Department of Consumer and Business Services
Division of Finance and Corporate Securities

Summary of Related Legislation - 2012 Session

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Foreclosure protections - SB 1552. Requires lenders to meet with homeowners who are underwater to discuss alternatives to foreclosure with a third party mediator upon borrower request. Creates a Foreclosure Avoidance Mediation Fund to pay the costs of statewide mediation, funded by a $100 fee on the filing of foreclosure papers. Requires the appointment of a mediation service provider who facilitates mediation between borrowers and lenders. The mediator has authority to waive the homeowner's mediation costs (up to $200). Lenders that commence or cause fewer than 250 foreclosures a year (including those filed by affiliates or agents) are exempt from these mediation requirements and the recording fees to pay for mediation, as long as they file an affidavit with the Attorney General within 30 days of the bill's passage. Lenders must meet face-to-face with homeowners in default to negotiate possible alternatives prior to foreclosing, unless homeowner chooses not to participate. In certain circumstances, the mediator may allow the lender to participate other than in person. A homeowner is required to consult with a HUD-approved housing counselor prior to mediation. If the homeowner is not able to get an appointment with a housing counselor within 30 days, this requirement is waived so the homeowner can proceed directly to mediation. The lender must send notice of mediation 60 days prior to the notice of sale, which is 180 days before a bank can sell a home in foreclosure. (There is no change to the existing 120-day timeline from notice of default to foreclosure sale.) Lenders are required to send someone to mediation with authority to accept or reject proposals for foreclosure avoidance measures. Lenders must bring documentation to the mediation, which includes copies of the note and the chain of title. The Attorney General is authorized to draft rules and oversee the foreclosure mediation program. Lenders are prohibited from pursuing a "dual track" - negotiating loan terms with homeowners while pursuing foreclosure. Violation of this prohibition is subject to a $500 fine, actual damages incurred by the homeowner, and reasonable attorney fees to the prevailing plaintiff. Once a lender has determined it can foreclose, the homeowner must be given 30 days notice. If the sale is postponed, the lender must provide the homeowner at least 15 days' notice of the new date. If a lender violates either the mediation requirements or the dual track prohibition it will create a cloud on the home's title that would prevent a lender from selling the property. Creates new responsibilities for the Department of Justice; does not affect or change DCBS authority. Operative June 4, 2012. (Chapter 112, 2012 Laws.)

Regulation of precious metal secondhand dealers - HB 4108. Creates new regulations for precious metal secondhand dealers who are not already licensed pawnbrokers. Provides other exemptions for manufacturers, Internet purchasing, and other services. Does not make any changes to the pawnbroker statutes or does not change the regulatory authority for DCBS. Requires record keeping for transactions involving precious metal and requires such dealers to hold precious metal items for seven days before disposing of them. Dealers must make items and records available for inspection by law enforcement. These requirements do not apply in cities or counties that adopt an ordinance regulating these activities that is substantially equal or more stringent requirements. The Secretary of State will list such cities and counties on its website. Creates increasing penalties for persons that fail to comply with record keeping and holding period requirements. Effective January 1, 2013. (Chapter 99, 2012 Laws.)

Revisions to preneed regulations - HB 4117. Requires entities that only administer preneed contracts to be certified providers, in addition to those who sell or offer to sell prearrangement or preconstruction contracts. Clarifies that DCBS will name a successor certified provider when the original certified provider has failed to perform their duties. Clarifies that only accounting fees, taxes, depository fees, investment manager fees, and master trustee fees may be paid from earnings of trust fund deposits. Allows the recalculation of the trust fund balance to be made at least once every six months. If the balances of the Funeral and Cemetery Consumer Protection Trust Fund falls below an acceptable level to meet future obligations, DCBS may, by rule, increase the current $5.00 per contract fee or impose an assessment. The balance of this fund is capped at $2 million. Allows DCBS to set fees for certified providers and master trustees that sufficient to meet the costs to administer this program and to maintain a reasonable emergency fund. Specifies what constitutes fraud or deceit in the preneed industry. Effective February 27, 2012. (Chapter 7, 2012 Laws.)

Senior and Disabled Property Tax Deferral Program; Reverse mortgages - HB 4039. HB 2543 (2011), prohibited persons from participating in the Department of Revenue's (DOR) tax deferral program if they had a reverse mortgage. This is a direct requirement on lenders making reverse mortgages and is not regulated by DCBS. This law delays this prohibition for two years to allow continued participation by existing program participants who were disqualified solely due to having a reverse mortgage and who had completed their recertification paperwork for the payment for the 2011-12 tax year. Lenders are required to notify potential borrowers of the prohibition against pledging tax deferred homestead as security for reverse mortgage. Provides a flexible system for DOR to certify eligibility for deferral not less than once every three years. Requires DOR to survey participants to gather socioeconomic information about persons in the tax deferral program. Effective June 4, 2012. (Chapter 13, 2012 Laws.)