InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Texas Adopts Provisions Regarding Criminal Prosecution of Mortgage Fraud
On June 17, Texas Governor Rick Perry signed into law S.B. 485, which adds an article to the Texas Code of Criminal Procedure to provide that offenses that are prosecuted as mortgage fraud may be brought in (i) the county in which the real estate is located, (ii) any county in which part of the transaction occurred, including the generation of documentation supporting the transaction, or (iii) any county authorized by Article 13.27, i.e., any county in which any material document was sent or any county in which any such material document was delivered. The amendment is effective September 1, 2011.
Nevada Amends Escrow Agent, Mortgage Banker, Mortgage Broker, and Mortgage Agent Laws
On June 17, Nevada Assembly Bill 77 (Bill) was signed into law, revising various provisions governing mortgage lending and the conduct and supervision of related professionals, including escrow agents and agencies, mortgage bankers, brokers, and agents, and providers of certain covered services. The Bill sets forth a requirement that certain escrow agency licensees designate a qualified employee, and provides new requirements and restrictions applicable to mortgage brokers arranging or servicing loans for private investors. The Bill amends the definition of "mortgage agent" and makes changes to the license eligibility requirements applicable to such persons, and exempts additional entities (for example, certain nonprofit agencies) from the purview of the Nevada Mortgage Brokers and Mortgage Agents Act and the Nevada Mortgage Bankers Act. The Bill requires that mortgage broker licensees undertake an annual review of impound trust accounts, and amends provisions pertaining to mortgage banker, broker, and agent license expiration dates, change of control reporting requirements applicable to mortgage broker licensees, and surety bonds requirements for escrow agency and mortgage broker licensees. Finally, the bill amends the definition of covered service to include, among other things, providing the services of a loan modification or foreclosure consultant, and specifies that such a provider of covered services may not request or receive payment of any fee from a homeowner until the requirements of the federal Mortgage Assistance Relief Services Rule and any other applicable law or federal regulation have been met. The Bill takes effect on July 1, 2011.
Texas Prohibits Execution of Deeds Conveying Residential Real Estate in Certain Transactions
On June 17, Texas Governor Rick Perry signed into law S.B. 1320, which forbids a seller or a mortgagee in a residential real estate transaction, before or at the time of the conveyance of the residential real estate, from requesting or requiring the purchaser or mortgagor to execute and deliver a deed conveying the residential real estate to the seller or mortgagee (i.e., a deed-in-lieu of foreclosure executed in advance so the lender can later avoid foreclosure). The law makes voidable a deed executed in violation of the law, unless a subsequent purchaser for value obtains an interest in the property after the deed was recorded, but without notice of the violation (including notice provided by actual possession of the property by the grantor of the deed). The law also establishes a statute of limitation and provides attorney’s fees for an action to void a deed under the law. S.B. 1320 takes effect on September 1, 2011.
Nevada Governor Signs Bill Regulating Foreclosure and Loan Modification Consultants
On June 10, Nevada Governor Brian Sandoval signed into law A.B. 308, which regulates foreclosure and loan modification consultants (but which do not include national banks, federal thrifts, regulated lenders, or their affiliates and agents). The law prohibits any payment to a consultant before a homeowner signs a written mortgage assistance agreement, requires consultants to maintain written records for two years, and obligates consultants to implement specific quality control and complaint tracking procedures. The law also requires consultants to make certain disclosures (including the identity of and the limitations on the role of the consultant) and provide notices to a homeowner. Finally, the law prohibits any person from assisting a consultant when the person knows or reasonably should know that the consultant is in violation of this law. A.B. 308 becomes effective on July 1, 2011.
Maine Amends Regulations Implementing the Federal SAFE Act
On June 10, Maine Governor Paul LePage signed into law LD 290, which amends Maine’s regulations implementing the federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) of 2008. LD 290 relates to good faith failures to comply, credit sales, and persons exempt from SAFE. Under LD 290, an originator’s good faith failure to comply with the Act does not affect the validity or enforceability of the underlying mortgage. Additionally, "credit sales" are defined as "the sale of a dwelling or residential real estate . . . in which credit is extended by the seller and either the debt is payable in installments or a finance charge is made," and are generally excluded from covered "residential mortgage loans." Lastly, LD 290 clarifies that certain individuals who qualify for exemptions under HUD rules based on minimal dealings with residential mortgage loans are exempt from the provisions of the Act.
Alabama Modifies Late Fee Restrictions Under Consumer Credit Act
On June 9, Alabama HB 3 went into effect, amending § 5-19-4 of the Alabama Consumer Credit Act (Mini-Code, which does not apply to real estate loans where the creditor is a national bank or federal thrift, except for prepayment penalties), which sets minimum and maximum late charges that may be imposed on consumer credit transactions. Prior to the amendment, § 5-19-4 allowed lenders to charge the greater of $10 or 5% of the amount of the scheduled payment in default, capped at $100, when a payment on a consumer credit transaction - which includes residential mortgage loans - is ten or more days past due. The amendment increases the dollar limitation to $18, while retaining both the alternative 5% of the amount of the scheduled payment provision and the $100 maximum late charge. This amendment brings the Mini Code and Small Loan Act into accord regarding the charging of late fees.
Nevada Amends Regulations Implementing the Federal SAFE Act
On June 4, Nevada Governor Brian Sandoval signed into law Assembly Bill 283 (AB 283), which revises Nevada’s regulations implementing the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 relating to continuing education, criminal and civil liability, and the employment of mortgage agents. Under AB 283, mortgage agents, bankers, brokers, and employees of such entities that (i) are not residential mortgage loan originators, (ii) are not otherwise required to register with the Nationwide Mortgage Licensing System & Registry (NMLS), and (iii) have not voluntarily registered or renewed with NMLS are exempt from all regulations promulgated by the Commissioner of Mortgage Lending relating to continuing education requirements. Assembly Bill 283 requires that non-exempt licensees dedicate at least three hours per year to continuing education specific to Nevada laws and regulations per year, as well as an additional two hours of continuing education classes related to ethics. In addition, AB 283 insulates investors who only provide money to acquire a beneficial interest in a mortgage loan from criminal or civil liability resulting from an act or omission committed by a mortgage broker. Finally, AB 283 updates the provisions relating to the licensing and regulation of mortgage agents to clarify the responsibilities of those who hold a certificate of exemption and those who sponsor mortgage agents.
Vermont Adds Individual Licensing Requirement for Loan Modification Activities
The Vermont Legislature recently amended the Vermont Licensed Lender Act, Vt. Stat. Ann. tit. 8, § 2201, to require loan modification employees of mortgage loan servicing companies to obtain individual mortgage loan originator licenses to continue their loan modification efforts for loans serviced by the loan servicing company. The statute defines "loan modification" as an adjustment or compromise of an existing residential mortgage loan and excludes a refinancing transaction. This provision takes effect on July 1, 2011.
Florida Amends Mortgage Loan Originator Licensing Requirements in Alignment with S.A.F.E. Act
Last week’s InfoBytes incorrectly reported on a Florida bill signed into law on May 31 by stating that the law amends provisions of Florida’s mortgage licensing law such that in-house loan processors must secure an individual mortgage loan processor license. Although Florida law previously required persons acting solely as loan processors to secure a loan originator license, the new legislation actually relieves in-house loan processors from individual licensing in Florida. Specifically, the bill excludes in-house loan processors from individual licensure, so long as the individual (i) is an exclusive employee of a single mortgage broker or a mortgage lender, (ii) under direct supervision and instruction of a licensed Florida loan originator, and (iii) engages in loan processing only (i.e., receiving, collecting, distributing, and analyzing information for processing a mortgage loan or communicating with consumers to obtain information necessary to process a mortgage loan (not including offering or negotiating or counseling consumers about mortgage loan rates or terms)). Contract (i.e., independent) loan processors remain subject to loan originator licensure in certain circumstances. This amendment brings Florida’s law more in line with the federal Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E.) and other state jurisdictions with respect to treatment of mortgage loan processors. As previously reported, the bill additionally requires mortgage lenders to submit reports of their financial condition to the NMLS registry and to authorize the NMLS registry to obtain a credit report for each of the mortgage lender’s control persons in order to renew a mortgage lender license. The bill becomes effective July 1, 2011.
Texas Adds Statutes Regarding Scope and Validity of Corrected Instruments
On May 28, the governor of Texas signed Senate Bill 1496, which added new sections regarding instruments that correct recorded original instruments to the Texas statutes. These new provisions provide that a correction instrument may correct an ambiguity or error in a recorded original instrument of conveyance to transfer real property or an interest in real property, including an ambiguity or error that relates to the description of or extent of the interest conveyed. The legislation states that a correction instrument may make nonmaterial corrections, such as corrections to legal descriptions, names, dates, or facts relating to the acknowledgment or authentication, but the person executing the document must disclose in the instrument the basis for the person’s personal knowledge of the facts relevant to the correction of the recorded original instrument of conveyance. A correction instrument may also make material corrections, such as adding a buyer’s disclaimer, a mortgagee’s consent or subordination, or additional land; removing land from a conveyance; or accurately identifying a lot or unit number that was inaccurately identified in the recorded original instrument of conveyance. While this legislation is slated to be effective September 1, 2011, a correction instrument that substantially complies with the statutory provisions recorded before that date will be given effect.