Revision: Dec. 4, 2019, 11:46 a.m.
HB 1588-FN - AS INTRODUCED
2020 SESSION
20-2232
11/05
HOUSE BILL 1588-FN
AN ACT establishing a mortgage mediation procedure.
SPONSORS: Rep. Williams, Hills. 4
COMMITTEE: Commerce and Consumer Affairs
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ANALYSIS
This bill establishes a procedure for mortgage mediation.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
20-2232
11/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty
AN ACT establishing a mortgage mediation procedure.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Banking Department; Mortgage Mediation Program. There is hereby established within the banking department the mortgage mediation program. Such program shall be funded through appropriations granted to the department for the biennium ending June 30, 2021.
2 New Subdivision; Mortgages; Mortgage Mediation Program. Amend RSA 479 by inserting after section 30 the following new subdivision:
Mortgages; Mortgage Mediation Program
479:31 Applicability. The provisions of RSA 479:31 through RSA 479:39 shall apply to loans secured by residential property that serves as the principal dwelling of the homeowner.
479:32 Notice of Foreclosure Required. Before proceeding with a foreclosure pursuant to RSA 479:19, RSA 479:22, or RSA 479:25, the mortgagee or assignee shall send notice to the mortgagor or mortgagors, and file a copy of such notice with the banking department. The notice shall include the total amount due, an itemization of the arrearage, and a list of local housing counseling agencies, lawyer referral services, and legal services offices where the homeowner may obtain assistance or representation during the foreclosure process. The notice shall also list the name and addresses of any subordinate mortgage lien holders. No additional fees shall accrue and no further action to initiate foreclosure shall occur during the mediation period, which shall commence on the date the notice of default is filed and which shall end on the date the mortgage mediator files a mediator's report pursuant to RSA 479:33. If the mortgagee or assignee fails to file a notice pursuant to this section, any subsequent foreclosure shall be void.
479:33 Notice of Mediation. Upon receipt of the notice of foreclosure pursuant to RSA 479:32, the banking department shall send a notice of mediation to the mortgagor, mortgage mediator, mortgagee, mortgage servicer, and any subordinate mortgage lien holder specifying that the initial mediation session shall occur within 30 days of the filing of the foreclosure notice pursuant to RSA 479:32. The mediation notice shall instruct the homeowner to bring specific information and supporting documentation relative to the current version of the FDIC Loan Modification Program. The notice shall instruct the mortgage servicer and subordinate lien holders to bring proof of authority to bind the holder, proof of the identity of the current holder including copies of all relevant powers of attorney, copies of each and every endorsement of the loan note or in the case of bearer paper, copies of all documents showing the date of the transfer of possession, and copies of each assignments of the mortgage or deed of trust, the loan documents including the loan note and riders, the Truth in Lending statement, and final settlement statement, and specific information and supporting documentation relevant to the current version of the FDIC Loan Modification Program.
479:34 Mediation.
I. The mediator shall bring a laptop, the FDIC Handbook, and capability to print out prescribed documents.
II. The attending parties shall negotiate in good faith.
III. If the homeowner is represented by an attorney, the homeowner or the servicer or subordinate lien holder may offer any reasonable proposal or may ask the mediator to first use the FDIC spreadsheet, a spreadsheet downloadable from the FDIC website that can be used to determine mortgage modification options. If the FDIC spreadsheet is used and a loan modification is feasible and agreed to by the parties, the mediator shall obtain the signature of the homeowner and servicer on the agreement, provided that the servicer has apparent authority to sign. The mortgage mediator shall then file a copy with the local land records office and provide copies to each attendee. The loan modification agreement shall be in substantially the same form as the FDIC model document and shall include an affirmation separately signed by the servicer that the servicer has the legal authority to bind the holder, the name, address, and telephone number of the current holder, and the date the first payment is due and the amount. The servicer shall promptly change its internal records to reflect the agreement terms. If an agreement is reached without the use of the FDIC spreadsheet, the homeowner’s representative shall promptly submit the agreement in written form to the mediator and the servicer. The servicer shall promptly sign and return the agreement to the homeowner, file it with the local land records office, and change its internal records to reflect the agreement terms. The mediator shall also promptly file a report of the outcome of the mediation with the banking department on a prescribed form and provide a copy to each attendee. If no agreement is reached, the mediator shall promptly file a report of the outcome with the banking department on a prescribed form and provide a copy to each attendee.
IV. If the homeowner is not represented by an attorney, the mortgage mediator shall use the FDIC spreadsheet. The mortgage mediator shall input all relevant information into the FDIC spreadsheet. If a loan modification is feasible using the FDIC spreadsheet and the parties, other than any subordinate lien holder, agree, the mediator shall obtain the signature of the homeowner and servicer on the agreement, so long as the servicer has apparent authority to sign, file a copy with the agency, and provide copies to each attendee. The loan modification agreement shall be in substantially the same form as the FDIC model document and shall include an affirmation separately signed by the servicer that the servicer has the legal authority to bind the holder, the name, address, and phone number of the current holder, and date on which the first payment is due and the amount. The servicer and holder shall promptly change its internal records to reflect the agreement terms. If a loan modification is not feasible after exhausting all possibilities using the FDIC spreadsheet, the mediation is terminated. Regardless of the outcome, the mediator shall promptly file a report of the outcome of the mediation with the local land records and the banking department on a prescribed form and provide a copy to each attendee. If the parties agree to a loan modification, the mortgage mediator may also discuss a loan workout with a subordinate lien holder that is reasonable and feasible taking into consideration whether the fair market value of the property in relation to the amount owed on the first mortgage leaves any equity in the property to which the subordinate lien attaches.
479:35 Unsuccessful Mediation; Judicial Foreclosure. Upon filing of the mediator's report after an unsuccessful mediation, the banking department shall inform the homeowner that he or she has the right to opt for a judicial foreclosure. If the mortgagee has grounds to proceed with foreclosure after an unsuccessful mediation and the homeowner has opted to proceed with judicial foreclosure, the mortgagee shall proceed with foreclosure through the judicial process pursuant to RSA 479:22. If the homeowner does not opt for judicial process pursuant to this section, the mortgagee may proceed through RSA 479:19 or RSA 479:25.
479:36 Cost of Mediation. The cost of mediation for up to a total of 3 hours, including any postponements, at an hourly rate of $125 shall be split evenly between the parties to the mediation, provided that the servicer shall advance the entire amount by bringing a check drawn from the servicer’s business account or the servicer's attorney’s account made payable to the mediator. The homeowner’s portion may be included in the principal balance of any agreed upon loan modification, paid separately in cash, or otherwise paid through the terms of the agreement. If the parties do not reach an agreement, the homeowner’s portion of the mediator’s fee may be included in the homeowner’s account and permitted by the loan note or deed of trust or mortgage or paid separately in cash. The cost of the parties to attend the mediation shall be borne by the party who incurred the cost.
479:37 Confidentiality. There shall be a privilege against disclosure of a mediation communication. Any documents generated by the parties or the mediator and that are required to be filed with any agency pursuant to this subdivision shall contain only the last 4 digits of the homeowner's social security number and account number. The mediator shall provide the homeowner and the servicer shall receive copies of the FDIC spreadsheet if the program approves a loan modification, whether or not the parties agree to the loan modification. The mediator shall retain the FDIC spreadsheet in electronic form and shall not release it unless in response to a subpoena issued by any court of competent jurisdiction.
479:38 Mediator Qualifications. The state shall set standards for the quality of the persons seeking to be mediators under this program and shall provide training to all persons selected to serve as mediators, including training on loss mitigations programs and the FDIC loan modification program in effect at the time the mediator is approved to serve.
479:39 Rulemaking; Banking Department. The commissioner of the banking department shall enact rules pursuant to RSA 541-A to carry out the provisions of this subdivision.
3 Effective Date. This act shall take effect 60 days after its passage.
20-2232
12/3/19
HB 1588-FN- FISCAL NOTE
AS INTRODUCED
AN ACT establishing a mortgage mediation procedure.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2020 | FY 2021 | FY 2022 | FY 2023 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $96,000+ | $96,000+ | $102,000+ |
Funding Source: | [ ] General [ ] Education [ ] Highway [ X ] Other - Assessment of entities licensed and chartered by the Banking Department | |||
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METHODOLOGY:
This bill establishes a procedure for mortgage mediation. The Banking Department assumes it will need a full time position to perform the duties of the Mortgage Mediation Program. The Department does not currently have the capacity to manage the program without additional staff and it does not have the statutory authority to contract with an outside party to manage the program. The Department identified the position classification of Administrator I as the most appropriate in the State classification system to perform the required duties. The Department provided the following cost information for an Administrator I position:
Administrator I, Labor Grade 27 | FY 2021 | FY 2022 | FY 2023 |
Salary | $56,000 | $58,000 | $61,000 |
Benefits | $30,000 | $32,000 | $33,000 |
Equipment, office space, and general office and supply expenses | $10,000 | $6,000 | $8,000 |
Total | $96,000 | $96,000 | $102,000 |
In addition, the bill states the mortgage mediator shall file a copy of the agreement with the local land records office, but it does not specify who bears the cost. If this cost is to be borne by the Banking Department, there will be an indeterminable increase in expenditures in addition to the position costs identified above.
It is assumed this bill will not take effect until FY 2021.
AGENCIES CONTACTED:
Banking Department