1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am
A bill for an act
relating to real property; providing for the Minnesota Subprime Foreclosure
Deferment Act of 2008; proposing coding for new law in Minnesota Statutes,
chapter 583.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
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Sections 583.33 to 583.40 shall be cited as the "Minnesota Subprime Foreclosure
Deferment Act of 2008."
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For purposes of sections 583.33 to 583.40, the terms defined
in this section have the meanings given to them.
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"The act" means the Minnesota Subprime Foreclosure Deferment
Act of 2008.
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"Deferment payment" means the monthly amount
that is due to the foreclosing lender by an eligible foreclosed borrower under section
538.37 to maintain the right to deferment.
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"Deferment period" means the period that begins on
the effective date of the act and expires one year following the effective date of the act.
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"Deferment right" means the relief provided to an
eligible foreclosed borrower in section 583.35.
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"Eligible foreclosed loan" means a residential
mortgage loan currently subject to a pending foreclosure sale under chapter 580 or 581
for which: (1) the closing of the loan occurred after January 1, 2001, and prior to August
1, 2007; and (2) either is a subprime loan, or is a loan with negative amortization for
which the required minimum payment of principal and interest increased after the date
the loan was originated.
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"Eligible foreclosed borrower" means a
borrower who: (1) is a mortgagor under an eligible foreclosed loan; and (2) resides at the
mortgaged property and intends to reside at the mortgaged property at least until the end
of the deferment period.
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"Foreclosing lender" means the mortgagee who is
foreclosing the mortgage of an eligible foreclosed borrower.
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The following terms defined in section 58.02 have the same meanings for
purposes of sections 583.33 to 583.40: "residential mortgage loan"; "residential mortgage
servicer or servicer"; "residential real property" or "residential real estate"; "subprime
loan"; "negative amortization" and "fully indexed rate."
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"Subprime loan" means a loan as defined in section
58.02, subdivision 27, except a subprime loan does not include a loan originated by a
federal or state chartered bank, savings bank, or credit union.
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An eligible foreclosed borrower has the right to defer a foreclosure sale under
chapter 580 or 581 until the expiration of the deferment period by providing an affidavit
of deferment to the foreclosing lender in accordance with section 583.36. A foreclosing
lender shall rescind notice of a foreclosure sale if the eligible foreclosed borrower has
submitted to the foreclosing lender an affidavit of deferment prior to or at the time of the
foreclosure sale. Upon expiration of the deferment period or the loss of the deferment
under section 583.37, subdivision 4, a foreclosing lender may schedule a deferred
foreclosure sale by publishing the notice of foreclosure sale once in the newspaper in
which the original advertisement was published and by serving a copy of the notice of
foreclosure sale in a like manner as a summons in a civil action in the district court upon
the person in possession of the mortgaged premises at least four weeks prior to the sale.
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The affidavit of deferment shall state the
name of the eligible foreclosed borrower, the address of the property in foreclosure, and
contain the following statements:
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"(1) I am the borrower on a mortgage loan on residential property located at [address
of property] (hereinafter "subject property");
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(2) A foreclosure sale has been scheduled on the subject property;
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(3) I currently reside at the subject property;
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(4) If permitted to reside at the subject property, I intend to reside at the subject
property until at least [end of deferment period];
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(5) I believe that the mortgage loan on the subject property is either:
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(i) a subprime loan; or
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(ii) a loan with negative amortization for which the required minimum payment
has increased."
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The affidavit shall be signed by at least one eligible foreclosed borrower who is the
mortgagor of the residential real property being foreclosed.
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A foreclosing lender shall accept the
affidavit of deferment if delivered through any reasonable means to the mortgagee or
counsel for the mortgagee identified in the notice of foreclosure. Reasonable means of
delivery include, but are not limited to, delivery in person to any agent or employee of the
mortgagee or counsel for the mortgagee, or delivery by United States mail or other reliable
delivery service to the address of the mortgagee or counsel for the mortgagee in the notice
of foreclosure, in the notice of right to deferment required by section 583.39, or at the
address of the registered agent with the secretary of state. Notwithstanding the above,
a sheriff conducting a foreclosure sale shall accept an affidavit of deferment, deliver it
to the foreclosing lender, and cancel the foreclosure sale.
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The foreclosing lender shall
promptly provide to the eligible foreclosed borrower a written acknowledgment that it has
received the affidavit of deferment. The acknowledgment shall state the following:
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(1) that the foreclosure sale has been canceled;
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(2) the deferment payment amount that is due by the eligible foreclosed borrower;
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(3) the date that the first deferment payment is due;
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(4) the date that each subsequent deferment payment is due; and
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(5) the address to which the borrower should send the deferment payment or
the payment delivery methods that are acceptable to the foreclosing lender. The
acknowledgment shall be on a single sheet of paper, shall use plain language, and
no other documents shall be included with the acknowledgment. The bottom of the
acknowledgment shall include the following disclosure in bold, 14-point type:
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The cancellation of the foreclosure sale on your property is the result of a law passed
by the Minnesota Legislature in 2008. You must make the monthly payment in full
by the due dates listed in this letter. If you do not make the payments on time, we
will have the right to schedule a foreclosure sale on your property.
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A foreclosing lender shall not charge an eligible
foreclosed borrower any amount other than the deferment payment for exercising the
deferment right.
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An eligible foreclosed borrower
who has a deferment right shall make monthly payments to the foreclosing lender. The
payment shall be made no later than the 15th day of each month. The first payment is not
due until the 15th day of the month that is a minimum of 30 days after the date that the
foreclosing lender sends the acknowledgment required by section 583.36, subdivision 3.
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For an eligible foreclosed borrower with a subprime
loan, the amount of payment would be the lesser of: (1) the minimum monthly payment
on the date the loan was originated; or (2) 65 percent of the minimum monthly payment at
the time the borrower defaulted prior to foreclosure. For an eligible foreclosed borrower
with a negative amortization loan that is not also a subprime loan, the amount of payment
would be the minimum monthly payment on the date the loan was originated. For
purposes of this subdivision, "payment" means principle and interest.
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The foreclosing lender shall provide to the
eligible foreclosed borrower monthly written payment advice notices. The notice shall
be sent by the first day of each month until the expiration of the deferment period or
the loss of the deferment under subdivision 4. Each notice shall state (1) the amount
of payment owed from the eligible foreclosed borrower; (2) the address to which the
borrower should send the deferment payment; and (3) the date that the payment must be
received to avoid loss of the deferment right under subdivision 4. The payment advice
notice shall be on a single sheet of paper, shall use plain language, and no other documents
shall be included with the notice. The bottom of the notice shall include the following
disclosure in bold, 14-point type:
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The deferment of the foreclosure sale on your property is the result of a law passed
by the Minnesota Legislature in 2008. You must continue to make the monthly
payment in full by the 15th day of each month. If you do not make the payments on
time, we will have the right to schedule a foreclosure sale on your property. The
deferment period will end on (last day of deferment period).
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An eligible foreclosed borrower who fails to
make payments in the amount required and by the date required under this section shall
lose the deferment right.
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If the foreclosing
lender determines after a reasonable investigation and in good faith that the person
submitting an affidavit of deferment is not the mortgagor under an eligible foreclosed
loan, the foreclosing lender shall provide a notice of denial of deferment to the person
submitting the affidavit of deferment. The foreclosing lender must send a notice of denial
by certified mail through the United States mail within five business days of receiving the
affidavit of deferment. The notice of denial shall be on a single sheet of paper and no other
documents shall be included with the notice. Such notice must include an explanation, in
plain language, of the reasons that the loan is not an eligible foreclosed loan. Such notice
must also inform the person who executed the affidavit of deferment that the person has
the right to apply to the court for an order deferring the foreclosure sale.
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For any other dispute about the deferment right or
other rights or requirements under the act, a person can apply to the district court in the
county where the property is located for an order establishing the rights of the parties
to the dispute.
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Every
foreclosing lender shall send to each borrower who has an eligible foreclosed loan a notice
of right to deferment. The notice of right to deferment shall be in the form of, and subject
to the delivery requirements specified in, section 580.041, subdivision 1b. The notice of
right to deferment must also indicate an address at which the foreclosing lender will
accept service of an affidavit of deferment under section 583.36, subdivision 2. The terms
of section 580.041, subdivisions 3 and 4, apply to this section. Notwithstanding the above,
a foreclosing lender must within three days after the first day of the deferment period send
the notice of right to deferment to each borrower who has an eligible foreclosed loan who
has a foreclosure sale scheduled within 20 days of the first day of the deferment period,
and must within 14 days after the first day of the deferment period send the notice of right
to deferment to all other borrowers who have an eligible foreclosed loan at the beginning
of the deferment period.
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The notice required by this section must appear substantially
as follows:
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"Emergency Help For Homeowners in Foreclosure:
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IMPORTANT: You are eligible to have the foreclosure of your home stopped
until at least (end of deferment period).
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The state of Minnesota recently passed a law which lets homeowners stop a
foreclosure sale. To qualify, you must currently live at the home in foreclosure and intend
to live at the home for at least the next 12 months.
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You will also need to complete and sign a special form (called an "affidavit")
and provide that affidavit to us at the following address: (insert address in the state
of Minnesota).
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There are many government agencies and nonprofit organizations that can help
you complete this affidavit. For the name and telephone number of an organization near
you, please call the Minnesota Housing Finance Agency (MHFA) at (insert telephone
number/Web site). The state does not guarantee the advice of these agencies.
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Do not delay dealing with the foreclosure because your options for foreclosure
deferment end with the foreclosure sale."
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A foreclosing lender who acts in bad faith or recklessly in violation of sections
583.35 to 583.39 shall be liable to a person injured by the violation for actual damages,
statutory damages of up to $25,000, punitive damages in an amount determined by the
court, costs, and reasonable attorney's fees.
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Sections 1 to 8 are effective the day following final enactment.
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