The Louisiana legislature recently enacted legislation addressing mortgage fraud. The Electronic Notary Public Authorization Act which authorizes the Secretary of State to appoint electronic notaries public who will be authorized to notarize electronic documents was recently enacted in Nevada. The New Jersey legislature amended foreclosure laws. If you have any questions concerning this Distribution Memorandum, please contact Laura LaRaia.
LOUISIANA SENATE BILL 105 (effective August 15, 2009)
“Residential mortgage lending activity” means an activity, including electronic activity, engaged in for compensation or with the expectation of compensation in connection with a residential mortgage loan, including but not limited to:
- The solicitation, application, origination, or funding of a residential mortgage loan;
- The negotiation and placement, or offering to negotiate, place, or find a residential mortgage loan for another person;
- Third-party provider services, including but not limited to, appraisals, abstracts, escrow services, or title insurance; and
- Underwriting, signing, closing, and funding the loan.
“Residential mortgage loan” means a loan for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential immovable property upon which is constructed or intended to be constructed a dwelling.
“Person” means a natural person, a sole proprietorship, corporation, company, limited liability company, partnership, limited liability partnership, trust, incorporated or unincorporated association, or any other individual or entity.
It is unlawful for a person, in connection with residential mortgage lending activity, to knowingly do any of the following:
- Employ a device, scheme, or artifice with intent to defraud;
- Make an untrue statement of material fact with intent to defraud; or
- Receive any portion of the purchase, sale, or loan proceeds, or any other consideration paid or generated in connection with the closing of a residential mortgage loan when the recipient knows that the proceeds or other funds were paid as a result of a violation.
A person who commits mortgage fraud will be imprisoned for not more than 10 years, or may be fined not more than $100,000, or both. Additionally, a person convicted of mortgage fraud will be offered to make full restitution to the victim and any other person who has suffered a financial loss as a result of the offense. If a person ordered to make restitution is found to be indigent and therefore is unable to make restitution in full at the time of conviction, the court will order a periodic payment plan consistent with the person’s financial ability.
NEVADA SENATE BILL 92 (effective July 1, 2009)
Definitions
“Electronic” means of or relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, and similar capabilities.
“Electronic document” means a document that is created, generated, sent, communicated, received, or stored by electronic means.
“Electronic notarial act” means an act that an electronic notary public is authorized to perform. The term includes:
· Taking an acknowledgement;
· Administering an oath or affirmation;
· Executing a jurat; and
· Performing such other duties as may be prescribed by a specific statute.
“Electronic notary public” means a person appointed by the Secretary of State to perform electronic notarial acts.
“Electronic seal” means information within a notarized electronic document that includes the name, jurisdiction and expiration date of the appointment of an electronic notary public and generally includes the information required to be set forth in a mechanical stamp.
“Electronic signature” means an electronic symbol or process attached to or logically associated with an electronic document and executed or adopted by a person with the intent to sign the electronic document.
A person appointed as an electronic notary public may, during normal business hours, perform the following electronic notarial acts for a person who requests the electronic notarial act and tenders the appropriate fee:
- Taking an acknowledgement;
- Executing a jurat; and
- Administering an oath or affirmation.
An electronic notary public may charge the following fees and no more:
- For taking an acknowledgement, for each signature, $10;
- For executing a jurat, for each signature, $10; and
- For administering an oath or affirmation, $10.
An electronic notary public may charge an additional fee for traveling to perform an electronic notarial act. The electronic notary public may charge a minimum of two hours for travel and will charge on a pro-rata basis after the first two hours. If a person requesting the electronic notarial act asks the electronic notary public to travel between the hours of and , the charge is $10 per hour, between the hours of and , $25 per hour.
An electronic notary public must not willfully electronically notarize the signature or electronic signature of a person unless the person is in the presence of the electronic notary public at the time of notarization and:
- Is known to the electronic notary public; or
- If unknown to the electronic notary public, provides a credible witness or documentary evidence of identification to the electronic notary public.
An electronic notarial act must be evidenced by the following, which must be attached to or logically associated with the electronic document that is the subject of the electronic notarial act and which must be immediately perceptible and reproducible:
- The electronic signature of the electronic notary public;
- The electronic seal of the electronic notary public; and
- The wording of a notarial certificate.
NEW JERSEY ASSEMBLY BILL 3821 (effective July 2, 2009)
In our Distribution Memorandum dated March 13, 2009, we reported on the Mortgage Stabilization and Relief Act (the “Act”), which created the Mortgage Stabilization Program and the Housing Assistance and Recovery Program. This Bill amends New Jersey foreclosure laws and repeals the section of the Act authorizing lenders and creditors to exchange information concerning delinquent borrowers. The repeal is retroactive to January 9, 2009.
Judiciary’s Foreclosure Mediation Program
“Forbearance” means a period of 6 months during which the creditor must suspend all efforts to advance any judicial foreclosure proceedings against the borrower.
“High risk mortgage” means the first mortgage loan that has one or more of the following characteristics:
· Is an interest only mortgage with a future interest reset rate;
· Has a reset mortgage rate that increases the initial interest rate by 2 or more percentage points;
· Contains a payment option plan or a “pick a payment” plan;
· Contains a negative amortization schedule;
· Is a subprime mortgage, which means a consumer credit transaction, secured by the consumer’s principal dwelling, with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as of the date the interest rate is set, by 1.5 or more percentage for loans secured by a first lien on a dwelling, or by 3.5 or more percentage points for loans secured by a subordinate lien on a dwelling;
· Contains an enforceable prepayment penalty; or
· Is a high cost home loan under the New Jersey Home Ownership Security Act of 2002.
Upon serving the summons and complaint in a foreclosure action, the creditor must notify the borrower of the borrower’s right for forbearance, and, upon receipt of written request by the borrower, within 30 days of the receipt of the summons and complaint, the creditor must grant the borrower a 6-month period of forbearance, beginning on the date the creditor receives the borrower’s request. The notice of the borrower’s right to forbearance must include the following information:
- Whether the loan being foreclosed upon is eligible to receive forbearance;
- That the borrower has the right to request the period of forbearance in writing not later than 30 days after receipt of the summons and complaint; and
- The full address and other contact information to which request for forbearance may be sent.
Upon receipt of a request for forbearance, the creditor must:
- Suspend all efforts, during the forbearance period, to advance any judicial proceeding in furtherance of the foreclosure action; and
- Notify the court that a forbearance has been granted with the dates that the forbearance period will begin and end.
The creditor and borrower are not precluded from participating in mediation or settlement discussions, including the Judiciary’s Foreclosure Mediation Program (the “Program”).
When the creditor grants a forbearance period, the borrower and the creditor must participate in the Program, where eligible, or another form of mediation or settlement discussions. However, the borrower’s inability to participate in mediation as a result of circumstances beyond the borrower’s control does not affect the borrower’s continued eligibility for forbearance.
If the borrower ceases to occupy the property at any time during the period of forbearance or if the borrower advises the creditor in writing that he or she will not participate in the Program or another form of mediation or settlement discussion, the creditor must notify the court. Upon notification and approval of the court, the forbearance period is deemed to have ended.
This law expires on July 2, 2011. However, a forbearance period will continue for its entire 6-month period notwithstanding the expiration of the law.