Wednesday, February 12, 2014

Almost Over?



“Even if you are on the right track, you’ll get run over if you just sit there.”
Will Rogers (1879-1935)

The legislature will adjourn on February 20.  As of the date of this Blog it is not certain if the House, Senate and Governor can reach agreement on the budget in the remaining time left.  If not, there will be a special session.

A disturbing trend has surfaced as the Democrat majority in the Senate seeks to avoid Governor Martinez’ veto.  Using the Senate Joint Resolution route to propose a constitutional amendment, Senator Sanchez has proposed a maximum legal interest rate of 36% on loans other than bank loans. One Senator tried to get legalized marijuana as a constitutional amendment—that failed.  If the trend continues, the New Mexico Constitution will look like that of a third world country[1]· in which everything from parking violations to routine statutory provisions are dealt with.  Some legislators are concerned and are moving to require a  two-thirds vote in each chamber to propose constitutional amendments. 

We have been spared the mortgage foreclosure bills that crop up in the regular session with their mandatory mediation and extended default cure provisions.  Instead, two memorials (HM 15 and SM11) have been introduced under the banner of the United South Broadway Corporation, an activist community organization, to form a “task force” to study the foreclosure process and “restore” due process to those threatened with foreclosure.  The memorials with 15 detailed “Whereas” clauses setting forth the sins of the banks that have settled government claims of poor or unlawful practices, then calls for the task force to be convened to solve the problem.  The suggested participants are community organizations from around the state, the Independent Community Bankers Association or mortgage association, MFA, citizens suffering from foreclosure, clergy, retired judge, etc.  I know that the Independent Community Bankers Association has resisted    being dragooned into the task force.  I suspect the other business associations have similar concerns.  Although a House or Senate Memorial does not have the force of law, one can see the “task force” proposing sweeping changes to foreclosure proceedings as banks try to cope with the burden of new mortgage rules from the federal government.

The Data Breach Notification Act (HB 224), a product of the Attorney General’s consumer protection division, is winding its way through the legislature, having received a “do pass” from the House Consumer and Public Affairs Committee.  A substitute bill has removed much of the mischief of the bill for banks, since it appears to exempt banks subject to Gramm-Leach-BlileyAct.  It is poorly drafted and for major credit card issuers still has some dangers.  Most alarming, three sections of HB 224 apply to any “person” who has “personal identity information”, which is basically the information most businesses may collect in any credit or lease transaction.  The term “person” is not defined.  And under the proposed legislation, the “person” who has “personal identify information”, must institute safeguards, have security procedures and disposal policies with respect to the material.  Thus, by accident (I think) auto dealers, hospitals, medical providers, and any business that collects social security numbers, birth dates, addresses, etc. is subject to the “Act” and faces Attorney General investigation and litigation.

HB 249 affects all banks.  It amends the tax levy provisions of the taxation code to permit service of levies on banks by “electronic” means.  This is not a foreign concept since many banks now store electronic customer information and agreements electronically.  A document stored under the federal or New Mexico electronic authentication statutes is as valid as the original. Electronic documents are used in court. [2] So what is the effect of HB 224?  Simply put, instead of Sheriff or other authorized official physically serving your bank branch, it can be done in the same form by electronic means.  Failure to honor a levy may subject the bank to penalty.  The only concern is that the banks institute procedures to cope with this new method of service (if it survives the session).

Boring?  Sorry.  Do good.

Marshall G. Martin
(505)228 8506








[1] Please don’t respond, “Dummy we look like one!”
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[2] Caution:  Promissory Notes are usually not accepted in many courts in electronic form. 

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