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State News

On May 7, Georgia passed House Bill 897, entitled an Act to amend Chapter 6B of Title 10 of the O.C.G.A., relating to the "Uniform Power of Attorney Act," to:

• revise the short title; 
• provide for definitions; 
• change provisions relating to the application of Chapter 6 of this title;
• update cross-references to federal law; 
• provide for related matters; 
• repeal conflicting laws; and 
• for other purposes.

These provisions are effective on July 1, 2018.

On May 3, Georgia passed House Bill 121, entitled an Act to amend Chapter 12 of Title 53 of the Official Code of Georgia Annotated, relating to trusts, to:

• change provisions relating to minor or unborn beneficiaries; 
• change provisions relating to nonjudicial settlement agreements, the modification and termination of noncharitable trusts, and distribution to another trust; 
• change provisions relating to modification or termination of uneconomic trusts; 
• provide for related matters; 
• provide for an effective date; 
• to repeal conflicting laws; and 
• for other purposes.

These provisions are effective on July 1, 2018.

Housingwire--Kelsey Ramirez

Real estate websites could be facing a major hurdle as New York regulators look to change the future of online real estate advertising in the state.

The New York Department of State has been looking into real estate advertising, looking to update its regulatory policies, sources told HousingWire.

This could threaten programs such as the StreetEasy Premier Agent advertising program, which Zillow bought out back in 2013 to gain access to the New York market, and other third-party real estate sites such as realtor.com.

While the department hasn’t made any official announcements, it shared its thoughts with Zillow and other affected parties weeks before it is expected to issue formal guidance on the matter.

Some argue that real estate agents can’t advertise on a property that is the subject of another agent’s exclusive. While real estate websites are not an agent or broker, New York regulators may now say they still have to comply, meaning programs such as Premier Agent will be a form of advertising on another agent’s listing.

Some media outlets reported that New York is looking to completely ban Zillow’s Premier Agent program, however the company highly disputes that claim.

“The New York Department of State is reviewing the application of NY real estate advertising rules with the intent of issuing guidance to clarify aspects of online advertising across the industry and the entire State of New York,” Zillow told HousingWire.

“The guidance issued will not be specific, in any way, to the Premier Agent advertising program. The clarifications will affect things such as the display of brokerage and licensing information in all online real estate advertising across the state,” Zillow continued. “We fully expect that the Premier Agent program will allow brokers to comply with the guidance when it is issued in the coming months.”

However, if the ban does ban or even limit Zillow’s program, it could be a major hit for the company, especially if other states begin to follow New York’s lead and change their advertising regulations. In 2017, Premier Agent revenue grew by 35%, totaling $604.3 million for the year.

The only other revenue source that beat this was Zillow’s marketplace revenue, which increased to $778.1 million for the year. Aside from that, all other revenues came up significantly short, with the closest one being other real estate revenue at $102.6 million.

Recently, the company began expanding into other revenue sources, announcing in April that it will begin actually buying and selling homes. However, the new expansion has yet to become a source of major income for the company as it is still in its early stages.

Of course, Zillow isn’t the only company that could need to change how it does business in New York. As regulators seek to update the state’s policies, all MLS websites that allow real estate agent advertising will have to change how they operate in New York state.

But Zillow does not think its Premier Agent program is at risk at all under the new changes based on talks it has had with the state.

“The Premier Agent advertising program is legal, and the NY DOS has given no indication that the program will be deemed illegal,” Zillow told HousingWire.

While the New York Department of State has yet to make any official announcements, online real estate advertisers could soon be walking a very thin line as the core of their revenue is threatened.

“Premier Agent helps thousands of brokers offer home buyers guidance and expertise navigating New York City’s real estate market,” Zillow said. “We’ve been working closely with the Department of State as they update their interpretation of New York advertising rules as they apply to online advertising, and it will be our top priority to help agents gain a clear understanding of the guidelines and how they apply to the real estate licensees who use our platforms.”

IRS

NC-2018-02, May 9, 2018

North Carolina — Victims of a tornado and severe storms that occurred on April 15, 2018 in parts of North Carolina may qualify for tax relief from the Internal Revenue Service.

The President has declared that a major disaster exists in the State of North Carolina. Following the recent disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain North Carolina counties will receive tax relief.

Individuals who reside or have a business in Guilford and Rockingham counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after April 15, 2018 and before Aug. 15, 2018, are granted additional time to file through Aug. 15, 2018. This includes the April 18 deadline for filing 2017 individual income tax returns and the April 18 and June 15 deadlines for making quarterly estimated tax payments.

In addition, penalties on employment and excise tax deposits due on or after April 15, 2018 and before April 30, 2018, will be abated as long as the deposits were made by April 30, 2018.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. §301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses (including tax-exempt organizations) whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Aug. 15, 2018, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns annual information returns of tax-exempt organizations; and employment and certain excise tax returns), that have either an original or extended due date occurring on or after April 15, 2018 and before Aug. 15, 2018.

Affected taxpayers that have an estimated income tax payment originally due on or after April 15, 2018 and before Aug. 15, 2018, will not be subject to penalties for failure to pay estimated tax installments as long as such payments are paid on or before Aug. 15, 2018. The IRS also gives affected taxpayers until Aug. 15, 2018 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after April 15, 2018 and before Aug. 15, 2018.

This relief also includes the filing of Form 5500 series returns, (that were required to be filed on or after April 15, 2018 and before Aug. 15, 2018, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

Unless an act is specifically listed in Rev. Proc. 2007-56, the postponement of time to file and pay does not apply to information returns in the W-2, 1094, 1095, 1097, 1098, or 1099 series; to Forms 1042-S, 3921, 3922 or 8027; or to employment and excise tax deposits.  However, penalties on deposits due on or after April 15, 2018 and before April 30, 2018, will be abated as long as the tax deposits were made by April 30, 2018.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. See Publication 547 for details.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684, Casualties and Thefts and its Instructions.

Affected taxpayers claiming the disaster loss on a 2017 return should put the Disaster Designation, “North Carolina, Tornado and Severe Storms” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation “North Carolina, Tornado and Severe Storms” in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-829-3676. The IRS toll-free number for general tax questions is 800-829-1040.

ReverseMortgageDaily--Alex Spanko

The state of New York this month enacted a law that requires reverse mortgage lenders to provide more detailed warnings to borrowers potentially facing foreclosure.

Under the new regulation, which Gov. Andrew Cuomo signed in April, lenders must alert Home Equity Conversion Mortgage borrowers 90 days before they intend to start a legal foreclosure action.

Empire State lawmakers included in the text of the bill a template for the required notification letter, which must prominently feature the phrase “You could lose your home to foreclosure. Please read the following notice carefully,” rendered in 16-point font.

The remainder of the letter must be written in 14-point type and include a host of information, including the specific reason why the lender believes the homeowner to be in default, the amount of back taxes and insurance that can be repaid to avoid the foreclosure action if applicable, and a list of housing counseling agencies that can provide assistance.

“If you were in default due to the death of your spouse, you may be considered an eligible ‘non-borrowing spouse’ under a HUD program which allows you to remain in your home for the rest of your life,” the letter also must read, while additionally informing borrowers of an “at-risk extension” that applies to homeowners aged 80 and older with long-term illnesses. 

Finally, the law requires the letter to include a direct lender phone number where troubled borrowers can receive information about working out a possible solution, as well as phone and online contacts for the New York State Department of Financial Services.

“While we cannot ensure that a resolution is possible, we encourage you to take immediate steps to try to achieve a resolution,” the letter must advise in its conclusion. “The longer you wait, the fewer options you may have.”

New York lawmakers had originally attempted to enact the new reverse mortgage foreclosure provisions in April 2017, according to National Reverse Mortgage Lenders Association co-general counsel Jim Milano pointed out in a notice about the new law. An error held its publication until this past April, but the passed bill explicitly makes the law retroactive to April 20, 2017, Milano noted.

Reverse mortgage foreclosures have garnered increasing attention in the last few years, particularly during the confirmation of Treasury Secretary Steven Mnuchin — whose tenure at OneWest Bank coincided with a number of HECM foreclosures associated with its then-subsidiary, Financial Freedom — and with the release of data showing a substantial spike in the actions in 2016.

Industry leaders have struck back by pointing out that the term “foreclosures” applies to property transfers after the death of the last remaining borrower, and the Department of Housing and Urban Development said the 2016 spike was likely the result of new guidance compelling lenders to speed up the foreclosure process. 

The disconnect between local ordinances and federal regulations often causes problems for lenders. For instance, a proposed Philadelphia regulation would prevent HECM companies from foreclosing upon homeowners with city-approved deferred tax payment plans. But lenders are ultimately bound by federal laws, which in this case can prevent them from taking any action other than foreclosure unless the tax debt is fully forgiven.

“Servicers are boxed in,” Leslie Flynne of Reverse Mortgage Solutions told RMD of the Philadelphia law in March. “We have to pay the past due taxes if the taxing authority reports them unpaid.”

Residential Mortgage Compliance Monitor--Rhona Kyeyune

The Montana Department of Administration amended multiple provisions that include reducing its licensing renewal fees for 2019. These provisions are effective immediately.

The amendment approved and adopted the following standardized NMLS forms relating to consumer loan licensing:

1. ”The NMLS company form dated September 12, 2015;”
2. “The NMLS individual form dated September 12, 2016.”

The amendment also approved and adopted the following state-specific forms on the NMLS:

1. “The Montana consumer loan license new application checklist dated October 7, 2016;”
2. “The Montana consumer loan license surrender checklist dated September 8, 2016.”

As per the amendment, “an entity holding a consumer loan license for any period during a calendar year reporting period shall complete and file by February 15 of the following calendar year an annual report.”

The amendment further states that “the annual report must be filed whether any loans were originated during the reporting period and whether the licensee renewed its license at the end of the reporting period or held a license when the report came due the following February 15.”

The amendment stipulates that “a completed annual report must be emailed to mortgagelicensing@mt.gov and that the January 25, 2018, edition, of the annual report is available on the division’s website at banking.mt.gov.”

The amendment approved and adopted the following standardized NMLS forms relating to escrow business licensing:

1. “The NMLS company form dated September 12, 2015;”
2. “The NMLS individual form dated September 12, 2016.”

Additionally, the amendment also approved and adopted the following state-specific forms on the NMLS:

1. “The Montana escrow business company new application checklist dated January 23, 2017;”
2. “The Montana escrow business company amendment checklist dated January 23, 2017.”

The amendment included definitions for “breach of trust” and “dishonesty.”

“Breach of trust” is defined as:

1. “A wrongful act, use, misappropriation, or omission with respect to any property or fund that has been committed to a person in a fiduciary or official capacity” or
2. “The misuse of a person’s official or fiduciary position to engage in a wrongful act, use, misappropriation, or omission.”

“Dishonesty” means:

1. “To cheat or defraud directly or indirectly;”
2. “To cheat or defraud for monetary gain or its equivalent;” or
3. “To wrongfully take property belonging to another in violation of any criminal statute.”
4. “Dishonesty includes acts involving want of integrity, lack of probity, or a disposition to distort, cheat, or act deceitfully or fraudulently, and may include crimes which federal, state, or local laws define as dishonest.”

The amendment reduced the licensing renewal fees for 2019 by 75 percent. This section of amendment expires in March 2019 and pertains to a mortgage broker who is both an individual mortgage loan originator licensee and the owner of a mortgage broker entity.

• Adopts portions of the Uniform Power of Attorney Act of 2006
• Applies to all powers of attorney except for certain exceptions
• Provides that powers of attorney are durable and for their execution
• Provides a choice-of-law rule for determining the law that governs the meaning and effect of the power of attorney
• Outlines when a power of attorney becomes effective
• Details when a power of attorney terminates

Many more provisions. Please read the entire rule.

These provisions are effective on July 13, 2018.

Residential Mortgage Compliance Monitor--Rhona Kyeyune

The state of Minnesota modified its provisions relating to mortgage loan originator continuing education requirements. These provisions are effective on August 1, 2018.

The amendment provides that in order to meet the written test requirement, an individual shall pass a qualified written test developed by the Nationwide Multistate Licensing System and Registry (NMLSR), designated as the NMLSR’s National Test Component with Uniform State Content for Mortgage Loan Originator Licensing, and administered by a test provider approved by NMLSR based upon reasonable standards.

The amendment further stipulates that in order to meet the annual continuing education requirements, a licensed mortgage loan originator shall complete at least eight hours of education that includes one hour of Minnesota state law and rules.

Lastly, the amendment provides that the revisor of statutes shall change the term “Nationwide Mortgage Licensing System and Registry” or similar term to “Nationwide Multistate Licensing System and Registry” wherever the term appears in Minnesota Statutes, chapter 58A.

Bankers Advisory--Rhona Kyeyune

The state of New York modified its Real Property Actions and Proceedings Law and Civil Practice Law and Rules relating to foreclosure upon a reverse mortgage. The provisions regarding reverse mortgage loans, including a new disclosure and defining a reverse mortgage as a home loan, become effective immediately and are deemed to have been in full force and effect on and after April 20, 2017.

The amendment provides that a home loan shall include a loan secured by a reverse mortgage if the following requirements are met:

1. The borrower is a natural person;
2. The debt is incurred by the borrower primarily for personal, family or household purposes;
3. The loan is secured by a mortgage or deed of trust on real estate improved by one to four family dwelling or a condominium unit used or occupied, or intended to be used or occupied wholly or partly, as the home or residence of one or more persons and which is or will be occupied by the borrower as the borrower’s principal dwelling; and the property is located in the state of New York.

The amendment stipulates that a residential foreclosure action involving a high-cost home loan or a subprime or nontraditional home loan, where the court holds a mandatory conference within sixty days after the date when proof of service is filed with the county clerk for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, shall not apply to a home loan secured by a reverse mortgage where the default was triggered by the death of the last surviving borrower unless:

1. “[T]he last surviving borrower’s spouse, if any, is a resident of the property subject to foreclosure; or”
2. “[T]he last surviving borrower’s successor in interest, who, by bequest or through intestacy, owns, or has a claim to the ownership of the property subject to foreclosure, and who was a resident of such property at the time of the death of such last surviving borrower.”

The amendment also requires a notice be provided to the borrower prior to commencement of legal action, including foreclosure. The notice must be provided at least ninety days prior to commencement of legal action and be in the format of and include the information as provided in Section 1304.

https://www.nysenate.gov/legislation/bills/2017/a9508

Dollar amounts indexed in the Regulated Loan Act, Minnesota Statutes, Chapter 56, and the Minnesota Consumer Credit Code, Minnesota Statutes, Section 47.59, will increase effective July 1, 2018.  Minnesota Statutes, Sections 47.59, subdivision 3(i), and 56.131, subdivision 4, provide for periodic adjustment in dollar amounts, effective on July 1 of even-numbered years, based on a percentage change in the Implicit Price Deflator for the Gross Domestic Product.

Statute establishes that the percentage change in the reference base index be 10% or more in order to adjust the dollar amounts.  The portion of the percentage change in the index in excess of a multiple of ten percent is to be disregarded, and the dollar amounts shall change only in multiples of ten percent.  Information provided by the U.S. Department of Commerce, Bureau of Economic Analysis indicates a percentage change from the revised reference base to be 10% calculated to the nearest whole percentage point as required.  The index for December 2011 is the reference base index for adjustments, with 2005 = 100.  The index was revised nationally to 2009 = 100.  The rebased index for December 2011 is 103.917, increasing to 114.275 in December 2015, for a change of 9.97%.

The original and current dollar amounts are as follows:

The next published adjustment is scheduled on or before April 30, 2020, for July 1, 2020, based on the December 2019 index.

Historic Adjustments - Minnesota Consumer Credit Code and Regulated Loan Act Adjustment of Dollar Amounts (.pdf)

The Department of Banking and Securities (Department) adopts Chapter 59 (relating to mortgage servicing). These regulations incorporate the Federal requirements and standards in effect as April 19, 2018, as most recently issued by the Consumer Financial Protection Bureau's mortgage servicer regulations in 12 CFR Part 1024, Subpart C.  These regulations include:

• 59.1. Purpose.
• 59.2. Scope. 
• 59.3. Definitions. 
• 59.4. General disclosure requirements. 
• 59.5. Mortgage servicing transfers. 
• 59.6. Timely escrow payments and treatment of escrow account balances. 
• 59.7. Error resolution procedures. 
• 59.8. Requests for information. 
• 59.9. Force-placed insurance. 
• 59.10. General servicing policies, procedures, and requirements. 
• 59.11. Early intervention requirements for certain borrowers. 
• 59.12. Continuity of contact. 
• 59.13. Loss mitigation procedures. 
• 59.14. Coordination with existing law. 
• 59.15. Additional notices.

These provisions are effective immediately.

Buckley Sandler, LLP--InfoBytes Blog

On April 25, the New York Department of Financial Services (NYDFS) announced the next phase in its initiative to manage the licensing and regulation of all nondepository financial institutions operating in the state. Beginning May 1, budget planners and premium finance companies will be able to transition their licenses to the Nationwide Multistate Licensing System and Registry (NMLS). Companies applying for new licenses will be also able to submit applications through the NMLS. As previously covered in InfoBytes, licensed lenders, sales finance companies, and money transmitters made the transition to NMLS last year. “The Department is proud to continue our work with [the Conference of State Bank Supervisors] and our fellow state regulators in the ongoing modernization of financial services regulation, enhancing the strong regulatory framework created by states, and supporting industry innovation,” stated NYDFS Superintendent Maria T. Vullo.