S.B. 27

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.




Legislative Review Note
as of 11-16-06 10:06 AM

Office of Legislative Research and General Counsel

Interim Committee Note
as of 12-18-06 3:36 PM

The Business and Labor Interim Committee recommended this bill.