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Financial Services Law Insights and Observations

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  • Texas Governor Signs Residential Mortgage Loan Servicer Registration Act Into Law

    State Issues

    On June 17, Texas Governor Rick Perry signed into law S.B. 17, the Residential Mortgage Loan Servicer Registration Act, which requires all residential mortgage loan servicers in Texas to register with the Commissioner of the Texas Department of Savings and Mortgage Lending (Commissioner). The registration requirement applies to both companies acting purely in a servicing capacity, as well as mortgage bankers acting as residential mortgage loan servicers. In addition to setting forth registration requirements, the law allows the Commissioner to investigate consumer complaints against registrants, impose an investigation fee to cover costs incurred in any such investigation, and order a non-compliant registrant to cease and desist and/or pay a consumer for damages. Additionally, no later than 30 days after commencing the servicing of a loan, registrants are required to provide borrowers with a specific notice that sets forth the Texas Department of Savings and Mortgage Lending’s contact information for reference in registering complaints. S.B. 17 takes effect on September 1, 2011.

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  • Oregon Provides Confidential Status to Mortgage Loan Documents Obtained During Licensee Examinations

    State Issues

    On June 17, Oregon Governor John Kitzhaber signed into law H.B. 2083, which amends the Oregon Mortgage Lender Law to provide confidential status to mortgage loan documents obtained by the Director of the Oregon Department of Consumer and Business Services as part of an examination. Effective immediately, any mortgage loan documents that the Director obtains during an examination of a mortgage banker, mortgage broker, or mortgage loan originator is not admissible as evidence in a private civil action or subject to (i) public inspection as a public record, (ii) subpoena, or (iii) discovery. However, the amendment permits the Director to disclose an individual’s mortgage loan documents obtained during an examination to that individual, so long as the Director authenticates the individual’s identity before disclosure.

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  • Texas Adds Military Disclosure Requirement to Foreclosure Notices

    State Issues

    On June 17, Texas Governor Rick Perry signed into law S.B. 101, which requires certain foreclosure notices to now include a statement directed to active duty military servicemembers. The new requirement, which takes effect on September 1, 2011, requires both the notice of default and the notice of sale to include the name and address of the sender and conspicuous language advising the recipient that, if they or their spouse are serving on active military duty, they should immediately send written notice of such active duty military service to the sender of the notice at the addressed provided.

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  • Florida Governor Signs Law Clarifying the Validity of Electronically Recorded Real Property Instruments

    State Issues

    On June 17, Florida Governor Rick Scott signed into law H.B. 951, which retroactively and prospectively ratifies the validity of electronic documents submitted to and accepted by a court clerk or county recorder for recordation, whether or not such documents were in strict compliance with the statutory and regulatory framework applicable to the submission or recording of electronic documents in effect at the time. The law provides that all such documents are deemed to provide constructive notice of ownership and encumbrances affecting a property. The law does not alter the duty of a court clerk or county recorder to comply with the Uniform Real Property Electronic Recording Act (URPERA) or any rules adopted by the Florida Department of State pursuant to URPERA.

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  • Texas Adopts Provisions Regarding Criminal Prosecution of Mortgage Fraud

    State Issues

    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.

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  • Nevada Amends Escrow Agent, Mortgage Banker, Mortgage Broker, and Mortgage Agent Laws

    State Issues

    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.

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  • Texas Prohibits Execution of Deeds Conveying Residential Real Estate in Certain Transactions

    State Issues

    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.

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  • Texas Passes Bill Targeting Debt Cancellation Agreements

    State Issues

    On June 17, Texas Governor Rick Perry signed into law H.B. 2931, which adds a new subchapter to the Texas Finance Code (Code) relating to debt cancellation agreements made in connection with retail installment contracts that include insurance coverage as part of a retail buyer’s responsibility to the holder. Among other things, the bill sets forth mandatory agreement provisions and requires all agreements to be submitted to the Texas Office of the Consumer Credit Commissioner for prior approval. The bill also enumerates requirements and restrictions applicable to the refunding of a debt cancellation agreement fee. H.B. 2931 takes effect on September 1, 2011.

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  • Nevada Governor Signs Bill Regulating Foreclosure and Loan Modification Consultants

    State Issues

    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.

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  • Maine Amends Regulations Implementing the Federal SAFE Act

    State Issues

    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.

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