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

SPONSOR Boitano

ORIGINAL DATE

LAST UPDATED

2/9/07

HB

SHORT TITLE

Real estate Transaction Funding Deadlines

SB 923

ANALYST C. Sanchez

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Regulation and Licensing Department (RLD)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

Senate Bill 923 would amend NMSA Section 58-21-23.2 of the Mortgage Loan Company and

Loan Broker Act to require that a lender deliver the required “net loan funds" (the mortgage loan

amounts specified in the note and mortgage less lender-retained fees, as specified in the lender's

instruction to the closing agent) within two business days of the time that the lender deems the

closing agent has fulfilled the requirements of the closing agent's duties, except for the

recordation of documents.

The bill also eliminates the two business day time period from receipt of documentation

specified in current law for a lender to authorize or advise the closing agent with regard to

recording documents or releasing funds.

The bill also repeals NMSA Section 58-21-23.1 which provides that 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

Senate Bill 923– Page

2

SIGNIFICANT ISSUES

Current law requires a lender to deliver loan funds to a closing agent in an amount sufficient to

complete the purchase of real property 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.

NMSA Section 58-21-23.2A. This bill would require the delivery of funds from a lender within

two business days of the time that the lender deems the closing agent has fulfilled the

requirements of the closing agent's duties, except for the recordation of documents.

Current law also requires a lender, within two business days from the time the lender receives

copies of all required documentation to the real estate transaction, to authorize the closing agent

to record with the county clerk all documents necessary to complete the real estate transaction

and to release the proceeds of the real estate transaction in accordance with agreed upon escrow

instructions; advise the closing agent of any funding conditions 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 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. While maintaining those requirements, the bill appears to

eliminate the requirement that those actions be performed within two business days from receipt

by a lender of required documentation.

TECHNICAL ISSUES

If the intent of the bill is to require a lender to advise the closing agent as to the sufficiency of

documentation and as to the release of funds within two business days from the time the lender

decides that the closing agent has fulfilled his duties, then the bill should clearly state that those

responsibilities also fall within that time period.

OTHER SUBSTANTIVE ISSUES

The new language appears to allow lenders to deliver net loan funds within two business days of

the time that the lender deems the closing agent has fulfilled the requirements of the closing

agent’s duties, except for the recordation of documents

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Lenders will continue to be required to provide consideration in an amount sufficient to complete

the purchase of real property at the same time

the lender provides to the closing agent

documentation to be reviewed and executed by the parties to the real estate transaction.

CS/mt