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First Substitute S.B. 128

Senator Thomas V. Hatch proposes the following substitute bill:




Chief Sponsor: Thomas V. Hatch

House Sponsor: David Clark

             7      LONG TITLE
             8      General Description:
             9          This bill addresses the use of a revolving credit line trust deed.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines "revolving credit line trust deed";
             13          .    requires that a revolving credit line trust deed contain specific language identifying
             14      it as a revolving credit line trust deed;    
             15          .    addresses a secured lender's reconveyance of a revolving credit line trust deed; and
             16          .    makes technical changes.
             17      Monies Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          None
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          57-1-38, as last amended by Chapter 185, Laws of Utah 1995
             25      Be it enacted by the Legislature of the state of Utah:

             26          Section 1. Section 57-1-38 is amended to read:
             27           57-1-38. Release of security interest.
             28          (1) As used in this section:
             29          (a) "Revolving credit line" means an agreement between the borrower and a secured
             30      lender who agrees to loan the borrower money on a continuing basis so long as the outstanding
             31      principal amount owed by the borrower does not exceed a specified amount.
             32          [(a)] (b) "Secured lender" means:
             33          (i) a mortgagee on a mortgage;
             34          (ii) a beneficiary on a trust deed;
             35          (iii) a person that holds or retains legal title to real property as security for financing the
             36      purchase of the real property under a real estate sales contract; and
             37          (iv) any other person that holds or retains a security interest in real property to secure
             38      the repayment of a secured loan.
             39          [(b)] (c) (i) "Secured loan" means a loan or extension of credit, the repayment of which
             40      is secured by a mortgage, a trust deed, the holding or retention of legal title under a real estate
             41      sales contract, or other security interest in real property, whether or not the security interest is
             42      perfected.
             43          (ii) A judgment award secured by a judgment lien is not of itself a secured loan. A
             44      subsequent written agreement between a judgment creditor and a judgment debtor concerning
             45      payment of the judgment is a secured loan if it otherwise qualifies under the definition in
             46      Subsection (1)[(b)](c)(i).
             47          [(c)] (d) "Security interest" means an interest in real property that secures payment or
             48      performance of an obligation. Security interest includes a lien or encumbrance.
             49          [(d)] (e) "Servicer" means a person that services and receives loan payments on behalf
             50      of a secured lender with respect to a secured loan.
             51          (2) This section may not be interpreted to validate, invalidate, alter, or otherwise affect
             52      the foreclosure of a mortgage, the exercise of a trustee's power of sale, the exercise of a seller's
             53      right of reentry under a real estate sales contract, or the exercise of any other power or remedy
             54      of a secured lender to enforce the repayment of a secured loan.
             55          (3) A secured lender or servicer who fails to release the security interest on a secured
             56      loan within 90 days after receipt of the final payment of the loan is liable to another secured

             57      lender on the real property or the owner or titleholder of the real property for:
             58          (a) the greater of $1,000 or treble actual damages incurred because of the failure to
             59      release the security interest, including all expenses incurred in completing a quiet title action;
             60      and
             61          (b) reasonable attorneys' fees and court costs.
             62          (4) A secured lender or servicer is not liable under Subsection (3) if the secured lender
             63      or servicer:
             64          (a) has established a reasonable procedure to release the security interest on a secured
             65      loan in a timely manner after the final payment on the loan;
             66          (b) has complied with this procedure in good faith; and
             67          (c) is unable to release the security interest within 90 days after receipt of the final
             68      payment because of the action or inaction of an agency or other person beyond its direct
             69      control.
             70          (5) A secured lender under a revolving credit line shall close the revolving credit line
             71      and release the security interest if the secured lender receives:
             72          (a) payment in full from a third party involved in a sale or loan transaction affecting the
             73      security interest; and
             74          (b) (i) a request from a third party for full payoff of the credit line; or
             75          (ii) a written request to close the credit line.

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