SENATE BILL 652
47th legislature - STATE OF NEW MEXICO - first session, 2005
INTRODUCED BY
Leonard Lee Rawson
AN ACT
RELATING TO REAL ESTATE TRANSACTIONS; ESTABLISHING DEADLINES FOR THE FUNDING OF REAL ESTATE TRANSACTIONS; PROVIDING FOR ENFORCEMENT; AMENDING AND ENACTING SECTIONS OF THE MORTGAGE LOAN COMPANY AND LOAN BROKER ACT; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 58-21-2 NMSA 1978 (being Laws 1983, Chapter 86, Section 2, as amended by Laws 2001, Chapter 251, Section 1 and by Laws 2001, Chapter 264, Section 1) is amended to read:
"58-21-2. DEFINITIONS.--As used in the Mortgage Loan Company and Loan Broker Act:
A. "affiliate" means a person who, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with another person;
B. "closing agent" means a person, including a title insurance agent or title insurance company, that acts in the normal course of business in a fiduciary capacity as a disinterested third party for the seller and buyer of real property for the purpose of consummating a sale of real property, including the performance of the following functions:
(1) preparation of deeds, mortgages, promissory notes, deeds of trust, real estate contracts, assignments or other documents incidental to the sale as permitted by law;
(2) calculations and disbursements of prorated taxes, insurance premiums, utility bills and other charges incidental to the sale;
(3) preparation of sellers' and buyers' closing statements;
(4) supervision of signing of documents;
(5) collection and disbursement of down payments, commissions of real estate licensees, fees and other charges pursuant to a sales agreement; and
(6) recordation of documents;
[B.] C. "division" means the financial institutions division of the regulation and licensing department;
[C.] D. "director" means the director of the financial institutions division of the regulation and licensing department;
[D.] E. "dwelling" means a residential structure, including a home, individual condominium unit, manufactured home or modular home, that contains one to four units and is permanently attached to real property;
F. "lender" means a person or government agency making a real property loan or any assignee or transferee, in whole or in part, of such a person or agency;
[E.] G. "loan broker" means any person who acts as a finder or agent of a lender or borrower of money for the purpose of procuring a mortgage loan, or both;
[F.] H. "mortgage loan" means a loan secured by a dwelling permanently affixed to real property; [and
G.] I. "mortgage loan company" means a person who, directly or indirectly:
(1) holds himself out as being able to serve as an agent for any person in an attempt to obtain a mortgage loan;
(2) holds himself out as being able to serve as an agent for a person who makes mortgage loans; or
(3) holds himself out as being able to make mortgage loans; and
J. "real property loan" means a loan, mortgage, advance or credit sale secured by a lien on real property, the stock allocated to a dwelling unit in a cooperative housing corporation or a mobile home, whether real or personal property."
Section 2. A new section of the Mortgage Loan Company and Loan Broker Act is enacted to read:
"[NEW MATERIAL] EXECUTION OF DOCUMENTATION FOR REAL ESTATE TRANSACTION.--A closing agent for any purchase of real property shall not require or permit any party to such a transaction to execute documentation necessary to finalize that transaction unless the consideration necessary to complete that transaction has been previously delivered to the seller or to the closing agent."
Section 3. A new section of the Mortgage Loan Company and Loan Broker Act is enacted to read:
"[NEW MATERIAL] FUNDING OF REAL ESTATE TRANSACTIONS--ENFORCEMENT.--
A. Unless the consideration necessary to complete a purchase of real property has been previously delivered to the seller or to the closing agent, a lender shall comply with the following:
(1) funds in an amount sufficient to complete the purchase of real property shall be provided to the closing agent at the same time the lender provides to the closing agent the documentation to be reviewed and executed by the parties to the real estate transaction; and
(2) within two business days from the time the lender receives copies of all previously required documentation to the real estate transaction, including documentation executed by the parties to that transaction, the lender shall:
(a) authorize the closing agent to record with the county clerk all documents necessary to complete the real estate transaction and release the proceeds of the real estate transaction in accordance with agreed upon escrow instructions;
(b) advise the closing agent of any funding conditions, as set forth in the lender's escrow instructions, that have not been satisfied and instruct the closing agent in writing what is to be done with any of the lender's funds held in escrow; or
(c) advise the closing agent that the documentation for the real estate transaction does not satisfy the lender's escrow instructions, specify the manner in which that documentation does not satisfy those instructions and instruct the closing agent in writing what is to be done with any of the lender's funds held in escrow.
B. In the event a lender does not comply with the requirements of Subsection A of this section, unreasonably refuses to approve the documentation necessary to complete a real estate action or unreasonably delays authorization of the recordation of closing documents and release of proceeds of a real estate transaction, the director of the division may, upon receipt of a complaint and in accordance with the procedures set forth in the Mortgage Loan Company and Loan Broker Act, suspend or revoke any state registration or license issued to the lender for a period not to exceed one year."
Section 4. APPROPRIATION.--Fifty thousand dollars ($50,000) is appropriated from the general fund to the financial institutions division of the regulation and licensing department for expenditure in fiscal year 2006 to provide for enforcement of the requirements as set forth in Section 3 of this act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2006 shall revert to the general fund.
Section 5. REPEAL.--Section 48-7-10.1 NMSA 1978 (being Laws 2003, Chapter 200, Section 1) is repealed.
Section 6. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2006.
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