SENATE BILL 349
55th legislature - STATE OF NEW MEXICO - first session, 2021
INTRODUCED BY
Katy Duhigg and Harold Pope, Jr. and Brenda McKenna
and Martin Hickey and Siah Correa Hemphill
AN ACT
RELATED TO MORTGAGES; ENACTING THE CORONAVIRUS DISEASE 2019 MORTGAGE RELIEF ACT; PROVIDING DEFINITIONS; PROVIDING A MORATORIUM ON ALL FORECLOSURES DURING THE CORONAVIRUS DISEASE 2019 PUBLIC HEALTH EMERGENCY; REQUIRING CERTAIN DISCLOSURES BE MADE TO BORROWERS; REQUIRING CERTAIN LOSS MITIGATION OPTIONS; REQUIRING COMPLIANCE AS A PRECONDITION TO FORECLOSURE; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Coronavirus Disease 2019 Mortgage Relief Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Coronavirus Disease 2019 Mortgage Relief Act:
A. "borrower" means a natural person obligated to repay a home loan, including a co-borrower, cosigner or guarantor, and includes any potential or confirmed successor in interest to the original borrower or mortgagor, as provided by 12 C.F.R. 1024.31;
B. "coronavirus disease 2019 emergency" means the period of time during the existence of a state of public health emergency, as declared by the governor pursuant to Section 12-10A-5, related to the coronavirus disease 2019;
C. "division" means the financial institutions division of the regulation and licensing department;
D. "federally backed mortgage loan" means a federally related mortgage loan that is owned, guaranteed or insured by a government-sponsored enterprise, the federal housing administration, the United States department of veterans affairs or the United States department of agriculture, and includes a loan that is secured by a first or subordinate lien on residential real property that is designed principally for the occupancy of no more than four families;
E. "loss mitigation guideline" means any process established by the owner or investor of a mortgage loan that describes the sequence and content of loss mitigation options that a servicer must follow in reviewing a borrower for alternatives to foreclosure, and includes the guidelines for loss mitigation developed by the government-sponsored enterprise, the federal housing administration, the United States department of veterans affairs or the United States department of agriculture, as well as guidelines and protocols applicable to private mortgage loans through securitization agreements or other contractual terms;
F. "mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling as so defined; and
G. "servicer" means any person or entity who directly services a mortgage loan or who is responsible for interacting with the borrower and regularly managing the loan account, including collecting and crediting periodic loan payments, reviewing borrowers for loss mitigation, managing any escrow account or enforcing the note and security instrument, either as the current owner of the promissory note or as the current owner's authorized agent, and includes a subservicing agent to a master servicer by contract and a servicer of a mortgage loan as provided in the federal Real Estate Settlement Procedures Act.
SECTION 3. [NEW MATERIAL] MORATORIUM ON FORECLOSURES DURING CORONAVIRUS DISEASE 2019 EMERGENCY.--
A. A stay on all pending and subsequently filed mortgage foreclosure proceedings shall be in effect for the duration of the coronavirus disease 2019 emergency. The stay on all mortgage foreclosure proceedings shall extend for the later of:
(1) one hundred eighty days from the end of the governor's declared state of public health emergency; or
(2) one hundred twenty days from the end of a borrower's final mortgage forbearance period.
B. For the period of time that the stay, as provided in Subsection A of this section, is in effect:
(1) a servicer, owner or beneficiary of a mortgage loan may file, but shall not be permitted proceed to serve, seek judgment upon or otherwise advance any foreclosure action in the courts;
(2) for a foreclosure action pending in the courts on or before the effective date of the Coronavirus Disease 2019 Mortgage Relief Act, all proceedings including filing of motions, entry of judgment and the scheduling or conduct of a foreclosure sale shall be stayed;
(3) all proceedings in post-foreclosure sale eviction proceedings shall be stayed; and
(4) all time periods required by any party to do any act related to a foreclosure proceeding, including a period for redemption, shall be tolled.
C. The stay shall take effect immediately and automatically upon the effective date of the Coronavirus Disease 2019 Mortgage Relief Act, without any requirement that individual borrowers request protection under that act.
D. Nothing in this section shall be construed to:
(1) stay any proceeding in which the servicer adequately demonstrates, to the satisfaction of the presiding judge, that the property at issue in a proceeding is vacant at the filing of the complaint, at the presentment of judgment by default or stipulation, when making a request for approval of any post-foreclosure sale or when making a request for post-foreclosure sale ancillary writs; and
(2) prohibit the enforcement of a real estate contract.
SECTION 4. [NEW MATERIAL] LOSS MITIGATION GUIDELINES--DISCLOSURES--FEDERALLY BACKED MORTGAGE LOANS.--
A. Within thirty days of the effective date of the Coronavirus Disease 2019 Mortgage Relief Act, a servicer shall send each borrower with a federally backed mortgage loan, for a property that is located within the state of New Mexico, an initial disclosure of the loss mitigation guidelines that apply to that borrower's loan. The disclosure shall include:
(1) the identity of and contact information for the government-sponsored enterprise or the federal agency that owns, insures or guarantees the loan;
(2) a summary of the forbearance and post-forbearance loss mitigation options that are available for the loan, including references to where the complete loss mitigation guideline texts can be obtained by the borrower; and
(3) information on how to request a loss mitigation option.
B. The initial disclosure shall not be required to include eligibility determinations for a specific borrower, but shall describe the programs and options that the servicer currently offers for the borrower's type of loan.
C. After the initial disclosure, as required in Subsection A of this section, a servicer shall provide each borrower with the same disclosure at least thirty days prior to the expiration of a forbearance period, at least thirty days prior to the filing of a foreclosure complaint and any time when a borrower requests assistance from the servicer to avoid foreclosure.
SECTION 5. [NEW MATERIAL] LOSS MITIGATION GUIDELINES--DISCLOSURES--NON-FEDERALLY BACKED MORTGAGE LOANS.--
A. Within thirty days of the effective date of the Coronavirus Disease 2019 Mortgage Relief Act, a servicer shall send to each borrower with a residential mortgage, for a property that is located within the state and that is not a federally backed mortgage loan, a disclosure of the loss mitigation guidelines that apply to that borrower's loan. The disclosure shall include:
(1) the identity of and contact information for any entity that owns, insures or guarantees the loan;
(2) a summary of the forbearance and post-forbearance loss mitigation options that are available for the loan, including references to where the complete loss mitigation guideline texts can be obtained by the borrower; and
(3) information on how to request a loss mitigation option from any entity identified in the disclosure.
B. After the disclosure as required in Subsection A of this section, a servicer shall provide each borrower with a further disclosure addressing the same matters provided in Subsection A of this section at least thirty days prior to the expiration of a forbearance period, at least thirty days prior to the filing of a foreclosure complaint and any time when a borrower requests assistance from the servicer to avoid foreclosure.
C. No later than thirty days after the end of the governor's declared state of public health emergency related to coronavirus disease 2019 and again, no later than forty-five days before filing a complaint to foreclose, a servicer shall transmit a complete application for any loss mitigation option available to a borrower and confirm receipt of the same by the borrower.
D. Unless investor guidelines or other legal requirements prohibit a servicer from compliance with this section, a servicer shall disclose all loss mitigation options potentially available to the borrower and whether investor guidelines or other legal requirements prohibit the servicer from offering such options to a particular borrower, and the servicer shall provide, with specificity and in full, the source of those guidelines or legal restrictions to the borrower at the time of making the disclosure. In providing the disclosure pursuant to this section, the forbearance and post-forbearance loss mitigation options required to be disclosed and provided by the servicer shall be identical to forbearance and post-forbearance loss mitigation options available at that time for similar loans owned or guaranteed by government-sponsored enterprises.
E. In no event shall a servicer be entitled to recover from a borrower any cost incurred by the servicer in complying with the Coronavirus Disease 2019 Mortgage Relief Act.
SECTION 6. [NEW MATERIAL] COMPLIANCE--PRECONDITION TO FORECLOSURE.--
A. A servicer shall specify within and attach to a foreclosure complaint sufficient evidence that the disclosures required by the Coronavirus Disease 2019 Mortgage Relief Act were provided to the borrower.
B. It is unlawful for a servicer to file a foreclosure complaint, enter judgment of foreclosure or conduct a foreclosure sale unless the servicer has:
(1) provided the borrower with the proper and timely disclosures as required by the Coronavirus Disease 2019 Mortgage Relief Act; and
(2) considered the borrower for forbearance and post-forbearance loss mitigation options, and if rejected, provided specific reasons to the borrower for that rejection and an explanation of any appeal rights available to the borrower regarding any determination made regarding a loss mitigation application.
SECTION 7. [NEW MATERIAL] FAILURE TO COMPLY.--
A. Failure to comply with the provisions of the Coronavirus Disease 2019 Mortgage Relief Act:
(1) may be used as a defense by a borrower in a foreclosure action; and
(2) shall constitute an unfair or deceptive trade practice and shall be subject to the penalties and remedies set forth in the Unfair Practices Act.
B. In all claims involving a violation of the Coronavirus Disease 2019 Mortgage Relief Act, the servicer or party seeking a foreclosure shall be the party required to prove compliance with the provisions of that act.
C. A borrower prevailing in any proceeding to enforce the provisions of the Coronavirus Disease 2019 Mortgage Relief Act shall be entitled to compensatory damages, punitive damages, costs and reasonable attorney fees.
SECTION 8. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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