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S.B. 27 Enrolled

             1     

TECHNICAL AMENDMENTS TO ASSUMPTION

             2     
OF INDEBTEDNESS ON RESIDENTIAL REAL

             3     
PROPERTY

             4     
2007 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Chief Sponsor: Scott K. Jenkins

             7     
House Sponsor: Stephen D. Clark

             8     
             9      LONG TITLE
             10      General Description:
             11          This bill makes technical changes to provisions related to assumption of indebtedness
             12      on residential real property.
             13      Highlighted Provisions:
             14          This bill:
             15          .    makes technical changes to a provision addressing accelerating or maturing an
             16      indebtedness, including clarifying sentence structure and updating language.
             17      Monies Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          None
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          57-15-8.5, as enacted by Chapter 224, Laws of Utah 1981
             24     
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 57-15-8.5 is amended to read:
             27           57-15-8.5. Acceleration or maturing an indebtedness -- Conditions authorizing --
             28      Exemption of loans sold to federal agencies.
             29          (1) As used in this section, "obligor" means the original borrower or, if the secured


             30      party or lender has previously approved, and pursuant to that approval there has been effected,
             31      an assumption of the indebtedness, the person last approved as an assumer and who has
             32      assumed the indebtedness.
             33          (2) (a) Notwithstanding [the provisions of] Sections 57-15-2 and 57-15-4 , a lender or
             34      secured party may accelerate or mature an indebtedness upon assumption of that indebtedness
             35      if:
             36          [(1) A] (i) a written agreement with, or a written instrument executed by, the obligor
             37      on the indebtedness allows the secured party or lender to accelerate or mature the indebtedness
             38      [and/or], increase the interest rate [thereon] on the indebtedness, or both upon assumption of
             39      the indebtedness; [and]
             40          [(2) The] (ii) the secured party or lender has offered to accept the assumption without
             41      acceleration and without maturing the indebtedness provided the assumer [agree] agrees to pay
             42      the secured party or lender:
             43          (A) not more than a 1% assumption fee[,];
             44          (B) subject to Subsection (2)(b), a not more than 1% interest rate increase effective as
             45      of the date of assumption, whichever is earlier[,]; and
             46          (C) subject to Subsection (2)(b), a further not more than 1% interest rate increase
             47      effective a date five years after the date of assumption, whichever is earlier[. Neither of said
             48      interest rate increases may cause the total interest rate on the indebtedness to exceed 1% below
             49      the weighted average yield of the Federal Home Loan Mortgage Corporation weekly auction
             50      for purchases of mortgages secured by residential 1 to 4 family dwellings in effect on the date
             51      of the increase]; and
             52          [(3) The] (iii) the assumer [has refused] refuses to consent to [such] the assumption
             53      fee and interest rate increases described in Subsection (2)(a)(ii).
             54          (b) Neither of the interest rate increases described in Subsection (2)(a)(ii) may cause
             55      the total interest rate on the indebtedness to exceed 1% below the weighted average yield of the
             56      Federal Home Loan Mortgage Corporation weekly auction for purchases of mortgages secured
             57      by residential one to four family dwellings in effect on the date of the increase.


             58          [As used in this section, the term "obligor" shall mean the original borrower or, if the
             59      secured party or lender has previously approved, and pursuant to that approval there has been
             60      effected, an assumption of the indebtedness, the person last approved as an assumer and who
             61      has assumed the indebtedness.]
             62          (3) If a determination is made by the Federal National Mortgage Association or by the
             63      Federal Home Loan Mortgage Corporation that it will not purchase Utah mortgage loans
             64      because of the effects of this [act] section, and [such] the determination is communicated in
             65      writing to the Legislature or governor of this state, then this [act] section will not apply, after
             66      receipt of [such] the communication, to any mortgages originated after [the effective date of
             67      this act] May 12, 1981 and sold to the entity making [such] the determination.


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