0001| HOUSE BILL 676
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0002| 43rd legislature - STATE OF NEW MEXICO - first session, 1997
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0003| INTRODUCED BY
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0004| LUCIANO "LUCKY" VARELA
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0008|
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0009|
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0010| AN ACT
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0011| RELATING TO INSURANCE; PROHIBITING LENDERS FROM REQUIRING
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0012| PRIVATE MORTGAGE INSURANCE IN CERTAIN LOAN TRANSACTIONS;
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0013| REQUIRING NOTIFICATION OF CONSUMER OF CONDITIONS UNDER WHICH
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0014| PRIVATE MORTGAGE INSURANCE REQUIRED BY A LENDER MAY BE
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0015| CANCELED; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.
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0016|
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0017| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0018| Section 1. Section 59A-28-1 NMSA 1978 (being Laws 1984,
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0019| Chapter 127, Section 488) is amended to read:
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0020| "59A-28-1. SCOPE OF ARTICLE. [This article] Chapter
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0021| 59A, Article 28 NMSA 1978 shall apply only with respect to
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0022| contracts of mortgage guaranty insurance as defined in Section
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0023| [112 of the Insurance Code. Such] 59A-7-6 NMSA 1978.
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0024| Mortgage guaranty insurance contracts are also subject to the
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0025| applicable provisions of Chapter 59A, Article 18 [(the
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insurance contract) of the Insurance Code] NMSA 1978."
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0002| Section 2. A new section of Chapter 59A, Article 28 NMSA
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0003| 1978 is enacted to read:
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0004| "[NEW MATERIAL] LIMITATION ON LENDER'S RIGHT TO REQUIRE
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0005| PRIVATE MORTGAGE INSURANCE AS CONDITION OF MAKING OR CONTINUING
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0006| LOAN SECURED BY MORTGAGE ON REAL PROPERTY--NOTIFICATION OF
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0007| CONSUMER OF CANCELLATION RIGHTS--DISCLOSURE REQUIRED.--
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0008| A. A consumer shall not be required to purchase or
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0009| pay the cost of premiums charged for private mortgage insurance
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0010| benefiting the lender as a condition of obtaining or continuing
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0011| a loan secured or to be secured by a first mortgage on
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0012| residential real property when the unpaid principal amount of
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0013| the loan represents eighty percent or less of the real
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0014| property's appraised value at the time the loan is
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0015| made.
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0016| B. A consumer shall not be required to purchase or
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0017| pay the cost of premiums charged for private mortgage insurance
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0018| benefiting the junior lender as a condition of obtaining or
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0019| continuing a loan secured by a junior mortgage on residential
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0020| real property when the unpaid principal balance of that loan,
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0021| combined with all existing loan amounts secured by mortgages on
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0022| that real property, is less than sixty percent of the real
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0023| property's appraised value at the time the junior loan is made.
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0024|
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0025| C. If a consumer is required to obtain and maintain
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0001| private mortgage insurance as a condition of obtaining a loan
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0002| secured by a mortgage on residential real property, the lender
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0003| shall disclose in writing at the time the loan is closed
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0004| whether or not the private mortgage insurance may be canceled
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0005| at the request of the consumer while the mortgage is
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0006| outstanding. If it may be canceled, the lender shall further
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0007| disclose in writing the following information at the time the
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0008| loan is closed:
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0009| (1) information necessary to permit the
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0010| consumer to communicate with the lender, any subsequent
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0011| servicer of the mortgage, or the issuer of the private mortgage
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0012| insurance concerning any condition required to be met before
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0013| the private mortgage insurance may be canceled at the request
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0014| of the consumer, including the following:
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0015| (a) if a condition for canceling the
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0016| private mortgage insurance is based on a minimum ratio between
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0017| the principal on the loan remaining outstanding and the
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0018| original value of the property securing the loan, that ratio;
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0019| and (b) information relating to
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0020| the time required for canceling the insurance; and
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0021| (2) the procedures required to be followed by
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0022| the consumer in obtaining cancellation of the private mortgage
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0023| insurance.
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0024| D. If a consumer is required to obtain and maintain
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0025| private mortgage insurance benefiting the lender as a condition
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0001| for obtaining a loan secured by a mortgage on residential real
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0002| property, the person servicing the mortgage shall include in or
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0003| with each written statement of account provided to the consumer
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0004| while the insurance is in effect, but not less often than
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0005| annually:
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0006| (1) the information required to be disclosed
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0007| under Subsection C of this section; or
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0008| (2) a clear and conspicuous written statement
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0009| containing:
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0010| (a) a statement that the consumer may be
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0011| able to obtain cancellation of the private mortgage insurance
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0012| if that is the case; and
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0013| (b) an address and telephone number that
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0014| the consumer may use to contact the creditor or the person
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0015| servicing the mortgage to determine whether the consumer has
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0016| the right to cancellation of the private mortgage insurance
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0017| and, if so, the conditions and procedures for canceling the
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0018| insurance.
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0019| E. No fee or other cost may be imposed on any
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0020| consumer with respect to the provision of any notice or
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0021| information to the consumer pursuant to this section.
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0022| F. As used in this section:
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0023| (1) "mortgage insurance" means insurance,
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0024| including any mortgage guaranty insurance, against the
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0025| nonpayment of, or default on, a loan or a mortgage on
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0001| residential real property securing the loan;
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0002| (2) "private mortgage insurance" means
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0003| mortgage insurance other than mortgage insurance made available
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0004| under the
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0005| National Housing Act, title 38 of the United States Code, or
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0006| title 5 of the National Housing Act of 1949; and
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0007| (3) "residential real property" means a
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0008| dwelling designed or used for occupancy by one family together
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0009| with the land upon which the dwelling is located."
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0010| Section 3. EFFECTIVE DATE.--The effective date of the
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0011| provisions of this act is July 1, 1997.
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0012| - 5 -
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0021|
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0022| State of New Mexico
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0023| House of Representatives
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0024|
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0025| FORTY-THIRD LEGISLATURE
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0001| FIRST SESSION, 1997
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0002|
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0003|
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0004| February 25, 1997
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0005|
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0006|
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0007| Mr. Speaker:
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0008|
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0009| Your BUSINESS AND INDUSTRY COMMITTEE, to whom
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0010| has been referred
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0011|
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0012| HOUSE BILL 676
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0013|
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0014| has had it under consideration and reports same with
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0015| recommendation that it DO PASS, and thence referred to the
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0016| CONSUMER AND PUBLIC AFFAIRS COMMITTEE.
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0017|
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0018| Respectfully submitted,
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0020|
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0022|
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0023|
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0024| Fred Luna, Chairman
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0025|
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0001|
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0002| Adopted Not Adopted
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0003|
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0004| (Chief Clerk) (Chief Clerk)
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0005|
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0006| Date
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0007|
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0008| The roll call vote was 12 For 0 Against
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0009| Yes: 12
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0010| Excused: None
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0011| Absent: Getty
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0013|
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0014| G:\BILLTEXT\BILLW_97\H0676
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