HOUSE JUDICIARY COMMITTEE SUBSTITUTE FOR

HOUSE BILL 171

50th legislature - STATE OF NEW MEXICO - first session, 2011

AN ACT

RELATING TO REAL PROPERTY; PROHIBITING DEFICIENCY JUDGMENTS IN CERTAIN MORTGAGE FORECLOSURES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of Chapter 39, Article 5 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] DEFICIENCY JUDGMENTS PROHIBITED.--

          A. There shall be no deficiency judgment entered in a foreclosure action on a home loan against a debtor who occupies the real property that is the subject of the foreclosure on the debtor's primary residence; provided that the debtor has occupied the real property as the debtor's primary residence for no fewer than one hundred twenty days prior to the initiation of the foreclosure action.

          B. A deficiency judgment for the diminution in value of the property may be entered against a debtor who damages the property, including damage beyond normal wear and tear, removal of structures on the property or removal of fixtures to the premises.

          C. As used in this section:

                (1) "home loan" means a loan, including an open-end credit plan, other than a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by the federal national mortgage association and where the loan is secured by:

                     (a) a mortgage or deed of trust on real estate in this state upon which there is located or there is to be located a structure: 1) designed principally for occupancy by one to four families; and 2) that is or will be occupied by a borrower as the borrower's principal residence; or

                     (b) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence; and

                (2) "mortgage" means any document creating a security interest in a residence owned by a person to secure the payment of a home loan."

     SECTION 2. APPLICABILITY.--The provisions of this act shall apply to foreclosure proceedings instituted on or after July 1, 2011.

     SECTION 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.

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