Compliance Newshub
State News

Requires lender that has contract with person for reverse mortgage to send person or escrow agent, title insurance company or other agent that pays property taxes on person's behalf notice that states that title to property that is subject to reverse mortgage remains with person and person is responsible for paying property taxes and related taxes on property.

Bankers Advisory, Compliance Monitor--Julio Suarez

Effective immediately, the California Department of Business Oversight (Department) issued a brief bulletin for licensees to be able to identify which documents may be used to comply with both the per diem statute and the Financial Code §50204 (o) (hereinafter referred to as §50204 (o)). The per diem statute prohibits a borrower from being required to pay interest for more than one day prior to the disbursement of loan proceeds from an escrow; §50204 (o) works in tandem with the per diem statute by prohibiting violation of the statute and provides guidance on licensee required documentation.

Though the Commissioner of the Department reserves the right to request more information, the following are documents outlined in the bulletin for licensees to meet compliance standards:

1. Written/electronic records which: (a) show communications between the licensee and settlement agent (agent); (b) verify disbursement date of loan; and (c) provide name and physical or electronic address of agent.
2. Written/electronic records memorializing: (a) oral communications between licensee and agent verifying disbursement date of loan proceeds; and (b) identify name and telephone number of agent.

The bulletin also answered frequently asked questions. In specific, clarification is given regarding ALTA Settlement Statement forms (ALTA forms), Closing Disclosures (CD) and alternative ALTA documentation. The Department clarified that ALTA forms are acceptable as satisfactory documentation if: (1) the agent prepares the statement and is identified; (2) the preparation date is provided; and (3) the latter date is not before the disbursement date. Unlike ALTA forms, CDs are acceptable only if additional documentation is provided since their disbursement date is only an estimation. Alternative ALTA documentation is acceptable so long as the form: (1) identifies the settlement as the preparer; (2) identifies the date the statement was prepared; and (3) identifies the actual date of disbursement.

http://www.dbo.ca.gov/Commissi...

Bankers Advisory, Compliance Monitor--Julio Suarez

Foreclosures of Vacant and Abandoned Dwellings

Effective October 1, 2017, Maryland enacted certain provisions to streamline the foreclosures of vacant and abandoned properties. Essentially, the provisions allow for expediency when a petition is filed for the foreclosure of a “vacant and abandoned” property. In addition, the provisions detail the qualifications for good faith attempts for the delivery of the foreclosure documents to the mortgagor/grantor (collectively referred to as “mortgagor”).

Under the provisions, a court will now rule on a petition “promptly” after it is filed. However, the streamlined process will only commence if a property is found to be “vacant and abandoned.” In order for the dwelling to be found vacant and abandoned, it must be found that the mortgage or deed of trust has been in default for 120 days plus meet three of the following conditions: (1) utility disconnection; (2) disrepair of windows/dwelling entrances; (3) accumulation of garbage on the property; (4) lack of habitation during inspection; (5) a written notice by the mortgagor of abandonment; (6) property condemnation; or (7) existence of two citations along with an unrectified health and safety issue.

As a defense against the classification of a dwelling as “vacant and abandoned,” two recourses are available. First, the mortgagor may file an answer or objection. Second, a mortgagor may file a written statement which opposes a “vacancy and abandonment” assertion. These defenses are pivotal since the process has emphasized the importance of expediency. In fact, only two good faith attempts to provide the foreclosure documents to the opposing party are required before the court will allow an affidavit of good faith attempts to be filed in lieu.

Credit Report Security Freezes

Effective October 1, 2017, Maryland amended provisions regarding fees associated with credit report security freezes. Previously, consumers were allotted two waived fee freezes provided he/she gave the consumer credit report agency (agency) the required documentation. However, under the amendments this has changed. On October 1, 2017, a consumer will be allotted one waived fee freeze provided he/she give the agency the required documentation. This waived fee freeze is only allowed for the placement of a freeze; it may not be used at the discretion of the consumer. The amendments also updated definitions such as “security breach” and other technical terms to reflect the changes in technology and the industry.

The primary change concerns which addresses must be used when sending statutorily required notices: the servicing agent or entity required to send a notice must do so to “all addresses on file, including PO Boxes”. Notices include: Payoff statements, reconveyances, foreclosure mediation notices, mediation decisions, and recorded notices of default. Effective on January 1, 2018.

Adds a new 'Definitions' section; provides that contacts concerning sale may be made with an attorney or an auction company; required trustee or substitute trustee actions after receipt of the sale proceeds. Effective September 1, 2017. 

The majority of changes are derived from the Uniform Power of Attorney Act. Effective September 1, 2017.

• Acceptance of a power of attorney by a third party is mandatory; with limitations/exceptions
•  Amends the Durable Power of Attorney Form

Ballard Sparh LLP--Consumer Financial Services Group

Governor John Hickenlooper recently signed a bill extending until September 1, 2028, the Colorado Fair Debt Collection Practices Act (CFDCPA), which prohibits harassment, misleading, and unfair practices in the collection of debts. The CFDCPA governs the actions of collection agencies and debt collectors and requires that they be licensed with the State of Colorado. The law, which was set to expire on July 1, 2017, does not apply to creditors collecting their own debts.

Along with the 11-year extension of the Act, Colorado enacted several new provisions that go into effect on January 1, 2018. Most notably, the new provisions extend the scope of the CFDCPA to include "Debt Buyers," defined as "a person who engages in the business of purchasing delinquent or defaulted debts for collection purposes, whether it collects the debt itself, hires a third party for collection, or hires an attorney for litigation in order to collect the debt. Debt Buyers are collection agencies for the purposes of the [CFDCPA]."

Under the CFDCPA, collection agencies in Colorado generally must post a surety bond or assign a cash deposit with the Colorado Attorney General's office. The amount of the bond depends on the agency’s average annual collections and serves to protect clients who hire collection agencies to collect debts but do not receive remittances of money collected. Under the new provisions, Debt Buyers are not subject to the surety bond requirement as long as they do not also provide third-party debt collection. Debt Buyers will be subject to the licensing and other requirements of the CFDCPA.

The new CFDCPA provisions also include stricter requirements for collection agencies seeking to obtain a default judgment. Collection agencies must now provide evidence of each assignment or transfer of ownership of the debt establishing an unbroken chain of ownership beginning with the original creditor. The new provisions also contain specific requirements regarding which types of materials suffice as written evidence of the debt and require an itemized accounting of all amounts due. These stricter default judgment requirements will apply to Debt Buyers.

Finally, the Colorado Attorney General's Office, through the Administrator of the CFDCPA, will continue to investigate complaints and take disciplinary or legal action when a debt collector or collection agency has violated the law. Under the new provisions, it is now clear that a two-year statute of limitations applies to these enforcement actions. The new provisions also include expanded requirements for the Administrator to engage in community outreach in the form of public meetings and to prepare and publish reports that detail the Administrator’s actions in pursuing enforcement actions, processing and resolving complaints, and other relevant information through the Colorado Attorney General’s website. The new law also abolished the five-member collection agency board that the Administrator had supervised.

Revisions include, but are not limited to, authorizing electronic delivery of certain notices relating to the foreclosure of real property; provisions relating to the Foreclosure Mediation Program; requiring Home Means Nevada, Inc., or its successor organization, to administer certain functions of the Program. Please see text of the bill for full details. These provisions are effective June 12, 2017; however, applies retroactively to December 2, 2016 to both judicial and non-judicial residential foreclosures.

Contains provisions intended to protect the internet privacy of consumers, including a requirement that website operators display a notice identifying certain categories of information collected through the website and also disclose information related to collection of personal data. Effective October 1, 2017.

Amends the Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 and changes the amount of time that may lapse before a residential mortgage loan originator (“RMLO”) must retake the required pre-licensure education requirement. Effective January 1, 2018, the amount of time that may pass before an individual must retake the pre-licensing education requirements will instead be determined through the rule making process.  At this time, it does not appear that the regulator has issued a proposed rule implementing this statute.

Bankers Advisory, Compliance Monitor--Rhona Kyeyune

West Virginia Amends Provisions Regarding Consumer Credit and Protection Act

The state of West Virginia amended its provisions regarding its Consumer Credit and Protection Act under two bills (SB 344 and SB 563). These provisions were passed on April 5, 2017 and are effective 90 days from this passage date. The bills contain several major changes to the West Virginia Consumer Credit and Protection Act and the most significant ones are the following:

W.Va. Code §46A-3-111 provides that all payments made to a creditor in accordance with the terms of a precomputed consumer credit sale or consumer loan shall be applied to installments in the order in which they fall due and then to delinquency and other outstanding charges.

Furthermore, the statute permits lenders to hold payments which do not comply with the terms of a precomputed consumer credit sale or consumer loan in a suspense or unapplied funds accounts.

The lender must disclose to the consumer the total amount of funds held in a suspense or unapplied funds accounts. Once full payment is received the lender must apply the entire payment to the loan.

W.Va. Code §46A-2-122 amends the definition of “debt collector” to exclude attorneys representing creditors provided the attorneys are licensed and are handling claims and collections in their own name as an employee, partner, member, shareholder or owner of a law firm and not operating a collection agency under the management of a person who is not a licensed attorney.

W.Va. Code §46A-2-128 changes the period of time from seventy-two hours to three business days from which a debt collector must cease direct contact with a consumer after receiving notice of representation. The provision further specifies that notice to a debt collector of a consumer’s representation by legal counsel which before only needed to be in writing, must now be sent by certified mail, return receipt requested.

A new section, designated §46A-2-140, establishes that pleadings filed in a court of West Virginia shall not be a basis of a cause of action under this chapter, nor shall the act of filing a civil action be the basis of a cause of action under this chapter unless the pleading or the filing of the civil action constitutes a material violation of certain statutory provisions.

Additionally, W.Va. Code § 46A-5-101(2) amends the statute of limitations from four (4) years to one (1) year for claims relating to the setting aside of a foreclosure sale. Also, the amendment provides that any counterclaim brought under this chapter is subject to the applicable statute of limitations.

W.Va. Code § 46A-5-108 requires that consumers give a lender or debt collector notice of a right to cure in writing before filing a lawsuit. The consumer must provide the creditor or debt collector forty-five (45) days from receipt of the notice of violation but twenty days (20) to make a cure offer in case a cause of action has already been filed.

The consumer shall have twenty days (20) from receipt of the cure offer to accept the cure offer or it is deemed refused and withdrawn. If a cure offer is accepted, the creditor or debt collector has twenty days (20) to begin effectuating the agreed upon cure and the cure must be completed within a reasonable time.

Where an action is brought under this article, it is a complete defense that a cure offer was made, accepted and the agreed upon cure was performed. If a cure offer is made, but rejected by the consumer, the consumer may only be awarded attorney’s fees in the subsequent litigation if he or she is awarded an amount at trial that exceeds the cure offer.

West Virginia Modifies Provisions Regarding Fees and Allowance

The state of West Virginia modified its provisions relating to fees the clerk of county commission may charge. These provisions were passed on April 5, 2017 and are effective 90 days from this passage date.

The amendment provides that, when a writing is admitted to record, for receiving proof of acknowledgment thereof, entering an order in connection therewith, endorsing clerk’s certificate of recordation thereon and indexing in a proper index, the clerk of the county commission shall charge twenty-five dollars instead of fifteen dollars that was previously charged for a deed of conveyance (with or without a plat), trust deed, fixture filing or security agreement concerning real estate lease.

The amendment further stipulates that of the fees collected, five dollars instead one dollar shall be deposited in the county reappraisal fund and dedicated to the operation of the assessor’s office mapping division. Three dollars shall be deposited in the Courthouse Facilities Improvement Fund, and three dollars shall be deposited in the county general fund and dedicated to the operation of the county clerk’s office.

West Virginia Amends Provisions Regarding Uniform Trust Code

The state of West Virginia amended its provisions relating to trusts. These provisions were passed on April 5, 2017 and are effective 90 days from this passage date. The amendments generally relate to trusts and their administration.

The provisions establish an insurable interest of a trustee in the life of an individual insured under a life insurance policy that is owned by the trustee of the trust acting in a fiduciary capacity or that designates the trust itself as the owner if, on the date the policy is issued the insured is a grantor of the trust; or an individual in who, a grantor of the trust has, or would have had if living at the time the policy was issued, an insurable interest.

A “grantor” means a person that executes a trust instrument. The term includes a person for which a fiduciary or agent is acting.

The amendment eliminates the requirement to give notice to a trustee of substitution under certain circumstances and increase the amount of non-charitable trust property to terminate trust without court approval from $100,000 to $200,000.

The update requires that a self-settled spendthrift trust have one independent qualified trustee. Furthermore, the provisions allow a creditor or assignee to reach the maximum amount distributed for the grantor’s benefit from an irrevocable and change references from beneficiary to interested person in limitation on actions to contest validity of revocable trust.

Lastly, the amendment modifies the duty of a trustee to inform and report to beneficiaries from sixty days to a reasonable time and grant a trustee authority and power to wind up the administration of the trust upon its termination.

Bankers Advisory, Compliance Monitor--Adam Faria

The state of Louisiana has passed HB 400 which amends provisions relating to the cancellation of mortgages and adds provisions relating to the partial cancellation of mortgages. These amendments include changes to the model form for cancellation of mortgages and the addition of a model form for the partial cancellation of mortgages. The provisions of HB 400 take effect August 1, 2017.

HB 400 amends provisions in R.S. 9:5172 that allow for a method of cancellation or partial cancellation of a mortgage in lieu of compliance with R.S. 9:5169, 5170, and 5171 by allowing the attachment of a signed written act of a licensed financial institution to a request for cancellation or partial cancellation of a mortgage. The signed, written act of the financial institution must be represented by one of its officers, duly executed or acknowledged before a notary public, or may take such other form that is self-proving under the Code of Evidence Article 902(1), (2), (3), or (8). Alternatively, a signed act by two authorized officers of the financial institution along with a declaration that the obligee is a licensed financial institution as defined in Subsection C of R.S. 9:5172 shall also be allowed so long as the following requirements are met by the institution: The financial institution must have been the obligee or agent of the obligee at the time the obligation was extinguished and the obligation must have been paid, satisfied, or extinguished; the financial institution releases the mortgage and directs the recorder to cancel its recordation, or; in the event of a partial release, the financial institution partially releases the mortgage and directs the recorder to partially cancel its recording.

In addition, Amended R.S. 9:5172 contains revisions to the model form for the cancellation of mortgages and adds a model form for the partial cancellation of mortgages; the new model forms are contained within the text of amended R.S. 9:5173.1. A financial institution may use the model forms and the recorder of mortgages shall accept the model forms as compliant with the requirements of the statute. The model forms are not, however, the only forms that may be used and any form that meets the requirements of R.S. 9:5172 may be filed to effect the cancellation or partial cancellation of a mortgage.

 The full text of HB 400 may be found at https://legiscan.com/LA/text/HB400/2017 and contains the amended model form for the cancellation of a mortgage and the new model form for the partial cancellation of a mortgage.