Compliance Newshub
State News

Bankers Advisory, Compliance Monitor--Zachary Pearlstein

The state of Wisconsin recently modified its provisions regarding procedures on the sale of a foreclosed property by a sheriff or referee. These provisions are effective immediately.

The updated provisions state that in the event of a foreclosure, the sheriff or referee who makes the sale of a mortgaged premises must give notice of the time and place of sale in the manner provided by law. The sheriff or referee must include the street address of the real estate to be sold and the sum of the judgment, in the notice of sale. If the Department of Veterans Affairs is also a party to the foreclosure action, the judgment must direct that notice of sale be given by registered mail, return receipt requested, to the Department at Madison, Wisconsin, at least 3 weeks prior to the date of sale.

The update explains that no foreclosure sale involving real property other than a one-family to 4-family residence that is owner-occupied at the commencement of the foreclosure action, a farm, a church, or a tax-exempt nonprofit charitable organization may be held until the expiration of six months from the date when the foreclosure judgment is entered. Notice of the time and place of sale must be given and may be given within the six month period, except that the first printing of the notice may not be made less than four months after the date when the judgment is entered.

Upon the sale of the mortgaged premises in compliance with its terms, the sheriff or referee must make and execute on the purchaser (or the purchaser’s assigns or personal representatives) a deed of the premises that includes each parcel of land sold to the purchaser and the purchase price.

The sheriff or referee may not accept less than $100 as a deposit or down payment from the purchaser at a sale of mortgaged premises. The sheriff or referee must then deliver the amount of the deposit or down payment to the clerk of court and the purchaser must pay the balance of the sale price to the clerk of court upon the confirmation of the sale.

The update further explains that there is a real estate transfer fee imposed on the grantor of real estate, which is 30 cents for each $100 of value on every non-exempt conveyance. The value is simply the total principal amount that the buyer agrees to pay the seller for the real estate. This transfer fee must be collected by the register at the time the instrument of conveyance is submitted for recording. The register must enter the fee paid on the face of the deed or other instrument of conveyance before recording. Submission of a completed real estate transfer return and collection by the register of the fee is necessary for acceptance of the conveyance for recording. If the transfer is not subject to a fee, the reason for exemption must be stated on the face of the conveyance to be recorded by reference.

The full text is available below:

https://docs.legis.wisconsin.gov/2017/related/acts/104

Bankers Advisory, Compliance Monitor--Zachary Pearlstein

The New Jersey Department of Banking and Insurance has issued a Bulletin setting out the maximum principal amount for loans that may be considered “high-cost home loans” under the New Jersey Home Ownership Security Act of 2002. The adjusted dollar amount may be effective for loan applications received on or after January 1, 2018.

The New Jersey Home Ownership Security Act of 2002 requires an annual review and adjustment (if necessary) of the maximum principal loan amount that may be considered a high-cost home loan in New Jersey. The adjustment is based on the housing component of the national Consumer Price Index, which measures the average change in housing prices over time.

When the Act was first enacted, the maximum principal amount was set at $350,000. As of 2017 this amount had risen to $477,744.15, and as of December 6, 2017 the index indicated an increase of 39.32% from 2003 to 2017.  Therefore, the New Jersey Department of Banking and Insurance has adjusted the definition of “high-cost home loan” to state that the maximum principal amount of a loan that may be considered a high-cost home loan in New Jersey is $487,618.86.

The full Bulletin is available below:

http://www.state.nj.us/dobi/bulletins/blt17_10.pdf

JDSUPRA--Reed Smith

Senate Bill 751, amendments to the Pennsylvania Mortgage Licensing Act (7 Pa. C.S.A. § 6101 et. seq.), we passed and sent to the governer for signature on December 13.  

• Servicer Licensing Requirements
  • Covers entities that “directly or indirectly” service a mortgage loan, including both first and second lien loans.
  • Requires most mortgage servicers to apply for and obtain a mortgage servicer license from the Department, with specific exceptions.
  • Enacts detailed licensing qualification requirements for servicers.
• Servicer Duties Following Payoff - The MLA already expressly requires licensees to comply with Pennsylvania's existing Mortgage Satisfaction Act; however, has added the same specific language to the amendments.
• Servicer Prohibitions - Amendments subject servicers to all of the existing prohibitions in the MLA that apply to licensed mortgage lenders, brokers and originators. 
• “Single Point of Contact” - Imposes a Pennsylvania law “single point of contact” requirement. Servicers must not fail by no later than the 36th day after a borrower becomes delinquent “to establish or attempt to establish a single point of contact with whom a borrower can communicate about foreclosure matters or loss mitigation options …, unless contact is inconsistent with applicable bankruptcy law or court order.”
  • Timing conflict: RESPA regulations establish a 36-day period for “early intervention,” which requires a good-faith effort to establish live contact. They allow 45 days for servicers to implement the single point of contact. The MLA Amendments allow 36 days. Cherry-picking federal mortgage servicing provisions and placing them into the MLA with different time limitations creates confusion, and could subject licensees to needless penalties. Perhaps the regulations will address this.
• RESPA Regulation X Mortgage Servicing Regulations - A servicer that violates federal mortgage servicing law could also trigger Department enforcement that seeks to impose MLA penalties, and such violation could potentially threaten a licensee’s future renewals. Also, even though the federal mortgage servicing provisions do NOT apply to open-end mortgages, the MLA Amendments seem to expand the scope of federal law to all loans subject to the MLA.
  • Also includes a provision that if Regulation X Subpart C should be altered in such a way as to result in a complete lack of federal regulations in this area, the Department’s regulation would remain in effect for two years, during which time the Department would be required to adopt “replacement regulations.”
• Penalties and Enforcement Against Servicers - Existing MLA penalties of a $10,000 fine for each offense assessed by the Department would apply to servicers that are covered by the MLA Amendments.

docutech

On November 30, 2017, Wisconsin 2017 Assembly Bill 253 was enacted which repeals, amends, and creates several provisions of Wisconsin’s laws concerning sheriff’s sales of foreclosed property (see https://docs.legis.wisconsin.gov/2017/related/acts/104). Among the provisions are the repeal of the clause in Wis. Stat. Ann. § 846.16(1)(a) which stipulates the order of distribution of proceeds after a foreclosure sale – which order is roughly outlined in FNMA Form 3050, § 22.

Legal Connection, Colorado Bar Association CLE--Susan Hoyt

On Thursday, December 7, 2017, the Colorado Supreme Court issued Rule Change 2017(12), amending the Colorado Rules of Civil Procedure.

Rule 16 was amended to reference new forms available to use when offering records of regularly conducted activity pursuant to CRE 902(11) and (12). The new forms, Form 37 and Form 38, were introduced, and Forms 10 and 11 were amended. These changes are effective immediately.

Rule 53, “Masters,” was introduced, effective January 1, 2018. The rule provides guidelines for the appointment of masters. Rule 121, § 1-15 was also amended effective January 1, 2018, to delete specific page requirements of briefs and instead refer to Rule 10(d), and also to add information about self-represented parties.

Finally, Rule 120, “Orders Authorizing Foreclosure Sale Under Power in a Deed of Trust to the Public Trustee,” was significantly amended. These changes are effective March 1, 2018.

A redline and clean copy of the rule change is available here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Bankers Advisory, Compliance Monitor--Rhona Kyeyune

Texas approved a proposed constitutional amendment that includes, but is not limited to, establishing a lower amount for expenses to borrowers and removing certain financing expense limitations for a Home Equity Loan (HEL), authorizing certain lenders to make HELs; changing certain options for the refinancing of HELs; amending the threshold for advances on an HEL; and expanding HELs to loans on agricultural homestead properties. These changes in Senate Joint Resolution 60 are effective on January 1, 2018.

The amendment provides that the homestead of a family, or of a single adult person, shall be, and is protected from forced sale, for the payment of all debts except for an extension of credit that does not require the owner or the owner’s spouse to pay, in addition to any interest or any bona fide discount points used to buy down the interest rate, any fees to any person that are necessary to originate, evaluate, maintain, record, insure, or service the extension of credit that exceed, in the aggregate, two percent of the original principal amount of the extension of credit, excluding fees for:

1. an appraisal performed by a third party appraiser;
2. a property survey performed by a state registered or licensed surveyor;
3. a state base premium for a mortgagee policy of title insurance with endorsements established in accordance with state law; or a title examination report if its cost is less than the state base premium for a mortgagee policy of title insurance without endorsements established in accordance with state law;

The amendment also provides that a refinance of debt secured by the homestead, any portion of which is an extension of credit may not be secured by a valid lien against the homestead unless all of the following conditions are met:

1. the refinance is not closed before the first anniversary of the date the extension of credit was closed;
2. the refinanced extension of credit does not include the advance of any additional funds;
3. the refinance of the extension of credit is of a principal amount that when added to the aggregate total of the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80 percent of the fair market value of the homestead on the date the refinance of the extension of credit is made; and
4. the lender provides the owner the following written notice on a separate document not later than the third business day after the date the owner submits the loan application to the lender and at least 12 days before the date the refinance of the extension of credit is closed:

“YOUR EXISTING LOAN THAT YOU DESIRE TO REFINANCE IS A HOME EQUITY LOAN. YOU MAY HAVE THE OPTION TO REFINANCE YOUR HOME EQUITY LOAN AS EITHER A HOME EQUITY LOAN OR AS A NON-HOME EQUITY LOAN, IF OFFERED BY YOUR LENDER.

“HOME EQUITY LOANS HAVE IMPORTANT CONSUMER PROTECTIONS. A LENDER MAY ONLY FORECLOSE A HOME EQUITY LOAN BASED ON A COURT ORDER. A HOME EQUITY LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE.

“IF YOU HAVE APPLIED TO REFINANCE YOUR EXISTING HOME EQUITY LOAN AS A NON-HOME EQUITY LOAN, YOU WILL LOSE CERTAIN CONSUMER PROTECTIONS. A NON-HOME EQUITY REFINANCED LOAN:

“(1) WILL PERMIT THE LENDER TO FORECLOSE WITHOUT A COURT ORDER;

“(2) WILL BE WITH RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE;

“(3) MAY ALSO CONTAIN OTHER TERMS OR CONDITIONS THAT MAY NOT BE PERMITTED IN A TRADITIONAL HOME EQUITY LOAN.

“BEFORE YOU REFINANCE YOUR EXISTING HOME EQUITY LOAN TO MAKE IT A NON-HOME EQUITY LOAN, YOU SHOULD MAKE SURE YOU UNDERSTAND THAT YOU ARE WAIVING IMPORTANT PROTECTIONS THAT HOME EQUITY LOANS PROVIDE UNDER THE LAW AND SHOULD CONSIDER CONSULTING WITH AN ATTORNEY OF YOUR CHOOSING REGARDING THESE PROTECTIONS.

“YOU MAY WISH TO ASK YOUR LENDER TO REFINANCE YOUR LOAN AS A HOME EQUITY LOAN. HOWEVER, A HOME EQUITY LOAN MAY HAVE A HIGHER INTEREST RATE AND CLOSING COSTS THAN A NON-HOME EQUITY LOAN.”

Subsection (f-1) was added and provides that a lien securing a refinance of debt under Section 1 (f) (2) is deemed to be a lien described by Section 1 (a) (4). An affidavit executed by the owner or the owner’s spouse acknowledging that the requirements of Section 1 (f) (2) have been met conclusively establishes that the requirements of Section 1 (a) (4) have been met.

Furthermore, part E of the written notice required where an extension of credit under Section 1 (a) (6) may be secured by a valid lien against homestead property if the extension of credit is not closed before the 12th day is amended to read as

“FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 2 PERCENT OF THE LOAN AMOUNT, EXCEPT FOR A FEE OR CHARGE FOR AN APPRAISAL PERFORMED BY A THIRD PARTY APPRAISER, A PROPERTY SURVEY PERFORMED BY A STATE REGISTERED OR LICENSED SURVEYOR, A STATE BASE PREMIUM FOR A MORTGAGEE POLICY OF TITLE INSURANCE WITH ENDORSEMENTS, OR A TITLE EXAMINATION REPORT.

Bankers Advisory, Compliance Monitor--Adam Faria

Effective November 6, 2017, the state of Maryland has amended regulation .08 under COMAR 09.03.12, Foreclosure Procedures for Residential Property. The amendment provides a model form to be used to expedite foreclosure proceedings for vacant and abandoned properties. The purpose of the form is to notify borrowers of their right to contest a finding that a property is vacant.

The model form may be found at: Model Form

The full text of the regulation may be found at: Full Text

Bankers Advisory, Compliance Monitor--Zachary Pearlstein

The state of California has recently enacted the Building Homes and Jobs Act, effective January 1, 2018. The purpose of the Act is to establish a permanent, ongoing source of funding for affordable housing development.  This funding will go to existing state programs that provide assistance for emergency housing, multifamily housing, farmworker housing, home ownership for very low and low-income households, and down payment assistance for first-time home buyers.

The state legislature has created this new source of funding in response to a severe need in California. The state of California has 12% of the United States population, but 20 percent of its homeless population, and, in addition, California has the highest percentage of unsheltered homeless in the nation at 64%.  Furthermore, California has 24 percent of the nation’s homeless veterans population and one-third of the nation’s chronically homeless population.

In response, as of 2015, the state has financed the construction, rehabilitation, and preservation of over 14,000 shelter spaces and 245,000 affordable homes. State funds have helped tens of thousands of families become and/or remain homeowners.  Previously, the state’s Community Redevelopment Law required that redevelopment agencies set aside significant funds for affordable housing, which generated approximately $1 billion per year.  However, as many of these agencies no longer exist there is a need to replace this funding.

In order to provide a new stream of funding for these programs, beginning on January 1, 2018, a fee of $75 will be paid at the time of recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, except for transfers subject to a transfer tax and/or transfers to an owner-occupier. The aggregate fees for a single transaction will be capped at $225.

“Real estate instrument, paper, or notice” means a document relating to real property, including, but not limited to, a: deed, grant deed, trustee’s deed, deed of trust, reconveyance, quit claim deed, fictitious deed of trust, assignment of deed of trust, request for notice of default, abstract of judgment, subordination agreement, declaration of homestead, abandonment of homestead, notice of default, release or discharge, easement, notice of trustee sale, notice of completion, UCC financing statement, mechanic’s lien, maps, and covenants, conditions, and restrictions.

Each county recorder within the state must then remit quarterly, on or before the last day of the month, these fees (after administrative deductions) to the Controller for deposit in the Building Homes and Jobs Trust Fund, which will then be distributed to a variety of state programs.

See also: http://leginfo.legislature.ca....

Daily Mortgage News and Commentary--Rob Chrisman

Summary provided by the Ohio MBA:

The new law will become effective 90 days after the Governor signs the legislation (signature pending).

• All loans secured by 1-4 unit residential property, both first and subordinate liens, will fall under Section 1322 of the Ohio Revised Code, requiring only one company registration and one state license per loan officer;
• All non-depository companies will become registrants, including mortgage banking companies that are currently exempt from registration when lending solely within their federal agency
• approvals, alleviating the possibility of unknowingly engaging in unlicensed activity;
• Special accounts will no longer be required; and
• Only unsecured loans and loans secured by collateral other than real estate will require a license under Section 1321 of the Ohio Revised Code.

Bankers Advisory, Compliance Monitor--Ryan Peters

The Michigan Department of Insurance and Financial Services has released the schedule of fees under the Mortgage Loan Originator Licensing Act for the licensing year January 1, 2018, to December 31, 2018.

The fees are as follows:

LICENSE APPLICATION

• Loan Originator License fee: $250.00

AMENDMENT

• Change in Employer/Sponsor fee: $100.00
• Loan Originator Name & Business Address Amendment fee: $15.00

For the complete release, please refer to: Full Text

Bankers Advisory, Compliance Monitor--Robert Harrison

The Mortgage Loan Servicer Practices Act necessitates that Oregon mortgage servicers attain a license from the Department of Consumer and Business Services (DCBS) by January 1, 2018. In order to provide time for the application process, a temporary rule has been adopted to create a licensing program in advance of the January 1, 2018 compliance date. DCBS did not have the authority to begin the rulemaking process until recently so there was not sufficient time to complete the notice and comment procedures required under the Administrative Procedures Act for a permanent rule. This temporary rule adopted by Oregon sets application requirements for obtaining a license, requirements for corporate surety bonds and irrevocable letters of credit, and application and renewal fees. The rule also clarifies which entities are exempt from licensing.

OAR 441-890-0005 sets application requirements for a mortgage servicer license. Each person applying for a mortgage servicer license must submit all of the following required application materials and information:

• A completed Form MU1
• A completed Form MU2
• Fingerprints and an authorization to conduct a criminal records check and obtain a credit report
• A corporate surety bond or an irrevocable letter of credit calculated using the appropriate loan servicing volume amounts under OAR 441-890-0025
• Financial statements prepared in accordance with generally accepted accounting principles, including a balance sheet and a statement of income or operations, dated not more than six months prior to submission of the application
• A statement with a detailed breakdown of the portfolio of mortgage loan servicing rights on a nationwide basis, as well as separately for Oregon.
• The names and contact information of all subcontractors performing servicing activities on behalf of the mortgage servicer.
• Biographical information required by OAR 441-890-0010
• The information required under OAR 441-890-0020 for each branch office (Form MU3)
• Payment of fees for application or renewal under OAR 441-890-0030.

OAR 441-890-0050 exempts certain entities from the licensing requirements. A person does not need to obtain a mortgage servicer license if:

• He or she is an employee of a licensed mortgage servicer or an exempt entity acting within the scope of the person’s employment;
• He or she owns the rights to service a mortgage loan but does not otherwise service a residential mortgage loan;
• The entity is a nonprofit organization that:
  • Has been granted a tax-exempt status under section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3);
  • Promotes affordable housing, affordable housing financing, or other similar services approved by the Director; and
  • Has not violated a state or federal law and has not engaged in a course of dealing that is fraudulent, deceptive, or dishonest.

The effective period of the temporary administrative order is October 23, 2017 through April 17, 2018 and the full text can be found here: Full Text

Bankers Advisory, Compliance Monitor--Robert Harrison

The Vermont Commissioner of Taxes issued a memo regarding the average prime loan rate charged by banks for 2018. This rate is the basis for determining whether a loan is a high-rate/high-point loan.

Title 32 V.S.A section 3108 requires the commissioner to set rates for calculating interest on underpayment and overpayment of tax liabilities. The annual rate for overpayments is rounded to the nearest quarter percent; the average prime loan for October 1, 2016 to September 30, 2017 was 3.91% so the annual rate for overpayment of tax is 4%.  The annual rate for underpayments is 200 basis points above the rate for over payments, in this case it is 6%.  Under Title 32 V.S.A section 3108(a) the monthly rate is rounded up to the nearest tenth which means the interest rate applicable to overpayments is 0.4% per month and 0.5% per month for underpayments.

These rates are effective January 1, 2018 and apply to interest that accrues in the 2018 calendar year.