SENATE TAX, BUSINESS AND TRANSPORTATION

COMMITTEE SUBSTITUTE FOR

SENATE BILL 349

55th legislature - STATE OF NEW MEXICO - first session, 2021

 

 

 

 

 

 

 

AN ACT

RELATING TO MORTGAGES; ENACTING THE MORTGAGE RELIEF ACT; PROVIDING DEFINITIONS; 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 "Mortgage Relief Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the 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. "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;

          C. "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

          D. "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] LOSS MITIGATION GUIDELINES--DISCLOSURES.--

          A. Within thirty days of the effective date of the Mortgage Relief Act, a servicer of a mortgage loan that is in default as of the effective date of this act, or that subsequently enters default, shall send to each borrower with a residential mortgage, for a property that is located within the state of New Mexico, 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 private entity, government-sponsored enterprise or 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 from any entity identified in the disclosure.

          B. The 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 disclosure is provided, 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 filing of a foreclosure complaint and any time when a borrower requests assistance from the servicer to avoid foreclosure.

          D. A servicer shall disclose all loss mitigation options potentially available to the borrower; provided that the 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. If investor guidelines or other legal requirements prohibit a servicer from compliance with this section, the servicer shall disclose to the borrower, with specificity and in full, the source of those guidelines or legal restrictions that prohibit the servicer from offering those loss mitigation options.

          E. In no event shall a servicer be entitled to recover from a borrower any cost incurred by the servicer in complying with the Mortgage Relief Act.

     SECTION 4. [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 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 Mortgage Relief Act; and

                (2) considered the borrower for 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 5. [NEW MATERIAL] FAILURE TO COMPLY.--

          A. Failure to comply with the provisions of the 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 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 Mortgage Relief Act shall be entitled to compensatory damages, punitive damages, costs and reasonable attorney fees.

     SECTION 6. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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