Alston & Bird Consumer Finance Blog

#foreclosuresale

Consumer Finance State Roundup

By

The latest edition of the Consumer Finance State Roundup highlights three recently enacted measures of potential interest from California, Missouri, and North Carolina:

  • California: Effective upon approval by Governor Gavin Newsom on July 18, Assembly Bill 295 amends provisions of the California Civil Code applicable to mortgages. Among other changes, first, the measure amends Section 2924(b) to clarify that when responding to a request for payoff or reinstatement information, a trustee is not liable for good faith error resulting from reliance on information provided in good faith by the beneficiary, or subject to the provisions of the Rosenthal Fair Debt Collection Practices Act. Second, the measure amends Section 2924c to allow a trustee to recover reasonable costs and expenses that “will be incurred as a direct result of the payment being tendered,” instead of limiting recovery to expenses actually incurred.  Third, the measure amends Section 2924m, which relates to the sale of tenant-occupied residential property, to clarify that if the winning bidder at a sale is not required to submit an affidavit or declaration regarding eligibility to bid, the trustee must attach as an exhibit to the trustee’s deed a statement that no such affidavit or declaration is required, and that the lack thereof does not preclude recording of the deed or invalidate the transfer of title pursuant to the trustee’s deed.Finally, the measure amends Section 3273.10, under the COVID-19 Small Landlord and Homeowner Relief Act, to clarify that the requirement for the mortgage servicer to provide a notice as prescribed by Section 2923.5(b) after denial of a forbearance applies only to a request made between August 30, 2020, and December 1, 2021.
  • Missouri: Effective August 28, 2024, Senate Bill 1359 enacts the “Money Transmission Modernization Act of 2024” (“Act,” Mo. Rev. Stat. §§ 361.900 to 361.1035) and the “Commercial Financing Disclosure Law” (“Law,” Mo. Rev. Stat. 427.300).First, the Act replaces Missouri’s existing money transmission laws and requires the licensing of persons engaged in money transmission (e.g., selling or issuing stored value, or receiving money for transmission from a person located in the state).  The Act sets forth relating regulatory processes such as license application requirements, licensee reporting obligations, compliance management system requirements (for supervision of delegates), and the relationship between the Act’s provisions and federal law.Second, the Law addresses obligations applicable in connection with a “commercial financing transaction” meaning “any commercial loan, accounts receivable purchase transaction, commercial open-end credit plan or each to the extent the transaction is a business purpose transaction.”  The Law requires a provider of such transaction to provide a disclosure of the terms prior to or at consummation of the transaction that includes, among other information, the total amount of funds provided to the business, the total amount of payments that will be due to the provider, and the manner, frequency, and amount of each payment.  Among others, the Law does not apply to: (a) a depository institution providing commercial financing; or (b) a commercial financing transaction that is secured by real property, a lease, or a purchase money obligation that is incurred as all or part of the price of the collateral (or for value given to enable the business to acquire rights in or the use of the collateral, if the collateral is so used).
  • North Carolina: Effective October 1, 2024, Senate Bill 319 (2024 N. C. Sess. Laws 29) amends provisions of the North Carolina General Statutes relating to powers of sale.  First, the measure amends Section 45-21.4 to permit a sale pursuant to a power of sale in a mortgage or deed of trust to occur at any public location within the county where the land is situated (or, for properties located in more than one county, in one of the counties in which the land is situated) as an alternative to the county courthouse. If permitted by the mortgage or deed of trust, the mortgagee or trustee may designate the alternative location; if the instrument does not contain such authority for the mortgagee or trustee, the clerk of the county superior court may do so.  Second, the measure amends Section 45-21.23, which relates to time of sale, to require a sale to begin no later than three hours (as opposed to one hour, under existing law) after the designated start time in the notice of sale, unless a delay occurs by other sales held at the same place.  Third, the measure adds new Section 45-21.25A establishing the procedure for placing remote bids at foreclosure sales.

Consumer Finance State Roundup

By

With the beginning of the 2024 legislative session, we return to the Consumer Finance State Roundup, which is intended to provide a brief overview of recently enacted legislation of potential interest.

To date in January, one state has enacted a legislative measure of potential interest to Consumer Finance ABstract readers: New Jersey Assembly Bill 5664 (2023 N. J. Laws 255).  Effective immediately upon approval by Governor Phil Murphy on January 12, the measure amends the state’s Fair Foreclosure Act (“Act”) to address requirements relating to sheriff’s sales, and establishes the Community Wealth Preservation Program (“Program”).

Sheriff’s Sales:

The measure substantially amends Section 2A:50-64 of the Act, which sets forth requirements for sheriff’s sales (including obligations of the plaintiff in a foreclosure action). First, prior to the sale, the measure the foreclosing plaintiff to disclose (if known) whether the property is vacant, tenant-occupied, or owner-occupied.  Second, the measure prohibits the plaintiff (or that party’s agent) from contacting the defendant, their next of kin, or a community development corporation prior to providing the sheriff’s office with the reserve (or “upset”) price to inquire whether that party will participate in the sheriff’s sale or exercise other rights under New Jersey law.

Property Maintenance:

Beyond the requirements for sheriff’s sales, the measure amends the Act to address conditions related to foreclosure proceedings and property maintenance requirements.  After institution of a foreclosure proceeding pursuant to the Act, current law permits a creditor to engage an agent to be responsible for the care, maintenance, security, and upkeep of a vacant and abandoned property.  The measure clarifies that neither the creditor nor the agent will be liable for damage caused by entry into the property, provided that such entry is peaceful and conducted with reasonable care.

Program:

According to the measure’s definition, the legislature created the Program “to assist prospective owner-occupants, nonprofit community development corporations, foreclosed upon defendants, next of kin of foreclosed upon defendants, and tenants of foreclosed upon defendants in purchasing and financing foreclosed upon residential properties in sheriff’s sales.”  In a sheriff’s sale, an eligible party must provide an initial 3.5 percent deposit, and then has 90 days to pay the balance (or may provide proof of pre-approval to finance the remainder of the purchase amount). Such purchaser must maintain eligibility (to include that, in the case of an individual bidder, the party will occupy the purchased property as a principal residence for a period of at least 84 months after taking possession).  The sheriff’s office must maintain and publicly display (i.e., on its website) information regarding the Program written in plain language to explain financing for the purchase of foreclosure sales.

Fees:

Finally, the measure amends Section 22A:4-8 of the New Jersey Statutes, which relates to the fees that a sheriff may charge for execution of a sheriff’s sale.  For sales by virtue of an execution conducted in accordance with the Act’s provisions, the amended section authorizes the sheriff to charge: (a) 6 percent; or (b) if a sale reverts to the foreclosing plaintiff, $150.