170
If a bankruptcy court order authorizing the sale of property free and clear of all judgments, mortgages, and privileges does not specify the discharged judgments, mortgages, or privileges to be cancelled, the trustee or former trustee in the proceedings, or his or her attorney of record, may specify by affidavit which discharged judgments, mortgages, or privileges are to be partially cancelled as to the particular property subject to the order. The affidavit and a Request to Cancel must be filed with the bankruptcy court order. The affidavit must contain all of the following information:
- A statement that the debtor filed a petition under the United States Bankruptcy Code.
- The name of the court where the bankruptcy proceeding was filed.
- The date on which the petition was filed.
- A statement that the debt or debts upon which the judgment, mortgage, or privilege is based were listed in the bankruptcy proceeding.
- A description of the particular property to be released and a statement that the property is free and clear of all judgments, mortgages, or privileges.
- A listing of the judgments, mortgages, or privileges, including the clerk’s office identification by instrument number, book, or folio.
- A certified copy of the bankruptcy court order.
NEW HAMPSHIRE HOUSE BILL 408
An attorney licensed in Hampshire performing activities that are within the definition of a loan originator is exempt from the New Hampshire Act provided that the activities are considered by the New Hampshire Supreme Court to be part of the authorized practice of law in New Hampshire, carried out within an attorney-client relationship, and accomplished by the attorney in compliance with all applicable laws, rules, ethics, and standards. However, if this exemption is construed by a governing federal agency to conflict with any federal law, rule, or governing federal agency interpretation promulgated under the Fair and Secure Enforcement for Mortgage Licensing Act of 2008, the exemption will be superseded.
NEW HAMPSHIRE SENATE BILL 253
A group of individuals may be insured under a mortgage disability or mortgage accidental death policy issued to a creditor, or to the trustee of a creditor, which creditor or trustee will be deemed the policyholder, to insure debtors of the creditor or creditors, subject to the following requirements:
- The debtors eligible for insurance under the policy must be all the debtors of the creditor or creditors whose indebtedness is repayable in installments, or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness. The policy may provide that the term “debtors” will include the debtors of one or more subsidiary corporations, and the debtors of one or more affiliated corporations, proprietors, or partnerships if the business of the policyholder and of the affiliated corporations, proprietors, or partnerships is under common control through stock ownership, contract, or otherwise.
- The premium for the policy will be paid by the policyholder, either from the creditor or creditor’s funds, or from charges collected from the insured debtors, or from both.
- The amount of indemnity payable with respect to any debtor must at no time exceed the amount owed by the debtor, which is repayable in installments to the debtor’s creditor.
- The insurance will be payable to the policyholder. The payment will reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment.
All of the provisions of the Unfair Insurance Trade Practices law, and specifically the provision governing unfair methods, acts, and practices, will apply to any mortgage disability or mortgage accidental death insurance policy.
COLORADO DIVISION OF REAL ESTATE POSITION STATEMENT MB 1.9
“Mortgage company” means a person other than an individual who, through employees or other individuals, takes residential loan applications or negotiates terms of a residential mortgage loan.
The Position Statement concerns entities that do not, through employees or other individuals, takes residential loan applications or offer or negotiate terms of residential mortgage loans to borrowers in Colorado.
The Board views the definition of a mortgage company to exclude the following entities:
- Persons, other than an individual, who meet all of the following requirements:
- Funds a residential mortgage loan when the residential mortgage loan application was taken by a licensed or exempt person;
- Does not take residential mortgage loan applications or does not offer or negotiate terms of a residential mortgage loan;
- Does not solicit borrowers in Colorado for the purpose of making residential mortgage loans; and
- Does not participate in the offering or negotiation of residential mortgage loans with the borrower, except for setting the terms under which a person may buy or fund a residential mortgage loan originated by a licensed person;
- Private mortgage insurance companies that provide contract underwriting services to the lending community; or
- Lead generating companies that do not, through employees or other individuals, take residential mortgage loan applications or offer or negotiate terms of a residential mortgage loan to prospective borrowers.
Since the above entities are excluded from the definition of a mortgage company, they are not required to register under the Colorado Act.
NEW YORK EMERGENCY REGULATION PART 420 and SUPERVISORY PROCEDURES MB 107
Our January 25, 2010, March 22, 2010, August 10, 2010, December 16, 2010, March 24, 2011, June 30, 2011, September 29, 2011, and March 23, 2012 Compliance Memorandums discussed Emergency Regulations issued by the New York Superintendent of Financial Institutions (the “Superintendent”) addressing mortgage loan originator licensing and application requirements. The Superintendent recently extended the Emergency Regulations through August 12, 2012.
TEXAS DEPARTMENT OF SAVINGS & MORTGAGE LENDING POLICY NOTICE RE: 7TAC 79.2, REQUIRED DISCLOSURE
Our January 6, 2012 Compliance Memorandum discussed 7 TAC 79.2, which requires residential mortgage loan servicer registrants to provide the borrowers with a disclosure advising them where to send complaints regarding the servicing of the borrower’s loan. This disclosure is available on the Texas Department of Savings & Mortgage Lending Department’s (“Department”) website at:
http://www.sml.texas.gov/ResidentialMortgageLoanServicer/documents/rmls_news_information/rmls_required_disclosure_statement.pdf. The Department recently issued a Policy Notice clarifying the disclosure.
The purpose of the disclosure is to ensure that borrowers clearly know how and to whom they make a complaint concerning the servicer of the borrower’s mortgage loan. The rule as written requires the disclosure to be included in all correspondence provided to the borrower.
The Department requires that the disclosure be provided to the borrower within 30 days of commencement of servicing the loan and to be sent to the borrower annually. The annual disclosure may be contained on the annual escrow statement or other correspondence sent in the normal course of business, providing it is clear and conspicuous.
The disclosure need not be included in literally all correspondence provided to the borrower.