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F I S C A L I M P A C T R E P O R T

SPONSOR Wirth

ORIGINAL DATE

LAST UPDATED

2/06/07

HB 641

SHORT TITLE

Judicial Foreclosure Redemption Rights

SB

ANALYST C. Sanchez

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Conflicts with HB 558

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Regulation and Licensing Department (RLD)

SUMMARY

Synopsis of Bill

House Bill 641 amends Section 39-5-18 NMSA 1978 designating priority of redemption rights

following a foreclosure sale of real property. HB 641 provides the redemption procedures to be

followed by a former owner of the property, the owner’s personal representative or by any junior

mortgagee or other junior lien holder whose rights were judicially determined in the foreclosure

proceeding. The action to redeem must be undertaken by payment to the purchaser within 9

months from the date of sale, or by filing a petition for redemption in a pending foreclosure case

in the district court in which the judgment or decree of foreclosure was entered. HB 641

provides that the former owner shall have the first priority to redeem the property, and that if the

former owner does not redeem the property, each junior mortgagee or junior lien holder has a

right to redeem that must be exercised within statutory time limits. The order of priority shall be

the same priority as the underlying mortgages or liens, as set forth in the court order, judgment or

decree of foreclosure or as otherwise determined by the court. HB 641 prohibits the assignment,

transfer or other conveyance of redemption rights. The Act defines “date of sale" to mean the

date the district court order confirming the special master’s report is filed in the court clerk’s

office.

House Bill 641 – Page

2

FISCAL IMPLICATIONS

There will be a minimal administrative cost for statewide update, distribution and documentation

of statutory changes. Any additional fiscal impact on the judiciary would be proportional to the

enforcement of this law and the determination and contesting of redemption priorities. New

laws, amendments to existing laws and new hearings have the potential to increase caseloads in

the courts, thus requiring additional resources to handle the increase.

SIGNIFICANT ISSUES

Subsection C provides that the hearing following filing of a petition for redemption shall be set

upon the earlier of the filing for redemption by the former owner or the expiration of the period

for filing redemption.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Conflicts with HB 558

TECHNICAL ISSUES

Page 3, lines 1 through 11, it may have been inadvertently omitted that the former defendant

owner’s representatives may also have first priority of redemption. Representatives of former

defendant owners and purchasers are mentioned throughout the statute.

Page 3, lines 18 through 20 reads, “The hearing shall be governed by the rules of civil procedure

and shall be set upon the earlier of the filing of a redemption by the former defendant owner or

the expiration of the period for filing a redemption

. It is unclear why a hearing would be set if

the period for filing a redemption has expired.

OTHER SUBSTANTIVE ISSUES

The statute, as currently written, allows former defendant owners of real estate certain rights of

redemption after the sale

of the real estate pursuant to judgment or decree of foreclosure. There

are two methods that redemption may be exercised, both, within nine months from the date of

sale of the real property. New language on page 2 lines 13 and 14 reads, “…filing a petition for

the redemption in the pending foreclosure case

…" It is unclear if the intent of the word

“pending" is to extend the time frame that petitions are allowed to be filed, to a time prior to the

sale.

Similarly, new language on page 2 lines 21 through 23 reads, “copies of the petition for

redemption shall be served upon the purchaser of the

real estate under a

at the judicial

foreclosure sale

…" It would seem difficult to meet this requirement if a petition were filed at a

point in time after the sale.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Status Quo

CS/csd