Bill Text: MN HF8 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Supporting Responsible Homeowners and Stabilizing Neighborhoods Act enacted, and homeowner opportunities provided in regard to underwater mortgage loans and foreclosure relief on residential homestead property.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced - Dead) 2013-01-24 - Author added Slocum [HF8 Detail]
Download: Minnesota-2013-HF8-Introduced.html
1.2relating to real estate; enacting the Supporting Responsible Homeowners and
1.3Stabilizing Neighborhoods Act; providing homeowner opportunities in regard
1.4to underwater mortgage loans and foreclosure relief on residential homestead
1.5property; amending Minnesota Statutes 2012, sections 580.02; 580.041,
1.6subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 47;
1.7580; proposing coding for new law as Minnesota Statutes, chapter 584.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.9 Section 1. [47.22] REFINANCING OPPORTUNITY REQUIRED; CERTAIN
1.10UNDERWATER HOME MORTGAGE LOANS.
1.11 Subdivision 1. Qualifications. This section applies to:
1.12(1) a bank chartered in this state; and
1.13(2) a home mortgage loan customer of the bank whose mortgage loan:
1.14(i) was originated prior to January 1, 2009;
1.15(ii) is current on payments;
1.16(iii) had not been delinquent at any time within the preceding 12 months;
1.17(iv) has a current interest rate of 5.25 percent or higher; and
1.18(v) has a loan-to-value ratio in excess of 100 percent.
1.19 Subd. 2. Opportunity to refinance. A bank described in subdivision 1, clause (1),
1.20must offer to an existing home mortgage loan customer described in subdivision 1, clause
1.21(2), an opportunity to refinance the loan at a lower interest rate. The offer must not be
1.22conditional upon the customer's payment of fees to the bank that exceed the cost actually
1.23and reasonably incurred in connection with the refinancing. The offer to refinance must
1.24be made no later than 60 days after the date of enactment of this bill. The offer must
2.1remain available for acceptance by the borrower for at least 60 days after the date the
2.2offer is communicated.
2.3 Subd. 3. Consequence of noncompliance by the bank. If the bank does not
2.4comply with subdivision 2, and the bank begins foreclosure of the mortgage, the
2.5redemption period shall be 12 months, notwithstanding a shorter period specified in
2.6Minnesota Statutes, section 580.23.
2.7EFFECTIVE DATE.This section is effective the day following final enactment.
2.8 Sec. 2. [47.221] TRANSPARENCY IN LOAN MODIFICATION CRITERIA.
2.9A state-chartered bank shall provide to all of its residential mortgage loan customers
2.10in writing the criteria the bank uses in determining eligibility for a loan modification. The
2.11bank shall provide the criteria at least once per year, within 30 days after each change in
2.12the criteria, and upon request. If the bank denies an application for a loan modification,
2.13the bank shall notify the customer in writing within five days of the decision and provide
2.14an explanation of how the customer failed to meet the criteria. The bank must provide
2.15the customer with accurate information about the lender.
2.16 Sec. 3. [47.222] RESPONSE TO SHORT SALE REQUESTS.
2.17 Subdivision 1. Short sale defined. For purposes of this section, short sale means a
2.18sale by a homeowner of the homeowner's mortgaged home to a buyer for a price that is
2.19less than the amount owed on the mortgage loan.
2.20 Subd. 2. Prompt response by lender. If a homeowner requests approval of the
2.21lender for a short sale of property on which the lender holds a mortgage, the lender must
2.22respond in writing to the request, either accepting it, denying it, or accepting it subject to
2.23conditions, within 30 days after receiving the request. The response by the lender must
2.24state the reason or reasons for a denial or for an acceptance subject to conditions.
2.25 Subd. 3. Effect of failure to respond by lender. If the lender fails to respond
2.26in compliance with subdivision 2, the homeowner becomes entitled to a redemption
2.27period of 12 months and the loss of any right the lender might otherwise have to obtain
2.28a deficiency judgment in the event of a future foreclosure of the loan. This subdivision
2.29applies notwithstanding anything to the contrary in section 580.23.
2.30 Sec. 4. [47.223] NO FEES FOR SERVICES NOT PROVIDED.
2.31A mortgage lender or mortgage broker shall not charge fees or other charges in
2.32connection with origination of a mortgage loan for alleged services that the lender or
3.1broker did not provide or fees or charges that exceed the cost paid to a third party for
3.2products or services provided through the lender or broker by a third party.
3.3 Sec. 5. Minnesota Statutes 2012, section 580.02, is amended to read:
3.4580.02 REQUISITES FOR FORECLOSURE.
3.5 To entitle any party to make such foreclosure, it is requisite:
3.6 (1) that some default in a condition of such mortgage has occurred, by which the
3.7power to sell has become operative;
3.8 (2) that no action or proceeding has been instituted at law to recover the debt then
3.9remaining secured by such mortgage, or any part thereof, or, if the action or proceeding
3.10has been instituted, that the same has been discontinued, or that an execution upon the
3.11judgment rendered therein has been returned unsatisfied, in whole or in part;
3.12 (3) that the mortgage has been recorded and, if it has been assigned, that all
3.13assignments thereof have been recorded; provided, that, if the mortgage is upon registered
3.14land, it shall be sufficient if the mortgage and all assignments thereof have been duly
3.15registered;and
3.16 (4) before the notice of pendency as required under section580.032 is recorded, the
3.17party has complied with section580.021 .; and
3.18(5) that if the mortgagor has requested a loan modification of the mortgage loan on
3.19the mortgagor's homestead, the mortgagee has rejected the request by notice in writing
3.20to the mortgagor. This requirement does not apply to a mortgagor's request for a loan
3.21modification made sooner than 60 days after a previous request by the mortgagor for
3.22a loan modification on the same mortgage loan was rejected by the mortgagee. The
3.23mortgagee cannot begin or continue a foreclosure if a loan modification request has been
3.24submitted, is under consideration, is pending, or if there has been a loan modification and
3.25the mortgagor is not in default on the modified loan.
3.26EFFECTIVE DATE.This section is effective for foreclosures commenced on or
3.27after June 1, 2013.
3.28 Sec. 6. [580.0211] FORECLOSURE FORBEARANCE FOR FINANCIAL
3.29HARDSHIP OF UNEMPLOYED LONG-TERM HOMEOWNERS.
3.30(a) Upon request and proof of eligibility provided by the mortgagor, a mortgagee
3.31shall defer commencement or continuation of a mortgage foreclosure for at least 12
3.32months for mortgagors: (1) who have lived in their current home that is subject to the
4.1mortgage for at least ten years; and (2) at least one of whom is unemployed and eligible
4.2for unemployment compensation or whose eligibility for it has expired.
4.3(b) Mortgagors who qualify under paragraph (a) and have lived in their current home
4.4that is subject to the mortgage for at least 20 years may request, and the mortgagee must
4.5provide, a deferral of commencement or continuation of foreclosure of at least 24 months.
4.6(c) A mortgagor may request and receive a deferral under paragraph (a) or (b) at
4.7any time before or during a foreclosure.
4.8(d) Interest may continue to accrue on the loan, unless otherwise agreed between
4.9the parties.
4.10(e) The mortgagee must notify in writing, as part of the notice of default, any
4.11potentially eligible mortgagor of the mortgagor's rights under this section.
4.12 Sec. 7. Minnesota Statutes 2012, section 580.041, subdivision 2, is amended to read:
4.13 Subd. 2. Content of foreclosure advice notice. The foreclosure advice notice
4.14required by this section must appear substantially as follows:
4.21AS OF [insert date], this lender says that you owe $[insert dollar amount] to bring
4.22your mortgage up to date (or "reinstate" your mortgage). You must pay this amount,
4.23plus interest and other costs, to keep your house from going through a sheriff's sale.
4.24The sheriff's sale is scheduled for [insert date] at [insert time] at [insert place].
4.25Mortgage foreclosure is a complex process. People may contact you with advice and
4.26offers to help "save" your home.
4.27Remember: It is important that you learn as much as you can about foreclosure and
4.28your situation. Find out about all your options before you make any agreements with
4.29anyone about the foreclosure of your home.
4.30Getting Help
4.31As soon as possible, you should contact your lender at the above number to talk
4.32about things you might be able to do to prevent foreclosure. You may be eligible for
4.33a loan modification from your lender. You have the right to ask your lender for a
4.34statement in writing describing how the lender decides whether to agree to modify a
4.35loan. You should also consider contacting the foreclosure prevention counselor in
5.1your area. A foreclosure prevention counselor can answer your questions, offer free
5.2advice, and help you create a plan which makes sense for your situation.
5.3Contact the Minnesota Home Ownership Center at 651-659-9336 or 866-462-6466
5.4or www.hocmn.org or contact the United States Department of Housing and Urban
5.5Development at 1-800-569-4287 or www.hud.gov to get the phone number and
5.6location of the nearest certified counseling organization. Call today. The longer you
5.7wait, the fewer options you may have for a desirable result."
5.8 Sec. 8. [584.01] DEFINITIONS.
5.9 Subdivision 1. Scope. For purposes of this chapter, the terms defined in this section
5.10have the meanings given.
5.11 Subd. 2. Affidavit of compliance. "Affidavit of compliance" means a sworn
5.12affidavit recorded by the mortgagee with the county recorder or registrar of titles as
5.13required under section 584.02.
5.14 Subd. 3. Completed loan modification application. "Completed loan modification
5.15application" means all the documents and information reasonably necessary for a
5.16mortgagee to determine the mortgagor's eligibility for a loan modification program have
5.17been provided to the mortgagee.
5.18 Subd. 4. Foreclosure. "Foreclosure" means foreclosure of a residential mortgage
5.19loan by advertisement under chapter 580, by action under chapter 581, or by any other
5.20method permitted by law.
5.21 Subd. 5. Incomplete loan modification application. "Incomplete loan modification
5.22application" means a loan modification application that lacks documents or information
5.23necessary for a completed loan modification application, or a written submission from or
5.24on behalf of a mortgagor demonstrating the mortgagor's intent to seek a loan modification.
5.25 Subd. 6. Loan modification. "Loan modification" means a permanent alteration to
5.26the terms and conditions of a residential mortgage loan under a loan modification program.
5.27 Subd. 7. Loan modification notice. "Loan modification notice" means the notice
5.28required by section 584.04.
5.29 Subd. 8. Loan modification program. "Loan modification program" means any
5.30federal, state, or local government program that requires the mortgagee to make a loan
5.31modification to a residential mortgage loan or any other loan modification program
5.32the mortgagee offers voluntarily or offers or is required to offer in compliance with a
5.33settlement, court judgment, consent decree, or other resolution of a legal proceeding.
5.34 Subd. 9. Mortgagee. "Mortgagee" means a person foreclosing a residential
5.35mortgage, and any agent or employee of that person acting in connection with the
6.1foreclosure of a residential mortgage, including but not limited to a mortgagee, a mortgage
6.2servicer, or the owner of the mortgage loan.
6.3 Subd. 10. Residential mortgage loan. "Residential mortgage loan" means a
6.4mortgage loan on real property consisting of one to four family dwelling units, one of
6.5which the owner occupies as the owner's principal place of residency at the time of default.
6.6 Subd. 11. Telephone contact attempt. "Telephone contact attempt" means an
6.7attempt by the mortgagee to contact the mortgagor that complies with the requirements
6.8of section 584.03, subdivision 4.
6.9 Sec. 9. [584.02] REQUISITES TO FORECLOSE.
6.10 Subdivision 1. Required recording of loan modification affidavit of compliance
6.11before foreclosure. No foreclosure shall commence until the mortgagee has complied
6.12with this chapter. Before the notice required by section 580.021 is provided to the
6.13mortgagor, the mortgagee must record an affidavit of compliance. The affidavit must be
6.14accurate and must attach supporting documents that establish that all requirements of
6.15this chapter have been met. The affidavit must include the date, time, and name of the
6.16representative who made each required telephone contact attempt. Within five days of
6.17recording this affidavit, the mortgagee shall mail a copy of the affidavit to the mortgagor.
6.18 Subd. 2. Form of affidavit of compliance. To comply with the requirements of this
6.19chapter, a mortgagee must record an affidavit of compliance that appears substantially
6.20as follows:
6.22[Identifying information relating to the case, such as party names, addresses, contact
6.23information, etc.]
6.24The undersigned, being duly sworn, hereby deposes and says:
6.251. I am the [job title] of [mortgagee] and am authorized to sign on behalf of
6.26[mortgagee].
6.272. I am familiar with the business records and procedures of [mortgagee].
6.283. I have specific knowledge of the mortgage loan held by the mortgagor and of
6.29all information sworn to in this affidavit.
6.304. [Mortgagee] has the right to proceed with foreclosure and is not required to offer
6.31a loan modification to mortgagor because (mortgagee MUST list one of the following
6.32reasons):
6.33(1) Prior to mortgagor applying for a loan modification, [mortgagee] had reliable
6.34information that led the [mortgagee] in good faith to conclude that the mortgagor is
6.35ineligible for a loan modification program and has notified the mortgagor of that; (2)
7.1mortgagor did not send to [mortgagee] a loan modification application within 60 days
7.2of the sending of the loan modification notice; (3) mortgagor sent an incomplete loan
7.3modification application, was notified by [mortgagee] of the deficiencies, and has not
7.4remedied the missing information by the deadline for a completed loan modification
7.5application; (4) mortgagor sent a completed loan modification application, but based
7.6upon reliable information, and in good faith, [mortgagee] has concluded that mortgagor
7.7is ineligible for a modification and has notified the mortgagor; (5) mortgagor has sent a
7.8completed loan modification application and has been offered a loan modification, but
7.9has elected not to accept the modification offer; (6) [mortgagee] has previously granted a
7.10mortgage loan modification to mortgagor, and mortgagor is in default on that mortgage
7.11loan modification agreement; and (7) [mortgagee] has concluded in good faith that
7.12mortgagor is not eligible for any additional mortgage loan modification.
7.135. [Mortgagee] has notified the mortgagor of the reason listed above and complied
7.14with all notice requirements of this chapter.
7.156. Attached are documents which [mortgagee] represents to be accurate and correct
7.16and which support the reason listed above.
7.17[Mortgagee must attach supporting documents that establish that all requirements
7.18of this chapter have been met].
7.19Signature: [agent of mortgagee]
7.20Legibly printed name [agent of mortgagee]
7.21 Sec. 10. [584.03] NOTICE REQUIREMENTS.
7.22 Subdivision 1. General. Notices required by this chapter must comply with the
7.23requirements of this section.
7.24 Subd. 2. Form of written notice. Written notices required by this chapter must
7.25be in 14-point boldface type. The color and format of the notice must not obscure or
7.26overshadow the content of the notice. The title of the notice must be in 20-point boldface
7.27type. The notice must be on its own separate page and must not be accompanied by any
7.28other documents or notices other than as specified in this chapter. The envelope or mailing
7.29package in which the notice is sent must be colored and contain the phrase "LOAN
7.30MODIFICATION INFORMATION" and "NOTICE REQUIRED BY THE STATE OF
7.31MINNESOTA" in a minimum of 14-point boldface type, located above the recipient's
7.32name and address. The written notices required by this chapter shall not contain any bills,
7.33requests for payment of current or past due amounts, collection notices, or references to
7.34collection of any kind, unless any such information is necessary for the determination
7.35of loan modification or is requested by the mortgagor. Any time a written response is
8.1required by the mortgagor, the mailing must include a return-addressed envelope. Any
8.2return-addressed envelope required by this chapter must state conspicuously, "Please
8.3consider sending this letter by a method that provides proof of delivery."
8.4 Subd. 3. Delivery of written notices. Notices required by this chapter must be
8.5sent to the last known address of the mortgagor. Notices must be sent by a method that
8.6provides proof of delivery. Notices required by this chapter shall also be transmitted
8.7within one business day in substantially similar form by e-mail to the mortgagor if the
8.8mortgagee has a valid e-mail address for the mortgagor.
8.9 Subd. 4. Telephone contact attempt. A telephone contact attempt by a mortgagee
8.10under this chapter must meet the following requirements:
8.11(1) the mortgagee shall use the last known telephone number of the mortgagor;
8.12(2) no call shall be initiated by the mortgagee between 9:00 p.m. and 8:00 a.m. in
8.13the mortgagor's time zone;
8.14(3) all calls must be conducted by a live representative, and the use of automated
8.15dialers is prohibited; and
8.16(4) the representative of the mortgagee must be authorized to and reasonably capable
8.17of discussing available loan modification programs and must encourage the mortgagor to
8.18take the next applicable steps for loan modification.
8.19 Subd. 5. Transparency of loan modification formula. The mortgagee shall publish
8.20on a Web site any net present value (NPV) formula the mortgagee uses to make any
8.21determination of eligibility under a loan modification program. Any NPV or similar tests
8.22and any data inputs used for making the determination of eligibility for a loan modification
8.23for a mortgagor must be retained by the mortgagee for a period of three years and must be
8.24provided to the mortgagor within seven days of request by the mortgagor.
8.25 Sec. 11. [584.04] NOTICES OF LOAN MODIFICATION AVAILABILITY.
8.26 Subdivision 1. Notice required. A mortgagee shall provide to the mortgagor the
8.27notices required by this section. The mortgagee may record an affidavit of compliance if
8.28the mortgagor fails to mail to the mortgagee a completed loan modification application
8.29or an incomplete loan modification application within 60 days of the mortgagee sending
8.30the notices.
8.31 Subd. 2. Loan modification notice. The mortgagee shall send to the mortgagor a
8.32notice that appears substantially as follows:
8.34Date of Notice: (insert date sent)
8.35Name of Mortgagor(s):
9.2You may be eligible to prevent foreclosure by receiving a loan modification under
9.3a loan modification program. If you apply for a loan modification within 60 days from
9.4the date of this notice, you will have certain rights under Minnesota law to a prompt
9.5evaluation of your request for a loan modification.
9.6You may apply for a loan modification by completing the enclosed Loan
9.7Modification Application and providing all requested information. We have included a
9.8return-addressed envelope for your convenience. Please consider sending these documents
9.9by a method that provides proof of delivery to ensure accurate record keeping.
9.11Please make sure to read this letter carefully so that you can take advantage of your
9.12potential options for a loan modification. Please make sure all documents mentioned in this
9.13letter are enclosed or available to you, and contact us immediately if a document is missing.
9.15We strongly encourage you to contact a foreclosure prevention counselor from the
9.16list below, and have the counselor review and assist you with your loan modification
9.17application.
9.19[Mortgagee contact information, including mailing address, toll-free telephone
9.20number, and e-mail address.]
9.21[Contact information for at least one HUD-certified foreclosure counseling agency
9.22that serves the county in which the mortgagor lives and contact information for the
9.23Minnesota Home Ownership Center. Include: name, mailing address, toll-free telephone
9.24number, e-mail address, and Web site.]
9.25 Subd. 3. Application for loan modification. The mortgagee shall send with the
9.26notice required by subdivision 2 an application form that appears substantially as follows:
9.29Date of Notice: (insert date sent)
9.30Name of Mortgagor(s):
9.31Property Address:
9.32Please complete this loan application form and attach the documents and information
9.33requested from the "required documents list." Return the completed application to the
9.34address at the bottom of this form within 60 days of the date of this form.
9.35For questions or assistance completing this application, please contact [mortgagee
9.36representative(s) who can provide assistance] at [telephone number of representative(s)] or
10.1[e-mail address of representative(s)] immediately; OR [loan counselor(s) who can provide
10.2assistance] at [telephone number of counselor(s)] or [e-mail address of counselor(s).]
10.3Required Documents List. The following documents must be sent to us in order for
10.4us to process your loan modification application.
10.5[All documents required by the applicable Loan Modification Program, listed
10.6separately and numbered, with attached documents listed first.]
10.7Attached Documents List. To make your application as easy as possible, we have
10.8included some of the documents you need to complete in order to apply for a modification.
10.9These documents are listed below. Remember that they must be sent with all materials
10.10listed in the Required Documents List. Please verify that every document listed below is
10.11included:
10.12[All documents required by the applicable loan modification program which can be
10.13provided by the mortgagee must be attached, listed separately, and numbered.]
10.14If any of these documents is not included in this packet, please contact [mortgagee
10.15representative(s) who can forward the missing information] at [telephone number of
10.16representative(s)] or [e-mail address of representative(s)] immediately.
10.17PLEASE MAKE A COPY OF ALL ENCLOSED FORMS AND DOCUMENTS
10.18FOR YOUR RECORDS.
10.19For accurate record keeping, we strongly encourage you to send this completed form
10.20and all requested documents with return receipt requested or by other method with proof
10.21of delivery to the address below:
10.23Thank you. [Mortgagee] will contact you within 30 days of receipt to inform you of
10.24the status of your loan modification application.
10.25 Subd. 4. Required attached documents. The mortgagee shall enclose any
10.26documents required for a completed loan modification application which can be provided
10.27by the mortgagee.
10.28 Subd. 5. Telephone contact attempt required. The mortgagee is required to make
10.29six telephone contact attempts to inform the mortgagor of possible eligibility for a loan
10.30modification program within 50 days after the date the loan modification notice is sent. If
10.31the mortgagee speaks with the mortgagor or someone authorized to speak on behalf of the
10.32mortgagor, no further contact attempts are required under this subdivision.
10.33 Subd. 6. Deadline notice. If the mortgagee has not received a completed loan
10.34modification application or incomplete loan modification application 50 days after the date
10.35the loan modification notice is sent, the mortgagor shall within five days do the following:
10.36(1) make one telephone contact attempt to inform the mortgagor of the approaching
11.1deadline and communicate to the mortgagor the documents necessary to submit a loan
11.2modification application; and (2) if mortgagee has an e-mail address for the mortgagor,
11.3send an e-mail to the mortgagor stating the approaching deadline.
11.4 Sec. 12. [584.05] NOTICE OF INCOMPLETE LOAN MODIFICATION
11.5APPLICATION.
11.6 Subdivision 1. Receipt of incomplete loan modification application. If the
11.7mortgagor mails an incomplete loan modification application within 60 days of the
11.8date the loan modification notice is sent by the mortgagee, the mortgagee must send to
11.9the mortgagor the notice required by subdivision 2 within ten days of the receipt of the
11.10incomplete loan application. The mortgagee may record an affidavit of compliance if the
11.11mortgagor has not mailed to the mortgagee a completed loan application within 30 days
11.12after the date of mailing of the notice required by subdivision 2, but not less than 60 days
11.13after the date the loan modification notice is sent by the mortgagee.
11.14 Subd. 2. Incomplete loan modification application notice. If an incomplete loan
11.15modification application has been received by the mortgagee, the mortgagee must send a
11.16notice to the mortgagor that appears substantially as follows:
11.18Date of Notice: (insert date sent)
11.19Name of Mortgagor(s):
11.20You recently submitted an application for a loan modification. Unfortunately, it was
11.21not complete. We require more information to evaluate your eligibility for a modification.
11.23[numbered list of all missing or incomplete documents, described in plain language.
11.24For each incomplete document, the mortgagee must describe in plain language the
11.25information that is missing.]
11.26PLEASE NOTE: We must receive this information within 30 days of the date of
11.27this notice for you to protect certain rights under Minnesota law to a prompt evaluation
11.28of your request for a loan modification.
11.29 Subd. 3. Inclusions with incomplete loan modification application. The
11.30second page of this notice must be a glossary describing the nature of any missing or
11.31incomplete documents and in plain language where the documents are available and how
11.32to submit them. If the mortgagor has partially completed a form from section 584.04, any
11.33information from that form must be included on the copy sent to the mortgagor pursuant
11.34to this section, with the locations of the missing information conspicuously marked.
12.1 Subd. 4. Telephone contact attempts. The mortgagee must make three telephone
12.2contact attempts to inform the mortgagor of any deficiencies necessary to make a
12.3completed loan modification application. The first telephone contact attempt must be
12.4made within ten days of receipt of the incomplete loan modification application and all
12.5three attempts must be completed within 15 days of the first attempt.
12.6 Sec. 13. [584.06] NOTICE OF DETERMINATION.
12.7 Subdivision 1. Determination required. The mortgagee must determine eligibility
12.8for each loan modification program for which the mortgagor may be eligible and issue a
12.9notice of determination as specified under this section within 30 days of the receipt of a
12.10completed loan modification application. The mortgagee shall comply with all guidelines
12.11and requirements of each loan modification program in connection with this determination.
12.12 Subd. 2. Loan modification offer. If the mortgagee determines that the mortgagor
12.13is eligible for a loan modification program, the mortgagee shall state the following in
12.14plain language in a written notice of the loan modification offer or offers for each loan
12.15modification program for which the mortgagor is eligible: a description of the terms of the
12.16modified loan offer; an explanation of any required timeline to respond to the offer; that the
12.17mortgagee is permitted to initiate foreclosure proceedings upon failure of the mortgagor to
12.18accept the offer; instructions regarding how the mortgagor should respond to the offer;
12.19and accurate contact information for how the mortgagor should respond to the offer.
12.20 Subd. 3. Refusal to offer loan modification. If the mortgagee determines that the
12.21mortgagor is not eligible for any loan modification program, the mortgagee shall state the
12.22following in plain language in a written notice: the timeline and procedures, if applicable,
12.23for how the mortgagor may request review of the determination; that failure to do so will
12.24free the mortgagee to initiate foreclosure proceedings; and the toll-free telephone number,
12.25address, e-mail address, and other contact information that will provide access during
12.26regular business hours to a live representative authorized to discuss the determination
12.27on behalf of the mortgagee. The timeline for the mortgagor to request a review of the
12.28determination must be at least 30 days after the date of mailing of the written notice of
12.29ineligibility and must be stated prominently in the written notice of ineligibility. The
12.30written notice of ineligibility must be accompanied by a form for the mortgagee to use in
12.31appealing the determination of ineligibility. The mortgagee may record an affidavit of
12.32compliance after making a determination in good faith that the mortgagor is ineligible for
12.33a loan modification, but the mortgagee shall not record an affidavit of compliance until at
12.34least 35 days after mailing the notice of ineligibility.
13.1 Subd. 4. General inclusions. Any notice described in this section must contain
13.2a detailed, clear description of any and all net present value (NPV) calculations used in
13.3making the determination, instructions explaining how to access the published NPV
13.4calculations contained on the mortgagee's Web site as required under section 584.03,
13.5subdivision 5, and a plain language statement that if the mortgagor believes there is an
13.6error in any element of the determination that the mortgagor has the right to contact an
13.7attorney or loan counselor for assistance. This mailing must include any and all data
13.8inputs used in the NPV calculations, which must be on a separate piece of paper.
13.9 Sec. 14. [584.07] NOTICE FOR INELIGIBLE HOMEOWNER.
13.10The mortgagee may record an affidavit of compliance if, prior to sending the loan
13.11modification notices, the mortgagee has reliable information that leads the mortgagee in
13.12good faith to conclude that the mortgagor is ineligible for any applicable loan modification
13.13program. Ten days prior to recording the affidavit of compliance, the mortgagee must
13.14send a written communication to the ineligible mortgagor. This written communication
13.15must contain a plain language statement explaining why the mortgagor is ineligible,
13.16and a toll-free telephone number, address, and e-mail address of a representative of the
13.17mortgagee that the mortgagor may contact to dispute any finding of ineligibility. The
13.18plain language statement must state that the mortgagor may contact a loan counselor or
13.19foreclosure prevention counselor for advice.
13.20 Sec. 15. [584.08] ENFORCEMENT; REMEDIES.
13.21 Subdivision 1. Private right of action. A mortgagee who fails to comply with any
13.22provision of this chapter is liable to a mortgagor for actual, incidental, and consequential
13.23damages in a private right of action and for any or all other remedies specified in this section.
13.24 Subd. 2. Statutory damages. (a) A mortgagee who violates any provision of this
13.25chapter is liable to the mortgagor for up to $2,000 for each violation.
13.26(b) De minimus violations are not subject to the statutory damages available under
13.27this subdivision.
13.28 Subd. 3. Punitive damages. (a) A mortgagor is entitled to punitive damages under
13.29paragraphs (b) and (c) and section 549.20.
13.30(b) The court may award punitive damages if the mortgagee has failed to issue
13.31a notice of determination within 30 days of the mortgagee's receipt of a completed
13.32loan modification application. There is a rebuttable presumption that all required
13.33documentation has been provided to the mortgagee for purposes of a completed loan
13.34modification application if the mortgagor can provide:
14.1(1) copies of all such required documents to the court; and either
14.2(2) proof of mortgagee's receipt of a completed loan modification application; or
14.3(3) a sworn affidavit by a HUD-approved counseling agency or substantially similar
14.4third party that those documents were sent to the mortgagee.
14.5(c) The court may award punitive damages to the mortgagor if the mortgagee did not
14.6in good faith attempt to comply with the standards, duties, prohibitions, or requirements of
14.7this chapter. Factors the court must consider in determining a lack of good faith include,
14.8but are not limited to:
14.9(1) the frequency, nature, and persistence of noncompliance;
14.10(2) a pattern of violations;
14.11(3) the extent to which the violation was reckless or intentional; or
14.12(4) a violation that results in, or substantially contributes to, the mortgagor's loss
14.13of home.
14.14 Subd. 4. Injunctive relief. The court may issue an injunction to prevent violations
14.15of this chapter and to enjoin foreclosure in violation of this chapter.
14.16 Subd. 5. Reimbursement for litigation costs. A prevailing plaintiff shall recover
14.17costs and disbursements of the action, plus reasonable attorney fees.
14.18 Subd. 6. Remedies cumulative. The remedies provided in this section are
14.19cumulative and do not restrict any remedy that is otherwise available.
14.20 Subd. 7. Public enforcement. (a) The attorney general may enforce this chapter
14.21under section 8.31.
14.22(b) The commissioner of commerce may enforce this chapter under chapter 45.
14.23 Sec. 16. [584.09] APPLICABILITY TO PRIORITY OF LOANS.
14.24A loan modification, as defined in section 584.01, does not affect the priority of the
14.25lien of the mortgage that secures the loan.
14.26 Sec. 17. EFFECTIVE DATE; APPLICABILITY.
14.27Sections 8 to 16 are effective 60 days after enactment and apply to foreclosures of
14.28residential mortgages commenced on or after that date.
1.3Stabilizing Neighborhoods Act; providing homeowner opportunities in regard
1.4to underwater mortgage loans and foreclosure relief on residential homestead
1.5property; amending Minnesota Statutes 2012, sections 580.02; 580.041,
1.6subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 47;
1.7580; proposing coding for new law as Minnesota Statutes, chapter 584.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.9 Section 1. [47.22] REFINANCING OPPORTUNITY REQUIRED; CERTAIN
1.10UNDERWATER HOME MORTGAGE LOANS.
1.11 Subdivision 1. Qualifications. This section applies to:
1.12(1) a bank chartered in this state; and
1.13(2) a home mortgage loan customer of the bank whose mortgage loan:
1.14(i) was originated prior to January 1, 2009;
1.15(ii) is current on payments;
1.16(iii) had not been delinquent at any time within the preceding 12 months;
1.17(iv) has a current interest rate of 5.25 percent or higher; and
1.18(v) has a loan-to-value ratio in excess of 100 percent.
1.19 Subd. 2. Opportunity to refinance. A bank described in subdivision 1, clause (1),
1.20must offer to an existing home mortgage loan customer described in subdivision 1, clause
1.21(2), an opportunity to refinance the loan at a lower interest rate. The offer must not be
1.22conditional upon the customer's payment of fees to the bank that exceed the cost actually
1.23and reasonably incurred in connection with the refinancing. The offer to refinance must
1.24be made no later than 60 days after the date of enactment of this bill. The offer must
2.1remain available for acceptance by the borrower for at least 60 days after the date the
2.2offer is communicated.
2.3 Subd. 3. Consequence of noncompliance by the bank. If the bank does not
2.4comply with subdivision 2, and the bank begins foreclosure of the mortgage, the
2.5redemption period shall be 12 months, notwithstanding a shorter period specified in
2.6Minnesota Statutes, section 580.23.
2.7EFFECTIVE DATE.This section is effective the day following final enactment.
2.8 Sec. 2. [47.221] TRANSPARENCY IN LOAN MODIFICATION CRITERIA.
2.9A state-chartered bank shall provide to all of its residential mortgage loan customers
2.10in writing the criteria the bank uses in determining eligibility for a loan modification. The
2.11bank shall provide the criteria at least once per year, within 30 days after each change in
2.12the criteria, and upon request. If the bank denies an application for a loan modification,
2.13the bank shall notify the customer in writing within five days of the decision and provide
2.14an explanation of how the customer failed to meet the criteria. The bank must provide
2.15the customer with accurate information about the lender.
2.16 Sec. 3. [47.222] RESPONSE TO SHORT SALE REQUESTS.
2.17 Subdivision 1. Short sale defined. For purposes of this section, short sale means a
2.18sale by a homeowner of the homeowner's mortgaged home to a buyer for a price that is
2.19less than the amount owed on the mortgage loan.
2.20 Subd. 2. Prompt response by lender. If a homeowner requests approval of the
2.21lender for a short sale of property on which the lender holds a mortgage, the lender must
2.22respond in writing to the request, either accepting it, denying it, or accepting it subject to
2.23conditions, within 30 days after receiving the request. The response by the lender must
2.24state the reason or reasons for a denial or for an acceptance subject to conditions.
2.25 Subd. 3. Effect of failure to respond by lender. If the lender fails to respond
2.26in compliance with subdivision 2, the homeowner becomes entitled to a redemption
2.27period of 12 months and the loss of any right the lender might otherwise have to obtain
2.28a deficiency judgment in the event of a future foreclosure of the loan. This subdivision
2.29applies notwithstanding anything to the contrary in section 580.23.
2.30 Sec. 4. [47.223] NO FEES FOR SERVICES NOT PROVIDED.
2.31A mortgage lender or mortgage broker shall not charge fees or other charges in
2.32connection with origination of a mortgage loan for alleged services that the lender or
3.1broker did not provide or fees or charges that exceed the cost paid to a third party for
3.2products or services provided through the lender or broker by a third party.
3.3 Sec. 5. Minnesota Statutes 2012, section 580.02, is amended to read:
3.4580.02 REQUISITES FOR FORECLOSURE.
3.5 To entitle any party to make such foreclosure, it is requisite:
3.6 (1) that some default in a condition of such mortgage has occurred, by which the
3.7power to sell has become operative;
3.8 (2) that no action or proceeding has been instituted at law to recover the debt then
3.9remaining secured by such mortgage, or any part thereof, or, if the action or proceeding
3.10has been instituted, that the same has been discontinued, or that an execution upon the
3.11judgment rendered therein has been returned unsatisfied, in whole or in part;
3.12 (3) that the mortgage has been recorded and, if it has been assigned, that all
3.13assignments thereof have been recorded; provided, that, if the mortgage is upon registered
3.14land, it shall be sufficient if the mortgage and all assignments thereof have been duly
3.15registered;
3.16 (4) before the notice of pendency as required under section
3.17party has complied with section
3.18(5) that if the mortgagor has requested a loan modification of the mortgage loan on
3.19the mortgagor's homestead, the mortgagee has rejected the request by notice in writing
3.20to the mortgagor. This requirement does not apply to a mortgagor's request for a loan
3.21modification made sooner than 60 days after a previous request by the mortgagor for
3.22a loan modification on the same mortgage loan was rejected by the mortgagee. The
3.23mortgagee cannot begin or continue a foreclosure if a loan modification request has been
3.24submitted, is under consideration, is pending, or if there has been a loan modification and
3.25the mortgagor is not in default on the modified loan.
3.26EFFECTIVE DATE.This section is effective for foreclosures commenced on or
3.27after June 1, 2013.
3.28 Sec. 6. [580.0211] FORECLOSURE FORBEARANCE FOR FINANCIAL
3.29HARDSHIP OF UNEMPLOYED LONG-TERM HOMEOWNERS.
3.30(a) Upon request and proof of eligibility provided by the mortgagor, a mortgagee
3.31shall defer commencement or continuation of a mortgage foreclosure for at least 12
3.32months for mortgagors: (1) who have lived in their current home that is subject to the
4.1mortgage for at least ten years; and (2) at least one of whom is unemployed and eligible
4.2for unemployment compensation or whose eligibility for it has expired.
4.3(b) Mortgagors who qualify under paragraph (a) and have lived in their current home
4.4that is subject to the mortgage for at least 20 years may request, and the mortgagee must
4.5provide, a deferral of commencement or continuation of foreclosure of at least 24 months.
4.6(c) A mortgagor may request and receive a deferral under paragraph (a) or (b) at
4.7any time before or during a foreclosure.
4.8(d) Interest may continue to accrue on the loan, unless otherwise agreed between
4.9the parties.
4.10(e) The mortgagee must notify in writing, as part of the notice of default, any
4.11potentially eligible mortgagor of the mortgagor's rights under this section.
4.12 Sec. 7. Minnesota Statutes 2012, section 580.041, subdivision 2, is amended to read:
4.13 Subd. 2. Content of foreclosure advice notice. The foreclosure advice notice
4.14required by this section must appear substantially as follows:
| 4.16 |
The attorney preparing this foreclosure is: ..... |
||
| 4.17 |
(Attorney name, address, phone) |
||
| 4.18 |
It is being prepared for: |
||
| 4.19 |
.....
|
||
| 4.20 |
(Lender name, loss mitigation phone number) |
||
4.22your mortgage up to date (or "reinstate" your mortgage). You must pay this amount,
4.23plus interest and other costs, to keep your house from going through a sheriff's sale.
4.24The sheriff's sale is scheduled for [insert date] at [insert time] at [insert place].
4.25Mortgage foreclosure is a complex process. People may contact you with advice and
4.26offers to help "save" your home.
4.27Remember: It is important that you learn as much as you can about foreclosure and
4.28your situation. Find out about all your options before you make any agreements with
4.29anyone about the foreclosure of your home.
4.30Getting Help
4.31As soon as possible, you should contact your lender at the above number to talk
4.32about things you might be able to do to prevent foreclosure. You may be eligible for
4.33a loan modification from your lender. You have the right to ask your lender for a
4.34statement in writing describing how the lender decides whether to agree to modify a
4.35loan. You should also consider contacting the foreclosure prevention counselor in
5.1your area. A foreclosure prevention counselor can answer your questions, offer free
5.2advice, and help you create a plan which makes sense for your situation.
5.3Contact the Minnesota Home Ownership Center at 651-659-9336 or 866-462-6466
5.4or www.hocmn.org or contact the United States Department of Housing and Urban
5.5Development at 1-800-569-4287 or www.hud.gov to get the phone number and
5.6location of the nearest certified counseling organization. Call today. The longer you
5.7wait, the fewer options you may have for a desirable result."
5.8 Sec. 8. [584.01] DEFINITIONS.
5.9 Subdivision 1. Scope. For purposes of this chapter, the terms defined in this section
5.10have the meanings given.
5.11 Subd. 2. Affidavit of compliance. "Affidavit of compliance" means a sworn
5.12affidavit recorded by the mortgagee with the county recorder or registrar of titles as
5.13required under section 584.02.
5.14 Subd. 3. Completed loan modification application. "Completed loan modification
5.15application" means all the documents and information reasonably necessary for a
5.16mortgagee to determine the mortgagor's eligibility for a loan modification program have
5.17been provided to the mortgagee.
5.18 Subd. 4. Foreclosure. "Foreclosure" means foreclosure of a residential mortgage
5.19loan by advertisement under chapter 580, by action under chapter 581, or by any other
5.20method permitted by law.
5.21 Subd. 5. Incomplete loan modification application. "Incomplete loan modification
5.22application" means a loan modification application that lacks documents or information
5.23necessary for a completed loan modification application, or a written submission from or
5.24on behalf of a mortgagor demonstrating the mortgagor's intent to seek a loan modification.
5.25 Subd. 6. Loan modification. "Loan modification" means a permanent alteration to
5.26the terms and conditions of a residential mortgage loan under a loan modification program.
5.27 Subd. 7. Loan modification notice. "Loan modification notice" means the notice
5.28required by section 584.04.
5.29 Subd. 8. Loan modification program. "Loan modification program" means any
5.30federal, state, or local government program that requires the mortgagee to make a loan
5.31modification to a residential mortgage loan or any other loan modification program
5.32the mortgagee offers voluntarily or offers or is required to offer in compliance with a
5.33settlement, court judgment, consent decree, or other resolution of a legal proceeding.
5.34 Subd. 9. Mortgagee. "Mortgagee" means a person foreclosing a residential
5.35mortgage, and any agent or employee of that person acting in connection with the
6.1foreclosure of a residential mortgage, including but not limited to a mortgagee, a mortgage
6.2servicer, or the owner of the mortgage loan.
6.3 Subd. 10. Residential mortgage loan. "Residential mortgage loan" means a
6.4mortgage loan on real property consisting of one to four family dwelling units, one of
6.5which the owner occupies as the owner's principal place of residency at the time of default.
6.6 Subd. 11. Telephone contact attempt. "Telephone contact attempt" means an
6.7attempt by the mortgagee to contact the mortgagor that complies with the requirements
6.8of section 584.03, subdivision 4.
6.9 Sec. 9. [584.02] REQUISITES TO FORECLOSE.
6.10 Subdivision 1. Required recording of loan modification affidavit of compliance
6.11before foreclosure. No foreclosure shall commence until the mortgagee has complied
6.12with this chapter. Before the notice required by section 580.021 is provided to the
6.13mortgagor, the mortgagee must record an affidavit of compliance. The affidavit must be
6.14accurate and must attach supporting documents that establish that all requirements of
6.15this chapter have been met. The affidavit must include the date, time, and name of the
6.16representative who made each required telephone contact attempt. Within five days of
6.17recording this affidavit, the mortgagee shall mail a copy of the affidavit to the mortgagor.
6.18 Subd. 2. Form of affidavit of compliance. To comply with the requirements of this
6.19chapter, a mortgagee must record an affidavit of compliance that appears substantially
6.20as follows:
6.22[Identifying information relating to the case, such as party names, addresses, contact
6.23information, etc.]
6.24The undersigned, being duly sworn, hereby deposes and says:
6.251. I am the [job title] of [mortgagee] and am authorized to sign on behalf of
6.26[mortgagee].
6.272. I am familiar with the business records and procedures of [mortgagee].
6.283. I have specific knowledge of the mortgage loan held by the mortgagor and of
6.29all information sworn to in this affidavit.
6.304. [Mortgagee] has the right to proceed with foreclosure and is not required to offer
6.31a loan modification to mortgagor because (mortgagee MUST list one of the following
6.32reasons):
6.33(1) Prior to mortgagor applying for a loan modification, [mortgagee] had reliable
6.34information that led the [mortgagee] in good faith to conclude that the mortgagor is
6.35ineligible for a loan modification program and has notified the mortgagor of that; (2)
7.1mortgagor did not send to [mortgagee] a loan modification application within 60 days
7.2of the sending of the loan modification notice; (3) mortgagor sent an incomplete loan
7.3modification application, was notified by [mortgagee] of the deficiencies, and has not
7.4remedied the missing information by the deadline for a completed loan modification
7.5application; (4) mortgagor sent a completed loan modification application, but based
7.6upon reliable information, and in good faith, [mortgagee] has concluded that mortgagor
7.7is ineligible for a modification and has notified the mortgagor; (5) mortgagor has sent a
7.8completed loan modification application and has been offered a loan modification, but
7.9has elected not to accept the modification offer; (6) [mortgagee] has previously granted a
7.10mortgage loan modification to mortgagor, and mortgagor is in default on that mortgage
7.11loan modification agreement; and (7) [mortgagee] has concluded in good faith that
7.12mortgagor is not eligible for any additional mortgage loan modification.
7.135. [Mortgagee] has notified the mortgagor of the reason listed above and complied
7.14with all notice requirements of this chapter.
7.156. Attached are documents which [mortgagee] represents to be accurate and correct
7.16and which support the reason listed above.
7.17[Mortgagee must attach supporting documents that establish that all requirements
7.18of this chapter have been met].
7.19Signature: [agent of mortgagee]
7.20Legibly printed name [agent of mortgagee]
7.21 Sec. 10. [584.03] NOTICE REQUIREMENTS.
7.22 Subdivision 1. General. Notices required by this chapter must comply with the
7.23requirements of this section.
7.24 Subd. 2. Form of written notice. Written notices required by this chapter must
7.25be in 14-point boldface type. The color and format of the notice must not obscure or
7.26overshadow the content of the notice. The title of the notice must be in 20-point boldface
7.27type. The notice must be on its own separate page and must not be accompanied by any
7.28other documents or notices other than as specified in this chapter. The envelope or mailing
7.29package in which the notice is sent must be colored and contain the phrase "LOAN
7.30MODIFICATION INFORMATION" and "NOTICE REQUIRED BY THE STATE OF
7.31MINNESOTA" in a minimum of 14-point boldface type, located above the recipient's
7.32name and address. The written notices required by this chapter shall not contain any bills,
7.33requests for payment of current or past due amounts, collection notices, or references to
7.34collection of any kind, unless any such information is necessary for the determination
7.35of loan modification or is requested by the mortgagor. Any time a written response is
8.1required by the mortgagor, the mailing must include a return-addressed envelope. Any
8.2return-addressed envelope required by this chapter must state conspicuously, "Please
8.3consider sending this letter by a method that provides proof of delivery."
8.4 Subd. 3. Delivery of written notices. Notices required by this chapter must be
8.5sent to the last known address of the mortgagor. Notices must be sent by a method that
8.6provides proof of delivery. Notices required by this chapter shall also be transmitted
8.7within one business day in substantially similar form by e-mail to the mortgagor if the
8.8mortgagee has a valid e-mail address for the mortgagor.
8.9 Subd. 4. Telephone contact attempt. A telephone contact attempt by a mortgagee
8.10under this chapter must meet the following requirements:
8.11(1) the mortgagee shall use the last known telephone number of the mortgagor;
8.12(2) no call shall be initiated by the mortgagee between 9:00 p.m. and 8:00 a.m. in
8.13the mortgagor's time zone;
8.14(3) all calls must be conducted by a live representative, and the use of automated
8.15dialers is prohibited; and
8.16(4) the representative of the mortgagee must be authorized to and reasonably capable
8.17of discussing available loan modification programs and must encourage the mortgagor to
8.18take the next applicable steps for loan modification.
8.19 Subd. 5. Transparency of loan modification formula. The mortgagee shall publish
8.20on a Web site any net present value (NPV) formula the mortgagee uses to make any
8.21determination of eligibility under a loan modification program. Any NPV or similar tests
8.22and any data inputs used for making the determination of eligibility for a loan modification
8.23for a mortgagor must be retained by the mortgagee for a period of three years and must be
8.24provided to the mortgagor within seven days of request by the mortgagor.
8.25 Sec. 11. [584.04] NOTICES OF LOAN MODIFICATION AVAILABILITY.
8.26 Subdivision 1. Notice required. A mortgagee shall provide to the mortgagor the
8.27notices required by this section. The mortgagee may record an affidavit of compliance if
8.28the mortgagor fails to mail to the mortgagee a completed loan modification application
8.29or an incomplete loan modification application within 60 days of the mortgagee sending
8.30the notices.
8.31 Subd. 2. Loan modification notice. The mortgagee shall send to the mortgagor a
8.32notice that appears substantially as follows:
8.34Date of Notice: (insert date sent)
8.35Name of Mortgagor(s):
9.2You may be eligible to prevent foreclosure by receiving a loan modification under
9.3a loan modification program. If you apply for a loan modification within 60 days from
9.4the date of this notice, you will have certain rights under Minnesota law to a prompt
9.5evaluation of your request for a loan modification.
9.6You may apply for a loan modification by completing the enclosed Loan
9.7Modification Application and providing all requested information. We have included a
9.8return-addressed envelope for your convenience. Please consider sending these documents
9.9by a method that provides proof of delivery to ensure accurate record keeping.
9.11Please make sure to read this letter carefully so that you can take advantage of your
9.12potential options for a loan modification. Please make sure all documents mentioned in this
9.13letter are enclosed or available to you, and contact us immediately if a document is missing.
9.15We strongly encourage you to contact a foreclosure prevention counselor from the
9.16list below, and have the counselor review and assist you with your loan modification
9.17application.
9.19[Mortgagee contact information, including mailing address, toll-free telephone
9.20number, and e-mail address.]
9.21[Contact information for at least one HUD-certified foreclosure counseling agency
9.22that serves the county in which the mortgagor lives and contact information for the
9.23Minnesota Home Ownership Center. Include: name, mailing address, toll-free telephone
9.24number, e-mail address, and Web site.]
9.25 Subd. 3. Application for loan modification. The mortgagee shall send with the
9.26notice required by subdivision 2 an application form that appears substantially as follows:
9.29Date of Notice: (insert date sent)
9.30Name of Mortgagor(s):
9.31Property Address:
9.32Please complete this loan application form and attach the documents and information
9.33requested from the "required documents list." Return the completed application to the
9.34address at the bottom of this form within 60 days of the date of this form.
9.35For questions or assistance completing this application, please contact [mortgagee
9.36representative(s) who can provide assistance] at [telephone number of representative(s)] or
10.1[e-mail address of representative(s)] immediately; OR [loan counselor(s) who can provide
10.2assistance] at [telephone number of counselor(s)] or [e-mail address of counselor(s).]
10.3Required Documents List. The following documents must be sent to us in order for
10.4us to process your loan modification application.
10.5[All documents required by the applicable Loan Modification Program, listed
10.6separately and numbered, with attached documents listed first.]
10.7Attached Documents List. To make your application as easy as possible, we have
10.8included some of the documents you need to complete in order to apply for a modification.
10.9These documents are listed below. Remember that they must be sent with all materials
10.10listed in the Required Documents List. Please verify that every document listed below is
10.11included:
10.12[All documents required by the applicable loan modification program which can be
10.13provided by the mortgagee must be attached, listed separately, and numbered.]
10.14If any of these documents is not included in this packet, please contact [mortgagee
10.15representative(s) who can forward the missing information] at [telephone number of
10.16representative(s)] or [e-mail address of representative(s)] immediately.
10.17PLEASE MAKE A COPY OF ALL ENCLOSED FORMS AND DOCUMENTS
10.18FOR YOUR RECORDS.
10.19For accurate record keeping, we strongly encourage you to send this completed form
10.20and all requested documents with return receipt requested or by other method with proof
10.21of delivery to the address below:
10.23Thank you. [Mortgagee] will contact you within 30 days of receipt to inform you of
10.24the status of your loan modification application.
10.25 Subd. 4. Required attached documents. The mortgagee shall enclose any
10.26documents required for a completed loan modification application which can be provided
10.27by the mortgagee.
10.28 Subd. 5. Telephone contact attempt required. The mortgagee is required to make
10.29six telephone contact attempts to inform the mortgagor of possible eligibility for a loan
10.30modification program within 50 days after the date the loan modification notice is sent. If
10.31the mortgagee speaks with the mortgagor or someone authorized to speak on behalf of the
10.32mortgagor, no further contact attempts are required under this subdivision.
10.33 Subd. 6. Deadline notice. If the mortgagee has not received a completed loan
10.34modification application or incomplete loan modification application 50 days after the date
10.35the loan modification notice is sent, the mortgagor shall within five days do the following:
10.36(1) make one telephone contact attempt to inform the mortgagor of the approaching
11.1deadline and communicate to the mortgagor the documents necessary to submit a loan
11.2modification application; and (2) if mortgagee has an e-mail address for the mortgagor,
11.3send an e-mail to the mortgagor stating the approaching deadline.
11.4 Sec. 12. [584.05] NOTICE OF INCOMPLETE LOAN MODIFICATION
11.5APPLICATION.
11.6 Subdivision 1. Receipt of incomplete loan modification application. If the
11.7mortgagor mails an incomplete loan modification application within 60 days of the
11.8date the loan modification notice is sent by the mortgagee, the mortgagee must send to
11.9the mortgagor the notice required by subdivision 2 within ten days of the receipt of the
11.10incomplete loan application. The mortgagee may record an affidavit of compliance if the
11.11mortgagor has not mailed to the mortgagee a completed loan application within 30 days
11.12after the date of mailing of the notice required by subdivision 2, but not less than 60 days
11.13after the date the loan modification notice is sent by the mortgagee.
11.14 Subd. 2. Incomplete loan modification application notice. If an incomplete loan
11.15modification application has been received by the mortgagee, the mortgagee must send a
11.16notice to the mortgagor that appears substantially as follows:
11.18Date of Notice: (insert date sent)
11.19Name of Mortgagor(s):
11.20You recently submitted an application for a loan modification. Unfortunately, it was
11.21not complete. We require more information to evaluate your eligibility for a modification.
11.23[numbered list of all missing or incomplete documents, described in plain language.
11.24For each incomplete document, the mortgagee must describe in plain language the
11.25information that is missing.]
11.26PLEASE NOTE: We must receive this information within 30 days of the date of
11.27this notice for you to protect certain rights under Minnesota law to a prompt evaluation
11.28of your request for a loan modification.
11.29 Subd. 3. Inclusions with incomplete loan modification application. The
11.30second page of this notice must be a glossary describing the nature of any missing or
11.31incomplete documents and in plain language where the documents are available and how
11.32to submit them. If the mortgagor has partially completed a form from section 584.04, any
11.33information from that form must be included on the copy sent to the mortgagor pursuant
11.34to this section, with the locations of the missing information conspicuously marked.
12.1 Subd. 4. Telephone contact attempts. The mortgagee must make three telephone
12.2contact attempts to inform the mortgagor of any deficiencies necessary to make a
12.3completed loan modification application. The first telephone contact attempt must be
12.4made within ten days of receipt of the incomplete loan modification application and all
12.5three attempts must be completed within 15 days of the first attempt.
12.6 Sec. 13. [584.06] NOTICE OF DETERMINATION.
12.7 Subdivision 1. Determination required. The mortgagee must determine eligibility
12.8for each loan modification program for which the mortgagor may be eligible and issue a
12.9notice of determination as specified under this section within 30 days of the receipt of a
12.10completed loan modification application. The mortgagee shall comply with all guidelines
12.11and requirements of each loan modification program in connection with this determination.
12.12 Subd. 2. Loan modification offer. If the mortgagee determines that the mortgagor
12.13is eligible for a loan modification program, the mortgagee shall state the following in
12.14plain language in a written notice of the loan modification offer or offers for each loan
12.15modification program for which the mortgagor is eligible: a description of the terms of the
12.16modified loan offer; an explanation of any required timeline to respond to the offer; that the
12.17mortgagee is permitted to initiate foreclosure proceedings upon failure of the mortgagor to
12.18accept the offer; instructions regarding how the mortgagor should respond to the offer;
12.19and accurate contact information for how the mortgagor should respond to the offer.
12.20 Subd. 3. Refusal to offer loan modification. If the mortgagee determines that the
12.21mortgagor is not eligible for any loan modification program, the mortgagee shall state the
12.22following in plain language in a written notice: the timeline and procedures, if applicable,
12.23for how the mortgagor may request review of the determination; that failure to do so will
12.24free the mortgagee to initiate foreclosure proceedings; and the toll-free telephone number,
12.25address, e-mail address, and other contact information that will provide access during
12.26regular business hours to a live representative authorized to discuss the determination
12.27on behalf of the mortgagee. The timeline for the mortgagor to request a review of the
12.28determination must be at least 30 days after the date of mailing of the written notice of
12.29ineligibility and must be stated prominently in the written notice of ineligibility. The
12.30written notice of ineligibility must be accompanied by a form for the mortgagee to use in
12.31appealing the determination of ineligibility. The mortgagee may record an affidavit of
12.32compliance after making a determination in good faith that the mortgagor is ineligible for
12.33a loan modification, but the mortgagee shall not record an affidavit of compliance until at
12.34least 35 days after mailing the notice of ineligibility.
13.1 Subd. 4. General inclusions. Any notice described in this section must contain
13.2a detailed, clear description of any and all net present value (NPV) calculations used in
13.3making the determination, instructions explaining how to access the published NPV
13.4calculations contained on the mortgagee's Web site as required under section 584.03,
13.5subdivision 5, and a plain language statement that if the mortgagor believes there is an
13.6error in any element of the determination that the mortgagor has the right to contact an
13.7attorney or loan counselor for assistance. This mailing must include any and all data
13.8inputs used in the NPV calculations, which must be on a separate piece of paper.
13.9 Sec. 14. [584.07] NOTICE FOR INELIGIBLE HOMEOWNER.
13.10The mortgagee may record an affidavit of compliance if, prior to sending the loan
13.11modification notices, the mortgagee has reliable information that leads the mortgagee in
13.12good faith to conclude that the mortgagor is ineligible for any applicable loan modification
13.13program. Ten days prior to recording the affidavit of compliance, the mortgagee must
13.14send a written communication to the ineligible mortgagor. This written communication
13.15must contain a plain language statement explaining why the mortgagor is ineligible,
13.16and a toll-free telephone number, address, and e-mail address of a representative of the
13.17mortgagee that the mortgagor may contact to dispute any finding of ineligibility. The
13.18plain language statement must state that the mortgagor may contact a loan counselor or
13.19foreclosure prevention counselor for advice.
13.20 Sec. 15. [584.08] ENFORCEMENT; REMEDIES.
13.21 Subdivision 1. Private right of action. A mortgagee who fails to comply with any
13.22provision of this chapter is liable to a mortgagor for actual, incidental, and consequential
13.23damages in a private right of action and for any or all other remedies specified in this section.
13.24 Subd. 2. Statutory damages. (a) A mortgagee who violates any provision of this
13.25chapter is liable to the mortgagor for up to $2,000 for each violation.
13.26(b) De minimus violations are not subject to the statutory damages available under
13.27this subdivision.
13.28 Subd. 3. Punitive damages. (a) A mortgagor is entitled to punitive damages under
13.29paragraphs (b) and (c) and section 549.20.
13.30(b) The court may award punitive damages if the mortgagee has failed to issue
13.31a notice of determination within 30 days of the mortgagee's receipt of a completed
13.32loan modification application. There is a rebuttable presumption that all required
13.33documentation has been provided to the mortgagee for purposes of a completed loan
13.34modification application if the mortgagor can provide:
14.1(1) copies of all such required documents to the court; and either
14.2(2) proof of mortgagee's receipt of a completed loan modification application; or
14.3(3) a sworn affidavit by a HUD-approved counseling agency or substantially similar
14.4third party that those documents were sent to the mortgagee.
14.5(c) The court may award punitive damages to the mortgagor if the mortgagee did not
14.6in good faith attempt to comply with the standards, duties, prohibitions, or requirements of
14.7this chapter. Factors the court must consider in determining a lack of good faith include,
14.8but are not limited to:
14.9(1) the frequency, nature, and persistence of noncompliance;
14.10(2) a pattern of violations;
14.11(3) the extent to which the violation was reckless or intentional; or
14.12(4) a violation that results in, or substantially contributes to, the mortgagor's loss
14.13of home.
14.14 Subd. 4. Injunctive relief. The court may issue an injunction to prevent violations
14.15of this chapter and to enjoin foreclosure in violation of this chapter.
14.16 Subd. 5. Reimbursement for litigation costs. A prevailing plaintiff shall recover
14.17costs and disbursements of the action, plus reasonable attorney fees.
14.18 Subd. 6. Remedies cumulative. The remedies provided in this section are
14.19cumulative and do not restrict any remedy that is otherwise available.
14.20 Subd. 7. Public enforcement. (a) The attorney general may enforce this chapter
14.21under section 8.31.
14.22(b) The commissioner of commerce may enforce this chapter under chapter 45.
14.23 Sec. 16. [584.09] APPLICABILITY TO PRIORITY OF LOANS.
14.24A loan modification, as defined in section 584.01, does not affect the priority of the
14.25lien of the mortgage that secures the loan.
14.26 Sec. 17. EFFECTIVE DATE; APPLICABILITY.
14.27Sections 8 to 16 are effective 60 days after enactment and apply to foreclosures of
14.28residential mortgages commenced on or after that date.
