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H.B. 164

             1     

TRUST DEED FORECLOSURE CHANGES

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: LaVar Christensen

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill enacts a provision relating to the foreclosure of trust deeds.
             10      Highlighted Provisions:
             11          This bill:
             12          .    requires a beneficiary or special servicer to appoint a single point of contact upon
             13      determining that a loan secured by a trust deed on residential, owner-occupied
             14      property is in default;
             15          .    requires notice to a default trustor before and within 30 days after a notice of default
             16      is filed;
             17          .    allows a default trustor to make application for foreclosure relief or to enter into
             18      negotiations for foreclosure relief;
             19          .    establishes duties in the process of negotiating foreclosure relief;
             20          .    requires foreclosure proceedings to be suspended if a default trustor successfully
             21      perform trial period modifications and the beneficiary or special servicer has the
             22      legal ability to do so; and
             23          .    allows a default trustor to extend the foreclosure period by a month, no more than
             24      twice, by paying a monthly payment under the loan.
             25      Money Appropriated in this Bill:
             26          None
             27      Other Special Clauses:


             28          None
             29      Utah Code Sections Affected:
             30      ENACTS:
             31          57-1-24.3, Utah Code Annotated 1953
             32     
             33      Be it enacted by the Legislature of the state of Utah:
             34          Section 1. Section 57-1-24.3 is enacted to read:
             35          57-1-24.3. Notices to default trustor -- Opportunity to negotiate foreclosure relief.
             36          (1) As used in this section:
             37          (a) "Beneficiary" means the legal holder of a note and trust deed.
             38          (b) "Default trustor" means a trustor under a trust deed secured by owner-occupied
             39      residential property that is the subject of a notice of default under Section 57-1-24 .
             40          (c) "Loan" means an obligation, evidenced by a note, for which a trust deed is given as
             41      security.
             42          (d) "Owner-occupied residential property" means real property that is occupied by its
             43      owner as the owner's primary residence.
             44          (e) "Single point of contact" means a person who:
             45          (i) exercises authority to direct the trustee under a trust deed to file a notice of default
             46      under Section 57-1-24 ;
             47          (ii) is the sole manager of the note and trust deed and of communications with the
             48      default trustor and other primary obligors; and
             49          (iii) has authority or can obtain authority to negotiate foreclosure relief with a default
             50      trustor.
             51          (f) "Special servicer" means a person duly authorized to act on behalf of a beneficiary.
             52          (2) Upon determining that a loan is in default, a beneficiary or special servicer shall
             53      appoint a single point of contact.
             54          (3) (a) No later than 30 days before the filing of a notice of default under Section
             55      57-1-24 and in an effort to encourage the default trustor to contact the beneficiary or special
             56      servicer to determine whether there is a reasonable prospect for successful foreclosure
             57      mitigation, the single point of contact, on behalf of the beneficiary or special servicer, shall
             58      send notice by United States mail to the default trustor of the intent of the beneficiary or special


             59      servicer to file a notice of default.
             60          (b) A notice under Subsection (3)(a) shall include:
             61          (i) the name, telephone number, email address, physical location, and other direct
             62      contact information of the single point of contact;
             63          (ii) the reason for the intent to file a notice of default; and
             64          (iii) the full amount the default trustor is required to pay in order to cure the default and
             65      avoid the filing of a notice of default, broken down by the type of each component adding up to
             66      the full amount, and the date by which the default trustor is required to pay that amount.
             67          (4) (a) No later than 30 days after the date a notice of default is filed under Section
             68      57-1-24 , the single point of contact, on behalf of the beneficiary or special servicer, shall send a
             69      notice to the default trustor by United States mail.
             70          (b) A notice under Subsection (4)(a) shall include:
             71          (i) the name, telephone number, email address, physical location, and other direct
             72      contact information of the single point of contact;
             73          (ii) the reason the notice of default was filed;
             74          (iii) the full amount the default trustor is required to pay in order to cure the default and
             75      avoid the posting of a notice of sale of the trust property, broken down by the type of each
             76      component adding up to the full amount, and the date by which the trustor is required to pay
             77      that amount; and
             78          (iv) a description of any mortgage modification program or other foreclosure relief
             79      option available that may, at the reasonable discretion of the lender, provide foreclosure relief
             80      or assistance in obtaining foreclosure relief, if the default trustor qualifies.
             81          (5) Upon receiving a notice under Subsection (3), a default trustor may:
             82          (a) make application directly with the single point of contact for foreclosure relief or
             83      assistance; or
             84          (b) enter into negotiations as provided in this section.
             85          (6) The single point of contact shall:
             86          (a) represent the interests of the beneficiary; and
             87          (b) negotiate in good faith on behalf of the beneficiary with respect to all aspects of the
             88      foreclosure, including foreclosure relief, loan modification or forbearance, deed in lieu of
             89      foreclosure, consideration of a short sale, or any other reasonable alternative to foreclosure.


             90          (7) Any action that a default trustor may take under this section may be taken by the
             91      default trustor's authorized representative.
             92          (8) A single point of contact, on behalf of the beneficiary or special servicer, has an
             93      express duty to:
             94          (a) be reasonably available for and cooperate in negotiations with a default trustor
             95      during the three-month period described in Subsection 57-1-24 (2); and
             96          (b) negotiate with a default trustor regarding any reasonable alternative to foreclosure,
             97      including a loan modification or forbearance, discounted payoff, short sale, or deed in lieu of
             98      foreclosure.
             99          (9) A beneficiary or special servicer shall suspend foreclosure proceedings if:
             100          (a) a default trustor successfully performs trial period modifications; and
             101          (b) the beneficiary or special servicer has the legal ability to do so under any applicable
             102      servicing contract.
             103          (10) A default trustor engaged in good faith negotiations under this section with a
             104      single point of contact for foreclosure relief may extend the period described in Subsection
             105      57-1-24 (2) by one month, no more than twice, by paying the beneficiary during the period
             106      described in Subsection 57-1-24 (2), or during an extension of that time under this Subsection
             107      (8), an amount equal to a full month's payment due under the loan.
             108          (11) A beneficiary, special servicer, and single point of contact shall align their
             109      practices in the foreclosure of owner-occupied residential property and any modification of a
             110      loan secured by that property with all applicable federal and state fair lending statutes.
             111          (12) A default trustor shall provide to a single point of contact all financial information
             112      and other reasonable information requested by a beneficiary or special servicer within the time
             113      required by the beneficiary or special servicer, to enable the beneficiary or special servicer to
             114      give reasonable consideration to the default trustor's request for foreclosure relief.




Legislative Review Note
    as of 2-2-12 9:25 AM


Office of Legislative Research and General Counsel


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