30 Jul Illinois and Michigan Legislative and New Mexico Regulatory Update
Illinois legislation addressing elder abuse and foreclosure sales was recently enacted, andMichigan enacted the Uniform Real Property Electronic Recording Act (the “Act”). The New Mexico mortgage loan originator and mortgage loan company requirements were clarified by the Financial Institutions Division of the New Mexico Regulation and Licensing Department (the “Division”), and the Home Loan Protection Act rules were amended. If you have any questions concerning this memorandum, please contact Laura LaRaia.
ILLINOIS SENATE BILL 3267 (effective July 22, 2010)
The Elder Abuse and Neglect Act was amended to require that the Illinois Department on Aging develop by joint rulemaking with the Department of Financial and Professional Regulation minimum training standards for financial institutions’ current and new employees with direct customer contact. The Department of Financial and Professional Regulation will retain sole visitation and enforcement authority and will provide bi-annual reports to the Department on Aging setting forth aggregate statistics on the required training programs.
ILLINOIS HOUSE BILL 5735 (effective July 23, 2010)
The provisions of the Illinois Code of Civil Procedure relating to the report and confirmation of a foreclosure sale were amended.
The Court that entered the judgment of foreclosure will set aside a sale upon the motion of the borrower at any time prior to confirmation of the sale if the borrower proves by a preponderance of the evidence that:
- The borrower has applied for assistance under the Making Home Affordable Program (the “Program”); and
- The mortgaged real estate was sold in a material violation of the Program’s requirements for judicial sales.
These amendments become inoperative on January 1, 2013 for all actions filed afterDecember 31, 2012 in which the borrower did not apply for assistance under the Making Home Affordable Program on or before December 31, 2012.
MICHIGAN SENATE BILL 791 (effective July 19, 2010)
“Document” means information that is:
- Inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form; and
- Eligible to be recorded in the land records maintained by the county register of deeds.
“Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
“Electronic document” means a document that is received by the county register of deeds in electronic form.
“Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a document and executed or adopted by a person with the intent to sign the document.
Electronic documents satisfying the Act are valid as a condition of recording for all of the following:
- That a document be an original, be on paper, another tangible medium, or be in writing;
- That a document be signed; and
- The requirement that a document or a signature associated with a document be notarized, acknowledged, verified, witnessed, or made under oath is satisfied if the electronic signature of the person authorized to perform that act, and all other information required to be included, is attached to or logically associated with the document or signature. A physical or electronic image of a stamp, impression, or seal need not accompany an electronic signature.
NEW MEXICO RULES 12.19 (effective June 1, 2010)
Definitions
“Days” means a period of time expressed in calendar days, excluding Saturdays, Sundays and legal holidays.
“Scheduled long-term monthly debt payments” means the monthly payments of all installment debts, revolving charge accounts, open accounts and lines of credit that are used to determine a borrower’s ability to repay per the current underwriting guidelines of FHA, Fannie Mae, Freddie Mac, or VA.
An investigation fee of $75 per hour, or any fraction of an hour, per examiner or investigator will be paid by a mortgage loan originator or a mortgage loan company.
The yield spread premium or discount points received by a mortgage loan company must be disclosed as a credit or a charge in a dollar amount on all good faith estimates.
Amending or Surrendering a Mortgage Loan Originator License
A licensed mortgage loan originator must amend information entered in the Nationwide Mortgage Licensing System and Registry (“NMLSR”) for licensure within 5 days following the change in that information. The information that will be required to be amended will include, but not be limited to:
- Name of mortgage loan originator;
- Contact information;
- Employment; and
- Surety Bond.
A licensed mortgage loan originator must notify the Director of the Division (the “Director”) in writing and amend his or her license information on the NMLSR within 5 days following knowledge of any change in his or her credit that involves bankruptcy, foreclosure, judgments, collections, tax liens and other government liens.
A licensed mortgage loan originator who has been charged with, convicted of, or pled guilty or no contest to, a felony in a domestic, foreign or military court must notify the Director in writing and amend his or her information on the NMLSR within 5 days of the occurrence.
A licensed mortgage loan originator is the only individual that can surrender his or her license. The removal of sponsorship by a mortgage loan company will place the mortgage loan originator license into an “approved-inactive” status.
A licensed mortgage loan originator must immediately surrender his or her license if required to do so by court order, final order, default order, consent order or if the mortgage loan originator no longer meets the minimum requirements for licensure.
A licensed mortgage loan originator whose employment with a mortgage loan company is terminated must not originate new mortgage loans for that mortgage loan company but may receive compensation for those mortgage loans originated by him or her while employed by that mortgage loan company.
An individual who offers or negotiates terms of a residential mortgage loan financed in whole or in part by the individual and secured by the individual’s residence is exempt from licensing.
Mortgage Loan Company Applicant and Licensee Requirements
A mortgage loan company must obtain and maintain a unique identifier number issued by the NMLSR for each principal office, divisional office or branch office. The unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan applications, solicitations, advertisements, including business cards and websites.
Licensees are required to keep and make available upon examination or investigation documents related to the withdrawal, denial or settlement of a residential mortgage loan which documents now include the mortgage loan settlement statement.
A licensee or applicant will be deemed to lack good business reputation if the Director finds that the licensee or applicant fails to pay the examination fee or the investigation fee or has allowed unlicensed independent contractors or mortgage loan originators to originate mortgage loans.
A mortgage loan company must pay an annual branch office fee of $500.
“Pricing” means the yield spread premium or discount points disclosed as a credit or charge in dollars to the borrower for the loan interest rate. The yield spread premium or discount points received by the mortgage loan company must be disclosed as a credit or charge in a dollar amount on all good faith estimates.
Amending or Surrendering a Mortgage Loan Company License
A licensed mortgage loan company must amend information entered into the NMLSR for licensure within 5 days following the change in that information. The information that is required to be amended will include, but not be limited to:
- Company name;
- Company address;
- Company legal status;
- Ownership;
- Control persons;
- Qualified manager;
- Surety bond;
- Branch name or location; and
- Branch manager.
A licensed mortgage loan company that has any owner, control person or qualified manager who has been charged with, convicted of, or pled guilty or no contest to, a felony in a domestic, foreign or military court must notify the Director in writing and amend the company’s license information on the NMLSR within 5 days of the occurrence.
A licensed mortgage loan company must immediately surrender the company’s license if required to do so by court order, final order, default order, consent order or if the mortgage loan company no longer meets minimum requirements for licensure. A licensed mortgage loan originator is the only individual that can surrender his or her license. The removal of sponsorship by a mortgage loan company will place the mortgage loan originator license into an “approved-inactive” status.
NEW MEXICO RULES 12.15 Home Loan Protection Act (effective June 1, 2010)
Definitions
“Grossed up income” means income that is not taxable by the federal government and has been increased to reflect the amount of tax savings attributable to this type of income. The maximum amount of grossed up income allowable is 25%, but could be less based on the tax savings of the borrower.
“Scheduled long-term monthly debt payments” means the monthly payments of all installment debts, revolving charge accounts, open accounts and lines of credit that will be used to determine a borrower’s ability to repay per the current underwriting guidelines of FHA, Fannie Mae, Freddie Mac, or VA.
The “conventional mortgage rate” refers to the conventional mortgage index published in the Federal Reserve “Selected Interest Rates” (Statistical Release H-15).
The phrase “comparable periods of maturity” refers to the “Treasury Constant Maturities” published in the Federal Reserve Selected Interest Rates (Statistical Release H-15) (previously weekly average yield on comparable United States Treasury Securities on the 15thday of the month immediately preceding the month in which the loan is made).
With regard to the points and fees exclusion for upfront premium private mortgage insurance, the “percentage rate” is set bi-annually on the Financial Institutions Division’s Mortgage Lending website on the first business day in January and July.