First Substitute S.B. 143

Senator Wayne A. Harper proposes the following substitute bill:

1 MORTGAGE AND FINANCIAL AFFAIRS AMENDMENTS
2 2013 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Wayne A. Harper
5 House Sponsor: V. Lowry Snow
6
7 LONG TITLE
8 General Description:
9 This bill amends the requirements related to communications with a default trustor and
10 the foreclosure of trust deeds.
11 Highlighted Provisions:
12 This bill:
13 . defines terms;
14 . amends the qualifications and obligations of a single point of contact;
15 . limits the requirements described in this bill to beneficiaries that are also financial
16 institutions;
17 . clarifies where a beneficiary or servicer must send notices under this section; and
18 . makes technical changes.
19 Money Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 57-1-24.3, as enacted by Laws of Utah 2012, Chapter 164

26
27 Be it enacted by the Legislature of the state of Utah:
28 Section 1. Section 57-1-24.3 is amended to read:
29 57-1-24.3. Notices to default trustor -- Opportunity to negotiate foreclosure relief.
30 (1) As used in this section:
31 (a) "Beneficiary" means a financial institution that is the record owner of the beneficial
32 interest under a trust deed, including successors in interest.
33 (b) "Current address" means the address at which a person has agreed or requested to
34 receive notices.
35 [(a)] (c) "Default trustor" means a trustor under a trust deed that secures a loan that the
36 beneficiary or servicer claims is in default.
37 (d) "Financial institution" means:
38 (i) a state or federally chartered:
39 (A) bank;
40 (B) savings and loan association;
41 (C) savings bank;
42 (D) industrial bank; or
43 (E) credit union; or
44 (ii) any other entity under the jurisdiction of the commissioner of financial institutions
45 as provided in Title 7, Financial Institutions Act.
46 [(b)] (e) "Foreclosure relief" means a mortgage modification program or other
47 foreclosure relief option offered by a beneficiary or servicer.
48 [(c)] (f) "Loan" means an obligation incurred for personal, family, or household
49 purposes, evidenced by a promissory note or other credit agreement for which a trust deed
50 encumbering owner-occupied residential property is given as security.
51 [(d)] (g) "Owner-occupied residential property" means real property that is occupied by
52 its owner as the owner's primary residence.
53 [(e)] (h) "Servicer" means an entity, retained by the beneficiary:
54 (i) for the purpose of receiving a scheduled periodic payment from a borrower pursuant
55 to the terms of a loan; or
56 (ii) that meets the definition of servicer under 12 U.S.C. Sec. 2605(i)(2) with respect to

57 residential mortgage loans.
58 (f) "Single point of contact" means [a person] an individual or the individual's
59 replacement who, as the designated representative of the beneficiary or servicer, is authorized
60 to:
61 (i) coordinate and ensure effective communication with a default trustor concerning:
62 (A) foreclosure proceedings initiated by the beneficiary or servicer relating to the trust
63 property; and
64 (B) any foreclosure relief offered by or acceptable to the beneficiary or servicer; and
65 (ii) access and be informed of decisions concerning the default trustor's eligibility for
66 foreclosure relief; and
67 [(ii) direct] (iii) access and be informed of the procedural details of all foreclosure
68 proceedings initiated by the beneficiary or servicer relating to the trust property, including:
69 (A) the filing of a notice of default under Section 57-1-24 and any cancellation of a
70 notice of default;
71 (B) the publication of a notice of trustee's sale under Section 57-1-25 ; and
72 (C) the postponement of a trustee's sale under Section 57-1-27 or this section.
73 (2) (a) [Before] No fewer than 30 days before the day on which a notice of default is
74 filed for record under Section 57-1-24 , a beneficiary or servicer shall:
75 (i) designate a single point of contact; and
76 (ii) send written notice [by United States mail] to the default trustor at the default
77 trustor's current address or, if none is provided, the address of the property described in the
78 trust deed.
79 (b) A notice under Subsection (2)(a)(ii) shall:
80 (i) advise the default trustor of the intent of the beneficiary or servicer to file a notice of
81 default;
82 (ii) state:
83 (A) the nature of the default;
84 (B) the total amount the default trustor is required to pay in order to cure the default
85 and avoid the filing of a notice of default, itemized by the type and amount of each component
86 part of the total cure amount; and
87 (C) [the] a date, not fewer than 30 days after the day on which the notice is mailed, by

88 which the default trustor [is required to] must pay the amount to cure the default and avoid the
89 filing of a notice of default under Section 57-1-24 ;
90 (iii) disclose the name, telephone number, email address, and mailing address of the
91 single point of contact designated by the beneficiary or servicer; and
92 (iv) direct the default trustor to contact the single point of contact regarding foreclosure
93 relief available through the beneficiary or servicer for which a default trustor may apply, if the
94 beneficiary or servicer offers foreclosure relief.
95 (3) Before the expiration of the three-month period described in Subsection 57-1-24 (2),
96 a default trustor may apply directly with the single point of contact for any available
97 foreclosure relief.
98 (4) A default trustor shall, within the time required by the beneficiary or servicer,
99 provide all financial and other information requested by the [single point of contact]
100 beneficiary or servicer to enable the beneficiary or servicer to determine whether the default
101 trustor qualifies for the foreclosure relief for which the default trustor applies.
102 (5) The single point of contact shall:
103 (a) inform the default trustor about and make available to the default [trust] trustor any
104 available foreclosure relief;
105 (b) undertake reasonable and good faith efforts, consistent with applicable law, to
106 consider the default trustor for foreclosure relief for which the default trustor is eligible;
107 (c) ensure timely and appropriate communication with the default trustor concerning
108 foreclosure relief for which the default trustor applies; and
109 (d) notify the default trustor [by United States mail] in writing of the decision of the
110 beneficiary or servicer regarding the foreclosure relief for which the default trustor applies.
111 [(6) Notice of a trustee's sale may not be given under Section 57-1-25 with respect to
112 the trust property of a default trustor who has applied for foreclosure relief until after the single
113 point of contact provides the notice required by Subsection (5)(d).]
114 (6) If a default trustor applies for foreclosure relief and provides all information
115 required under Subsection (4), the trustee may not give notice of a trustee's sale under Section
116 57-1-25 until the single point of contact provides the notice required by Subsection (5)(d).
117 (7) A beneficiary or servicer may cause a notice of a trustee's sale to be given with
118 respect to the trust property of a default trustor who has applied for foreclosure relief if, in the

119 exercise of the sole discretion of the beneficiary or servicer, the beneficiary or servicer:
120 (a) determines that the default trustor does not qualify for the foreclosure relief for
121 which the default trustor has applied; or
122 (b) elects not to enter into a written agreement with the default trustor to implement the
123 foreclosure relief.
124 (8) (a) A beneficiary or servicer may postpone a trustee's sale of the trust property in
125 order to allow further time for negotiations relating to foreclosure relief.
126 (b) A postponement of a trustee's sale under Subsection (8)(a) does not require the
127 trustee to file for record a new or additional notice of default under Section 57-1-24 .
128 (9) A beneficiary or servicer shall cause the cancellation of a notice of default filed
129 under Section 57-1-24 on the trust property of a default trustor if the beneficiary or servicer:
130 (a) determines that the default trustor qualifies for the foreclosure relief for which the
131 default trustor has applied; and
132 (b) enters into a written agreement with the default trustor to implement the foreclosure
133 relief.
134 (10) This section may not be construed to require a beneficiary or servicer to:
135 (a) establish foreclosure relief; or
136 (b) approve an application for foreclosure relief submitted by a default trustor.
137 (11) A beneficiary and servicer shall each take reasonable measures to ensure that their
138 respective practices in the foreclosure of owner-occupied residential property and any
139 foreclosure relief with respect to a loan:
140 (a) comply with all applicable federal and state fair lending statutes; and
141 (b) ensure appropriate treatment of default trustors in the foreclosure process.
142 [(12) This section does not apply if the beneficiary under a trust deed securing a loan is
143 an individual.]
144 [(13)] (12) A beneficiary or servicer is considered to have complied with the
145 requirements of this section if the beneficiary or servicer designates and uses a single point of
146 contact in compliance with federal law, rules, regulations, guidance, or guidelines governing
147 the beneficiary or servicer and issued by, as applicable, the Board of Governors of the Federal
148 Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of
149 the Currency, the National Credit Union Administration, or the Consumer Financial Protection

150 Bureau.
151 [(14)] (13) The failure of a beneficiary or servicer to comply with a requirement of this
152 section does not affect the validity of a trustee's sale of the trust property [to a bona fide
153 purchaser].

[Bill Documents]