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HF 35

as introduced - 88th Legislature (2013 - 2014) Posted on 01/10/2013 12:12pm

KEY: stricken = removed, old language. underscored = added, new language.

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A bill for an act
relating to real estate; regulating underwater mortgage loans; providing an
opportunity to refinance; requiring transparency in loan modification criteria;
proposing coding for new law in Minnesota Statutes, chapter 47.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

[47.22] REFINANCING OPPORTUNITY REQUIRED; CERTAIN
UNDERWATER HOME MORTGAGE LOANS.

Subdivision 1.

Qualifications.

This section applies to:

(1) all mortgagees and their assignees and servicers; and

(2) a home mortgage loan customer of an entity described in clause (1) whose
mortgage loan:

(i) was originated prior to January 1, 2009;

(ii) is current on payments;

(iii) had not been delinquent at any time within the preceding 12 months;

(iv) has a current interest rate of 5.25 percent or higher; and

(v) has a loan-to-value ratio in excess of 100 percent.

Subd. 2.

Opportunity to refinance.

An entity described in subdivision 1, clause
(1), must offer to an existing home mortgage loan customer described in subdivision 1,
clause (2), an opportunity to refinance the loan at a lower interest rate. The offer must not
be conditional upon the customer's payment of fees to the entity described in subdivision
1, clause (1), that exceed the cost actually and reasonably incurred in connection with the
refinancing. The offer to refinance must be made no later than 60 days after the date of
enactment of this act. The offer must remain available for acceptance by the borrower for
at least 60 days after the date the offer is communicated.

Subd. 3.

Consequence of noncompliance.

If an entity described in subdivision 1,
clause (1), does not comply with subdivision 2, and the entity begins foreclosure of the
mortgage, the redemption period is 12 months, notwithstanding a shorter period specified
in section 580.23.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

[47.221] TRANSPARENCY IN LOAN MODIFICATION CRITERIA.

An entity described in section 47.22, subdivision 1, clause (1), shall provide to all of
its residential mortgage loan customers in writing the criteria the entity uses in determining
eligibility for a loan modification. The entity shall provide the criteria at least once per
year, within 30 days after each change in the criteria, and upon request. If the entity denies
an application for a loan modification, the entity shall notify the customer in writing within
five days of the decision and provide an explanation of how the customer failed to meet the
criteria. The entity must provide the customer with accurate information about the lender.

EFFECTIVE DATE.

This section is effective the day following final enactment.

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