Bill Text: AZ HB2383 | 2011 | Fiftieth Legislature 1st Regular | Introduced
Bill Title: Mortgage loan servicers; duties; obligations
Spectrum: Partisan Bill (Democrat 9-0)
Status: (Introduced - Dead) 2011-01-25 - Referred to House BI Committee [HB2383 Detail]
Download: Arizona-2011-HB2383-Introduced.html
|
REFERENCE TITLE: mortgage loan servicers; duties; obligations |
|
State of Arizona House of Representatives Fiftieth Legislature First Regular Session 2011
|
|
HB 2383 |
|
|
|
Introduced by Representatives McCune Davis, Campbell, Hobbs, Patterson, Senator Cajero Bedford: Representatives Alston, Hale, Miranda C, Tovar
|
AN ACT
amending title 44, chapter 9, Arizona Revised Statutes, by adding article 23; relating to mortgage loan servicers.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 44, chapter 9, Arizona Revised Statutes, is amended by adding article 23, to read:
ARTICLE 23. MORTGAGE LOAN SERVICERS
44-1379. Definitions
In this article, unless the context otherwise requires:
1. "Authorized representative" means a person designated by the borrower in a written authorization signed by the borrower, including an attorney, employee or agent of a nonprofit housing counseling or legal services organization, except that nothing restricts the ability of a servicer to share information and communicate verbally with a person acting on behalf of a borrower following a tape recorded or other verifiable verbal consent by the borrower.
2. "Home affordable mortgage program" means the program established by the United States Department of the Treasury pursuant to sections 101 and 109 of the Emergency Economic Stabilization Act of 2008, as section 109 of the Act has been amended by section 7002 of the American Recovery and Reinvestment Act of 2009.
3. "Loan modification" means the waiver, modification or variation of any material term of the mortgage loan, whether the duration is short-term, long-term or life-of-loan, that changes the interest rate, forbears or forgives the payment of principal or interest or extends the final maturity date of the loan.
4. "Loss mitigation option" means an alternative to foreclosure, including loan modification, reinstatement, forbearance, deed-in-lieu and short sale.
5. "Mortgage loan" means a loan for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling, as defined in the Truth in Lending Act (15 United States Code section 1602(v)), or for residential real estate on which a dwelling is constructed or intended to be constructed.
6. "Servicer" means the person responsible for servicing a mortgage loan, including the person who makes or holds a loan if the person also services the mortgage loan.
7. "Servicing" means receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts, and making the payments of principal and interest and other payments with respect to the amounts received from the borrower that are required pursuant to the terms of the mortgage loan.
44-1379.01. Applicability
A. This article shall not be construed as authorizing conduct for which a license would be required under title 6, chapter 9, article 4.
B. This article shall not be construed to require a servicer to perform services in a manner that is inconsistent with the enforceable terms of a note, mortgage or contract for the servicing of a mortgage loan or with the regulations or guidelines implementing the home affordable mortgage program.
44-1379.02. Servicer duties; trustee's sales
A. A servicer has a duty of good faith and fair dealing in its communications, transactions and course of dealings with each borrower in connection with the servicing of the borrower's mortgage loan, including a duty to do all of the following:
1. Act with reasonable skill, care and diligence.
2. Educate borrowers in or at risk of default about available loss mitigation options and services.
3. Provide trained personnel and telephone facilities sufficient to respond promptly to a borrower's inquiries regarding the borrower's mortgage loans.
4. Pursue loss mitigation with the borrower whenever possible in accordance with the home affordable mortgage program or the servicer's own programs.
5. Pursue foreclosure on a primary residence only when the right to proceed is clearly established and only after it has been determined that the borrower is not eligible for or cannot qualify for any available loss mitigation option.
6. Ensure that all foreclosure documents filed or recorded are accurate, verified or acknowledged by an individual with personal knowledge of the information contained in the documents and submitted in compliance with applicable laws.
B. A servicer shall comply with the lender and beneficiary obligations in trustee's sales as set forth in section 33-807.01.
44-1379.03. Prohibited acts
Servicer shall not:
1. Engage in unlawful practices in connection with the servicing of a borrower's mortgage loan.
2. Misrepresent or omit any material information in connection with the servicing of the borrower's mortgage loan, including:
(a) The amount or terms of any fee or payment due or claimed to be due on a loan or pursuant to a loan modification agreement.
(b) The terms and conditions of the servicing agreement.
(c) The borrower's obligations under the loan or loan modification agreement.
(d) The nature, effect or time frames of loss mitigation options, including loan modifications.
(e) The reason why the Servicer denied the borrower's request for a loan modification or other loss mitigation option.
44-1379.04. Loss mitigation options; servicer duties; loan modifications
A. Servicers shall make reasonable and good faith efforts consistent with usual and customary industry standards and this article to engage in appropriate loss mitigation options, including loan modifications, to avoid foreclosure. Servicers must have adequate staffing, written procedures, resources and facilities to provide timely and appropriate responses to borrower inquiries and complaints regarding available loss mitigation options and to ensure that borrowers are not required to submit multiple copies of required documents during consideration for a loss mitigation option.
B. When a borrower who is in or at risk for default contacts the Servicer with respect to a loan modification or other loss mitigation assistance, the Servicer shall do all of the following:
1. Establish a single point of contact for the borrower to communicate regarding the status of the loan and all loan enforcement efforts.
2. Inform the borrower of the facts concerning the loan, the nature and extent of the delinquency or default, the Servicer's loss mitigation protocols, the loss mitigation options and services offered by the Servicer and how loss mitigation options may affect the borrower's credit.
3. If requested by the borrower, negotiate with the borrower in good faith, subject to the Servicer's duties and obligations under the mortgage servicing contract, if any, to attempt a resolution or workout of the delinquency or to prevent the borrower's default, including a loan modification.
C. Servicers shall undertake reasonable, good faith efforts to avoid foreclosure, including considering a loan modification as an alternative when both of the following apply:
1. the borrower demonstrates that the borrower is in imminent risk of defaulting on the mortgage loan as a result of a financial hardship or has experienced a financial hardship and is unable to maintain the payment at the current amount required under the mortgage loan or is unable to make up the delinquent payments.
2. The net present value of the income stream expected of the modified loan is greater than the net present value of the income stream that is expected to be recovered through the disposition of the property through a foreclosure sale.
D. When a loan modification is a reasonable alternative to foreclosure, a servicer shall make good faith efforts to structure the modification to result in payments that are affordable and sustainable for the borrower. Servicers that are participating in the home affordable mortgage program shall offer loan modifications in compliance with the home affordable mortgage program guidelines or directives, including using reasonable efforts to remove prohibitions or impediments to their authority and to obtain third‑party consents and waivers that are required, by contract or law, in order to effectuate a loan modification under the home affordable mortgage program.
E. Unless a longer time is permitted under the guidelines or directives implementing the home affordable mortgage program, within ten business days after receiving a request from a borrower or authorized representative for a loss mitigation option, the servicer shall transmit a written acknowledgement of the request to the borrower and, if applicable, to the authorized representative. The acknowledgement shall identify with specificity any information needed from the borrower in order for the servicer to review the borrower's loss mitigation request. The acknowledgement shall also include the key elements of the loss mitigation process, including, as appropriate, the following:
1. The information that the borrower may be asked to provide and third‑party approvals that may be required for the servicer to evaluate and complete the request for a loan modification or other loss mitigation option.
2. The average length of time for a decision to be made regarding a loan modification or other loss mitigation option.
3. Information about how the borrower's request for a loss mitigation option may affect the borrower's credit, including credit rating.
4. A notification of the actions the servicer, lender or owner of the mortgage may take during the loss mitigation process, such as whether the borrower may continue to receive collection letters or foreclosure notices, whether the foreclosure process will continue or whether and to what extent collection and foreclosure will be stayed.
F. Within thirty days after receiving all required documentation from the borrower and third parties, unless a shorter time is required under regulations or guidelines implementing the home affordable mortgage program, a servicer shall complete its evaluation of the borrower's eligibility for a loan modification or other loss mitigation option requested by the borrower and advise the borrower, and if applicable, the borrower's authorized representative, in writing of its determination. If the servicer approves the borrower for a loan modification, including a trial modification, or other loss mitigation option, the written notice must provide the borrower with clear and understandable written information explaining the material terms, costs and risks of the option offered. If the servicer determines that the borrower cannot be approved for a loan modification or other requested loss mitigation option, the written notice must state with specificity the reasons for the determination, contact information for a person at the mortgage servicer to reconsider a denial and any other foreclosure prevention alternatives for which the borrower may be considered.
G. A Servicer shall take reasonable steps to ensure that its staff is aware of programs designed to assist borrowers avoid foreclosure or resolve delinquency. The Servicer shall make available to homeowners who are at least sixty days delinquent, or who the servicer has reason to believe are experiencing a financial hardship and are in imminent risk of default, a list of government approved nonprofit housing counselors in the homeowner's geographic area.
H. A Servicer shall maintain and make available to borrowers and borrowers' authorized representatives current contact information to communicate and negotiate with the Servicer's designated loss mitigation staff who are authorized to discuss and negotiate loss mitigation options. The contact information shall include toll‑free telephone numbers for direct communication with a loss mitigation staff person, fax numbers for receipt of documents and e-mail addresses.
I. The servicer shall establish an effective process through which borrowers may escalate disagreements to a supervisory level where a separate review of the borrower's eligibility or qualification for a loss mitigation option can be performed. The servicer shall also designate special escalation contacts for nonprofit housing counselors, government representatives, legal services organizations and attorneys to use when necessary to review or intervene in the handling of a pending loss mitigation matter.
J. It shall be presumed that a servicer has engaged in good faith loss mitigation efforts if the servicer offers loan modifications and other loss mitigation options in accordance with the home affordable mortgage program guidelines or directives developed by the united states department of the treasury.
K. This section shall not be construed to prevent a servicer from offering or accepting alternative loss mitigation options, including other modification programs offered by the servicer, a short sale, a deed-in-lieu of foreclosure or a forbearance, if the borrower requests such an alternative, is not eligible for or does not qualify for a loan modification under the home affordable mortgage program or rejects the servicer's loss mitigation proposal.
L. A Servicer shall develop and implement policies and procedures to provide notification to its foreclosure attorneys and trustees regarding a borrower's status for consideration of a loss mitigation option and whether the borrower is being evaluated for, or is currently in, a trial or permanent modification. A Servicer shall not initiate or advance a foreclosure action if the borrower has requested and is being considered for a loss mitigation option or if the borrower is in a trial or permanent modification and is not more than thirty days in default under the modification agreement.
44-1379.05. Enforcement and remedies
A. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.
B. The rights, remedies and penalties provided pursuant to this article are cumulative and do not abrogate and are in addition to any other rights, remedies and penalties that may exist at law or in equity.
