This topic consolidates legislative summaries of new and revised state laws pertaining to licensing, originating, and servicing mortgage loans.
Nevada has adopted temporary regulations relating to AB 413 of the 2017 Legislative Session and the electronic notarial acts including those using audio-video communications. Includes provisions relating to electronic notaries public and solution providers. These provisions are effective immediately.
DSNews--John A. Ansell III, Partner, Rosenberg & Associates, LLC
Editor’s note: This feature originally appeared in the January issue of DS News.
The District of Columbia recently passed legislation that may affect the ability of servicers and lenders to adequately assess title on certain properties in Washington, D.C. The new statute—dubbed the Address Confidentiality Act of 2018, which became effective on October 1, 2018—is designed to protect the victims of domestic violence.
According to the terms of the Act, if an individual applies for the program and is certified as a victim of stalking, domestic violence, human trafficking, or a range of other sexual offenses, the individual will be issued an identification card with a substitute address. The substitute address will be a mailbox to which mail can be sent, and from which the office that administers the program will forward mail to the program participant’s actual address. More importantly from a title perspective, a participant in the program can submit a request to any D.C. government office or agency to remove all publicly accessible references to their actual address. This means that a participant may have their name removed from all publicly available land records, tax records, or court records. This presents obvious problems for the title industry, as well as to loan originators and servicers.
Also problematic at this point is the fact that D.C. has not provided crucial details of such activity. Namely, there is no word yet whether the redacted information will simply be absent or if there will be an indication that the information is being withheld pursuant to this program. Thus, a title search may come back with documents simply missing—e.g., a deed or deed of trust simply not appearing in a title search, or a lack of a tax record appearing when performing an escrow analysis. Alternatively, the record might come back with some indication that the information was being omitted, with or without explanation.
The District of Columbia has not yet provided any answers as to how such matters will be treated. Further complicating the issue is the fact that, as currently written, the statute does not allow the participant to selectively direct the release of their information. Their only choice appears to remove themselves entirely from the program—hardly the route that someone fearing for their safety would choose. Overall, the potential implications of this statute for title are enormous, and until D.C. provides more information as to how such matters will be handled, the state of title in D.C. will remain uncertain.
Search our Compliance Calendar for current regulatory changes & updates.
DSNews--John A. Ansell III, partner at Rosenberg & Associates, LLC
Editor’s note: This feature originally appeared in the January issue of DS News, out now.
The District of Columbia recently passed legislation that may affect the ability of servicers and lenders to adequately assess title on certain properties in Washington, D.C. The new statute—dubbed the Address Confidentiality Act of 2018, which became effective on October 1, 2018—is designed to protect the victims of domestic violence.
According to the terms of the Act, if an individual applies for the program and is certified as a victim of stalking, domestic violence, human trafficking, or a range of other sexual offenses, the individual will be issued an identification card with a substitute address. The substitute address will be a mailbox to which mail can be sent, and from which the office that administers the program will forward mail to the program participant’s actual address. More importantly from a title perspective, a participant in the program can submit a request to any D.C. government office or agency to remove all publicly accessible references to their actual address. This means that a participant may have their name removed from all publicly available land records, tax records, or court records. This presents obvious problems for the title industry, as well as to loan originators and servicers.
Also problematic at this point is the fact that D.C. has not provided crucial details of such activity. Namely, there is no word yet whether the redacted information will simply be absent or if there will be an indication that the information is being withheld pursuant to this program. Thus, a title search may come back with documents simply missing—e.g., a deed or deed of trust simply not appearing in a title search, or a lack of a tax record appearing when performing an escrow analysis. Alternatively, the record might come back with some indication that the information was being omitted, with or without explanation.
The District of Columbia has not yet provided any answers as to how such matters will be treated. Further complicating the issue is the fact that, as currently written, the statute does not allow the participant to selectively direct the release of their information. Their only choice appears to remove themselves entirely from the program—hardly the route that someone fearing for their safety would choose. Overall, the potential implications of this statute for title are enormous, and until D.C. provides more information as to how such matters will be handled, the state of title in D.C. will remain uncertain.
Ballard Sparh, LLP--Barbara S. Mishkin
On December 28, 2018, New York Governor Cuomo signed into law amendments to the state’s General Business Law (GBL) that address the collection of family member debts. The amendments made by Senate Bill 3491A become effective March 29, 2019.
While the legislative history indicates that the amendments are intended to address the collection of a deceased family member’s debts, they are drafted more broadly to prohibit “principal creditors and debt collection agencies” from: (a) making any representation that a person is required to pay the debt of a family member in a way that contravenes the FDCPA; and (b) making any misrepresentation about the family member’s obligation to pay such debts.
The GBL defines a “principal creditor” as “any person, firm, corporation or organization to whom a consumer claim is owed, due or asserted to be due or owed, or any assignee for value of said person, firm, corporation or organization.” The amendments define a “debt collection agency” as “a person, firm or corporation engaged in business, the principal purpose of which is to regularly collect or attempt to collect debts: (A) owed or due or asserted to be owed or due to another; or (B) obtained by, or assigned to, such person, firm or corporation, that are in default when obtained or acquired by such person, firm or corporation.”
In 2011, the FTC issued its final Statement of Policy Regarding Communications in Connection With the Collection of Decedents’ Debts to provide guidance on how it would enforce the FDCPA and Section 5 of the FTC Act in connection with the collection of debts of deceased debtors. The policy statement provides that the FTC will not initiate an enforcement action under the FDCPA against a debt collector who (1) communicates for the purpose of collecting a decedent’s debts with a person who has authority to pay such debts from the assets of the decedent’s estate even if that person does not fall within the FDCPA’s definition of “consumer,” or (2) includes in location communications a statement that it is seeking to identify a person with authority to pay the decedent’s “outstanding bills” from the decedent’s estate. It also contains a caution that, depending on the circumstances, contacting survivors about a debt too soon after the debtor’s death may violate the FDCPA prohibition against contacting consumers at an “unusual time” or at a time “inconvenient to the consumer.”
DS News-- Radhika Ojha
The Texas Department of Insurance (TDI) has recommended adopting laws requiring that property insurance policies include a disclosure that the policy does not cover flood damage. The agency proposed this step in its biennial report to the state legislature.
The issue at the core of this proposal is the rule that property within the Federal Emergency Management Agency (FEMA) 100-year flood plain must have flood insurance to get a federally backed mortgage. TDI, in its report, said that during Hurricane Harvey, more than half the homes that were flooded were outside of these designated flood zones and most of those didn't have flood insurance.
Another issue was the awareness among homeowners on this rule. TDI noted that some homeowners outside the flood zones and even renters in the flood zones were not aware that they might need flood insurance. The need for such a rule, TDI stated became even more important in the light of the fact that the state was "particularly prone to floods and almost every major city in Texas had areas that were at high risk of flooding." Additionally, since development could change an area's flood risk, it was difficult to keep the flood maps developed by FEMA up to date.
As a result, TDI has recommended amending the state's Insurance Code to require property policies to include a prominent disclosure if the property does not cover flood damage. TDI recommended two alternatives to achieve this:
Currently, six states have a similar law in place. They include Florida, Louisiana, Minnesota, New Hampshire, New York, and Washington.
Floods after Hurricane Harvey not only impacted properties but also homeowners' ability to pay. In a case study conducted in the aftermath of Hurricane Harvey in Texas, CoreLogic found that FEMA designated counties following Hurricane Harvey saw a significant increase in 90-plus day delinquency when compared to delinquency rates just six months prior. In these counties, properties estimated to be damaged saw a 205 percent increase in 90-plus day delinquency, and undamaged properties saw a 167 percent increase in 90-plus day delinquency.
Ohio House Bill 489
This bill was signed by the governor on December 19, 2018 and is effective 91 days after filling with the Secretary of State.
"ACES has made my life so much easier from a QC perspective. It's life-changing"
- Kelly Cooper Spencer, QC & Business Intelligence Data Manager at Thrive Mortgage
The bill is effective effective 91 days after filling with the Secretary of State.
Amends the Residential Mortgage License Act of 1987.
Effective December 19, 2018.
House Bill 1025 amends the Uniform Power of Attorney Act to make technical corrections to the general statutes, as recommended by the General Statutes Commission. These provisions are effective December 14, 2018.
The Act, effective December 4, 2018, is to
"ACES has shined a light on our productivity and empowered us to hold our teams accountable."
- Emilee Rada, Director of Lending Operations at Georgia's Own Credit Union
Bankers Advisory--Rhona Kyeyune
The state of Michigan amended its provisions with an amendment relating to notaries that include updates to definitions as well as the electronic notarization of documents. The amendment is effective immediately; compliance is effective on March 12, 2019.
The amendment defines the following terms: “credential analysis,” “electronic notarization system,” “electronic signature,” “identity proofing,” “remote electronic notarization platform” and “state” and modifies the following definitions: “acknowledgment,” “electronic,” “information,” “in a representative capacity,” “in the presence of,” “notarial act,” “person,” “official misconduct,” “record,” “secretary,” “signature,” “suspension” and “verification upon oath or affirmation.”
The amendment authorizes the Secretary of State to develop and implement an electronic application and payment process for individuals who are seeking appointment as a notary.
The amendment allows a notary public to select one or more tamper-evident electronic notarization systems to perform notarial acts electronically and prohibits anyone from requiring a notary to perform an electronic notarial act with an electronic notarization system that the notary has not selected.
The amendment requires a notary to inform the Secretary of State that he or she would be performing notarial acts electronically, prior to performing his or her initial public notarial act electronically and also requires the notary to identify the electronic notarization system the he or she intends to use foe electronic notarizations.
If the Secretary of State and Department of Technology, Management, and Budget has approved the use of one or more electronic notarization systems, the notary must select the system he or she intends to use from the from the approved electronic notarization systems. The amendment also provides that the Secretary may disallow the use of an electronic notarization system if the system does not satisfy the criteria under Section 26A.
The amendment requires the Secretary of State and Department of Technology, Management, and Budget to review and approve at least one electronic notarization system for the performance of electronic notarizations in the state by March 30, 2019. The Secretary of State and Department of Technology, Management, and Budget may approve multiple electronic notarization systems, and may allow approval of additional electronic notarization systems on an ongoing basis.
The amendment requires the Secretary of State and Department of Technology, Management, and Budget to review the criteria for approval of electronic notarization systems and whether currently approved electronic notarization systems remain sufficient for the electronic performance of notarial acts, at least every 4 years.
The amendment provides the following minimum set of standards by which the Secretary of State and Department of Technology, Management, and Budget will approve electronic notarization systems: (a) the need to ensure that any change to or tampering with an electronic record is evident; (b) the need to ensure integrity in the creation, transmittal, storage, or authentication of electronic notarizations, records, or signatures; (c) the need to prevent fraud or mistake in the performance of electronic notarizations; (d) the ability to adequately investigate and authenticate a notarial act performed electronically with that electronic notarization system; (e) the most recent standards regarding electronic notarizations or records promulgated by national bodies, including, but not limited to, the National Association of Secretaries of state; and (f) the standards, practices, and customs of other jurisdictions that allow electronic notarial acts.
The amendment provides that if an electronic notarization system is approved or certified by a government-sponsored enterprise, the Secretary and the Department of Technology, Management, and Budget shall approve the system if verifiable proof of that approval or certification is provided to the Secretary and Department, unless the use of the system is affirmatively disallowed by the Secretary.
The amendment requires a notary to include to include on each record whether the act was performed using an electronic notarization system under Section 26b. ffff
The state of Ohio enacted provisions relating to its Notary Public Modernization Act. This bill was signed by the governor on December 19, 2018 and is effective 91 days after filling with the Secretary of State.
Buckley Sandler, LLP--InfoBytes Blog
On December 19, the Illinois governor signed HB 5542, which amends the state’s Residential Mortgage License Act of 1987 (the Act) to make various changes to state licensing requirements. Among other things, the amended Act (i) clarifies the definition of a “bona fide nonprofit organization”; (ii) provides a list of prohibited acts and practices; (iii) stipulates that a licensee filing a Mortgage Call Report is not required to file an annual report with the Secretary of Financial and Professional Regulation (Secretary) disclosing applicable annual activities; (iv) repeals a provision requiring the Secretary to obtain loan delinquency data from HUD as part of an examination of each licensee; (v) clarifies that the notice of change in loan terms disclosure requirements do not apply to any licensee providing notices of changes in loan terms pursuant to the CFPB’s Know Before You Owe mortgage disclosure procedure under TILA and RESPA, while removing the provision that previously excluded licensees limited to soliciting residential mortgage loan applications as approved by the Secretary from the requirements to provide disclosure of changes in loan terms; (vi) removes certain criteria concerning the operability date for submitting licensing information to the Nationwide Multistate Licensing System; and (vii) makes other technical and conforming changes. The amendments are effective immediately.
Bankers Advisory--Adam Faria
The Texas Office of Consumer Credit Commissioner has made a number of housekeeping changes to its rules under the Regulated Lenders and Credit Access Businesses chapter. Provisions relating to the application process, licensing process, interest charges on loans, and property insurance have been modified to ensure consistent terminology, remove obsolete language, and to introduce technical corrections to the regulations; numerous additional modifications consisting of grammar, punctuation, and formatting changes have also been adopted.
The provisions took effect November 8, 2018 and the full text of the modified rules may be found at: https://occc.texas.gov/sites/default/files/uploads/pub/rules/reg-rule-review-adoption-fc-110818.pdf
