First Substitute H.B. 164

Representative LaVar Christensen proposes the following substitute bill:

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 servicer to appoint a single point of contact upon
13 determining that a loan secured by a trust deed on owner-occupied residential
14 property is in default;
15 . requires notice to a default trustor before a notice of default is filed;
16 . allows a default trustor to make application for foreclosure relief if the beneficiary
17 or servicer offers foreclosure relief;
18 . establishes duties of the single point of contact during the three-month period
19 following a notice of default; and
20 . makes provisions applicable if a default trustor applies for foreclosure relief.
21 Money Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 None
25 Utah Code Sections Affected:

26 ENACTS:
27 57-1-24.3, Utah Code Annotated 1953
28
29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 57-1-24.3 is enacted to read:
31 57-1-24.3. Notices to default trustor -- Opportunity to negotiate foreclosure relief.
32 (1) As used in this section:
33 (a) "Default trustor" means a trustor under a trust deed encumbering owner-occupied
34 residential property that is the subject of a notice of default under Section 57-1-24 .
35 (b) "Foreclosure relief" means a mortgage modification program or other foreclosure
36 relief option offered by a beneficiary or servicer.
37 (c) "Loan" means an obligation incurred for personal, family, or household purposes,
38 evidenced by a promissory note or other credit agreement for which a trust deed encumbering
39 owner-occupied residential property is given as security.
40 (d) "Owner-occupied residential property" means real property that is occupied by its
41 owner as the owner's primary residence.
42 (e) "Servicer" means an entity, retained by the beneficiary:
43 (i) for the purpose of receiving a scheduled periodic payment from a borrower pursuant
44 to the terms of a loan; or
45 (ii) that meets the definition of servicer under 12 U.S.C. Sec. 2605(i)(2) with respect to
46 residential mortgage loans.
47 (f) "Single point of contact" means a person authorized by the beneficiary or servicer
48 who:
49 (i) exercises authority to direct the trustee under a trust deed to file a notice of default
50 under Section 57-1-24 ;
51 (ii) is the sole manager of the promissory note, trust deed, and communications on
52 behalf of the beneficiary or servicer with the default trustor and any other primary obligors on
53 the loan; and
54 (iii) has authority to represent the beneficiary or servicer in communications with the
55 default trustor concerning any modification program or foreclosure relief option offered by the
56 beneficiary or servicer.

57 (2) Upon determining that a loan is in default, a beneficiary or servicer shall appoint a
58 single point of contact to represent the interests of the beneficiary or servicer in all matters
59 concerning the default trustor.
60 (3) (a) Before a notice of default is filed for record under Section 57-1-24 , a single
61 point of contact, on behalf of the beneficiary or servicer, shall send notice by United States
62 mail to the default trustor.
63 (b) A notice under Subsection (3)(a) shall:
64 (i) advise the default trustor of the intent of the beneficiary or servicer to file a notice of
65 default;
66 (ii) state:
67 (A) the nature of the default;
68 (B) the total amount the default trustor is required to pay in order to cure the default
69 and avoid the filing of a notice of default, itemized by the type and amount of each component
70 part of the total cure amount; and
71 (C) the date by which the default trustor is required to pay the amount to cure the
72 default and avoid the filing of a notice of default;
73 (iii) disclose the name, telephone number, email address, and mailing address of the
74 single point of contact appointed by the beneficiary or servicer; and
75 (iv) identify the foreclosure relief available through the beneficiary or servicer for
76 which a default trustor may apply, if the beneficiary or servicer offers foreclosure relief.
77 (4) After receiving a notice under Subsection (3), a default trustor may apply directly
78 with the single point of contact for the beneficiary or servicer's foreclosure relief identified
79 under Subsection (3)(b)(iv).
80 (5) A default trustor shall provide all financial and other information requested by the
81 single point of contact to enable the beneficiary or servicer to determine whether the default
82 trustor qualifies for the foreclosure relief for which the default trustor has applied.
83 (6) During the three-month period described in Subsection 57-1-24 (2), the single point
84 of contact shall:
85 (a) be reasonably available for and responsive to communications with a default
86 trustor, including communications regarding the foreclosure relief offered by the beneficiary or
87 servicer for which the default trustor has applied; and

88 (b) notify the default trustor of the decision of the beneficiary or servicer regarding the
89 foreclosure relief for which the default trustor has applied.
90 (7) Notice of a trustee's sale may not be given under Section 57-1-25 with respect to
91 the trust property of a default trustor who has applied for foreclosure relief until after the single
92 point of contact provides the notice required by Subsection (6)(b).
93 (8) A beneficiary or servicer may cause a notice of a trustee's sale to be given with
94 respect to the trust property of a default trustor who has applied for foreclosure relief if, in the
95 exercise of the beneficiary or servicer's sole discretion, the beneficiary or servicer:
96 (a) determines that the default trustor does not qualify for the foreclosure relief for
97 which the default trustor has applied; or
98 (b) elects not to enter into a written agreement with the default trustor to implement the
99 foreclosure relief.
100 (9) (a) A beneficiary or servicer and a default trustor may, by mutual agreement,
101 postpone a trustee's sale of the trust property in order to allow further time for good faith
102 negotiations relating to foreclosure relief.
103 (b) A postponement of a trustee's sale under Subsection (9)(a) does not require the
104 trustee to file for record a new or additional notice of default under Section 57-1-24 .
105 (10) A beneficiary or servicer shall cause the cancellation of a notice of default filed
106 under Section 57-1-24 on the trust property of a default trustor if the beneficiary or servicer:
107 (a) determines that the default trustor qualifies for the foreclosure relief for which the
108 default trustor has applied; and
109 (b) enters into a written agreement with the default trustor to implement the foreclosure
110 relief.
111 (11) This section may not be construed to require a beneficiary or servicer to:
112 (a) establish foreclosure relief; or
113 (b) approve an application for foreclosure relief submitted by a default trustor.
114 (12) A beneficiary and servicer shall each take reasonable measures to ensure that their
115 respective practices in the foreclosure of owner-occupied residential property and any
116 foreclosure relief with respect to a loan comply with all applicable federal and state fair lending
117 statutes.
118 (13) This section does not apply if the beneficiary under a trust deed securing a loan is

119 an individual.