13 Aug Maine Legislative Update
The Maine legislature recently enacted laws amending the foreclosure process and the Maine Fair Debt Collection Practices Act (“Act”), effective September 17, 2014.
MAINE LEGISLATIVE DOCUMENT 1389 (H.P. 992)
A person assigning rights in or connected with title to foreclosed real property for which a deed is not given, including rights as high bidder at the public sale, must report the assignment to the register of deeds in the county or counties in which the real property is located within 30 days of the assignment on a return in the form of an affidavit furnished by the State Tax Assessor (“Assessor”).
The Assessor will provide for the collection of the tax in the same manner as if the assignment were a transfer of real property by deed. The return must be signed by both the transferor and the transferee and accompanied by payment of the tax due.
When the real property is located in more than one county, the tax must be divided among the counties in the same proportion in which the real property is distributed among the counties. Disputes between 2 or more counties as to the proper amount of tax due to them as a result of a particular transaction must be decided by the Assessor upon the written petition of an official authorized to act on behalf of any such county.
The provisions above apply to assignments made during the time between the judgment of foreclosure and the transfer of the foreclosed real property by deed.
In the event of a transfer, by deed, assignment or otherwise, to a third party at a public sale, the real estate transfer tax imposed upon the borrower applies only to that portion of the proceeds of the sale that exceeds the sums required to satisfy in full the claims of the lender and all junior claimants originally made parties in interest in the proceedings or having subsequently intervened in the proceedings as established by the judgment of foreclosure and sale.
In the event of a transfer, by deed, assignment or otherwise, from a lender or its servicer to the lender or its servicer or to the owner of the mortgage debt at a public sale, the lender or its servicer, if the servicer is the selling entity, is considered to be both the grantor and grantee.
In the event of a deed in lieu of foreclosure and a deed from a lender or its servicer to the lender or its servicer or to the owner of the mortgage debt at a public sale, the tax applies to the value of the property.
“Servicer” means a person or entity that acts on behalf of the owner of a mortgage debt to provide services related to the mortgage debt, including accepting and crediting payments from the borrower, issuing statements and notices to the borrower, enforcing rights of the owner of a mortgage debt, and initiating and pursuing foreclosure proceedings.
The lender in a judicial foreclosure action may present evidence of abandonment and may request a determination that the mortgaged premises have been abandoned if:
- More than 50% of the mortgaged premises is used for residential purposes; and
- The mortgaged premises are the subject of an uncontested foreclosure action or an uncontested foreclosure judgment has been issued with respect to the premises and a foreclosure sale regarding the premises is pending.
An action or judgment is uncontested if:
- The borrower has not appeared in the action to defend against foreclosure;
- There has been no communication from or on behalf of the borrower to the lender for at least 90 days showing any intent of the borrower to continue to occupy the premises or there is a document of conveyance or other written statement, signed by the borrower, that indicates a clear intent to abandon the premises; and
- Either all lenders with interests that are junior to the interests of the lender have waived any right of redemption or the lender has obtained or has moved to obtain a default judgment against the junior lenders.
Evidence of abandonment showing that the mortgaged premises are vacant and the occupant has no intent to return may include, but is not limited to, the following:
- Doors and windows on the mortgaged premises are continuously boarded up, broken or left unlocked;
- Rubbish, trash or debris has observably accumulated on the mortgaged premises;
- Furnishings and personal property are absent from the mortgaged premises;
- The mortgaged premises are deteriorating so as to pose a threat to public health or safety;
- A lender has changed the locks on the mortgaged premises and neither the borrower nor anyone on the borrower’s behalf has requested entrance to, or taken other steps to gain entrance to, the mortgaged premises;
- Reports of trespassers, vandalism, or other illegal acts being committed on the mortgaged premises have been made to local law enforcement authorities;
- A code enforcement officer or other public official has made a determination or finding that the mortgaged premises are abandoned or unfit for occupancy;
- The borrower is deceased and there is no evidence that an heir or personal representative has taken possession of the mortgaged premises; and
- Other reasonable indicators of abandonment.
The lender may at any time after commencement of a foreclosure action file with the court a motion to determine that the mortgaged premises have been abandoned.
If the court finds by clear and convincing evidence, based on testimony or reliable hearsay, including affidavits by public officials and other neutral nonparties, that the mortgaged premises have been abandoned, the court may issue an order granting the motion and determining that the premises are abandoned.
The court may not grant the motion if the borrower or a lawful occupant of the mortgaged premises appears and objects to the motion. The court will vacate the order if the borrower or a lawful occupant of the mortgaged premises appears in the action and objects to the order prior to the entry of judgment.
Upon the issuance of an order of abandonment determining that the mortgaged premises are abandoned:
- The foreclosure action may be advanced on the docket and receive priority over other cases as the interests of justice require;
- The period of redemption is shortened to 45 days from the later of the issuance of the judgment of foreclosure and the order of abandonment;
- If the mortgaged premises include dwelling units occupied by tenants as their primary residence, the lender must assume the duties of landlord for the rental units upon the later of the issuance of the judgment of foreclosure and the order of abandonment; and
- The lender must notify the municipality in which the premises are located and must record the order of abandonment in the appropriate registry of deeds within 30 days from the later of the issuance of the judgment of foreclosure and the order of abandonment.
The provisions above regarding the order of abandonment for residential properties in foreclosure apply to foreclosure actions pending as of September 17, 2014.
Except when otherwise required under the loss mitigation procedures of federal Regulation X (“Regulation X”), a public sale must be held not less than 30 days nor more than 45 days after the first date of that publication.
Except for sales of premises that the court has determined to be abandoned, a public sale may be adjourned for any time not exceeding 7 days and from time to time until a sale is made, by announcement to those present at each adjournment.
For sales of premises that the court has determined to be abandoned, the public sale may be adjourned once for any time not exceeding 7 days, except that the court may permit one additional adjournment for good cause shown. Adjournments may also be made in accordance with Regulation X.
A person may not commence an action against the validity of a governmental taking of real estate for nonpayment of property taxes upon the expiration of a 5-year period immediately following the expiration of the period of redemption. This provision applies to a tax lien recorded after October 13, 2014.
A person may not commence an action against the validity of a governmental taking of real estate for nonpayment of property taxes after the earlier of the expiration of a 15-year period immediately following the expiration of the period of redemption and October 13,
2019. This provision applies to a tax lien recorded after October 13, 1993 and on or before October 13, 2014.
“Debt collector,” among other inclusions, under the Act, includes any person regularly engaged in the enforcement of security interests securing debts, including a repossession company and a residential real estate property preservation provider.
“Residential real estate property preservation provider” under the Act means a person who regularly provides residential real estate property preservation services. “Residential real estate property preservation provider” does not include a supervised financial organization, a supervised lender, a person licensed by the Plumbers’ Examining Board, a person licensed by the Electricians’ Examining Board, a person licensed by the Department of Professional and Financial Regulation as a financial institution, a person licensed by the Maine Fuel Board, or a person licensed by the Real Estate Commission.
“Residential real estate property preservation services” under the Act means those services undertaken at the direction of a person holding or enforcing a mortgage on residential real estate that is in default or in which the property is presumed abandoned in entering or arranging for entry into a building to perform the services of winterizing the residence, changing the door locks, or removing unsecured items from the residence.
Except in the case of a residential real property preservation provider:
- A debt collector acting on behalf of a lender may take possession of collateral only if possession can be taken without entry into a dwelling, unless that entry has been authorized after default and without the use of force or other breach of the peace; and
- A debt collector must inventory any unsecured property taken with repossessed collateral and immediately notify the borrower that the property will be made available in a manner convenient to the borrower.
A residential real estate property preservation provider may enter into a dwelling only if authorized by the terms of a note, contract or mortgage. The provider may not use force or cause a breach of the peace against any person. The provider must inventory any unsecured items removed from the dwelling and immediately notify the appropriate borrower that the unsecured items will be made available in a manner convenient to the borrower. The provider must make a permanent record of all steps taken to preserve and secure the dwelling and must make that record and the inventory of removed unsecured items available to the borrower upon written request.
Under the foreclosure mediation program, a court must assign mediators, including active retired justices and judges, who, among other requirements:
- Are trained in mediation and relevant aspects of the law related to real estate, mortgage procedures, foreclosure, or foreclosure prevention;
- Are knowledgeable in principal loss mitigation and mortgage loan servicing guidelines and regulations; and
- Are capable of facilitating and likely to facilitate identification of and compliance with principal loss mitigation and mortgage loan servicing guidelines and regulations.
The court may establish an orientation (previously training) program for mediators and require that mediators receive orientation (previously training) prior to being appointed.
The mediator’s report required under the foreclosure mediation program must indicate in a manner as determined by the court that the parties completed in full the Net Present Value Worksheet in the Federal Deposit Insurance Corporation Loan Modification Program Guide, or now by other reasonable determination of net present value. If the mediation did not result in the settlement or dismissal of the action, the report must include the outcomes of the Net Present Value Worksheet or another determination of net present value.
The mediator’s report must also include a statement of all agreements reached at mediation, with sufficient specificity to put all parties on notice of their obligations under agreements reached at mediation, including but not limited to, a description of all documents that must be completed and provided according to the agreements reached at mediation and the time frame during which all actions are required to be taken by the parties, including decisions and determinations of eligibility for all loss mitigation options.