― Napoléon Bonaparte
We are
heading into the long session of the New Mexico legislature, which starts at
noon on January 20. For the first time
in many decades the House has a Republican majority. Business groups are pushing the legislature
to enact Right to Work legislation on the theory that new businesses coming
from out of state view Right to Work as a key factor in location of plants or
business. Under the New Mexico Senate’s rules the Right to Work legislation may
hit a roadblock: Senate Majority Leader
Michael Sanchez has vowed to block Right to Work bills from reaching a vote in
the Senate. Apparently the Senate rules permit that although a supermajority could override the decision. Sounds like the dropped
penalty flag in the Dallas-Detroit game, maybe unfair but maybe no way to
change it? The legislative agenda will
include the usual proposed mortgage and foreclosure “remedial” bills, as well
as the unexpected legislative measures that no one could have thought of except
a legislator caught up in the glory of his or her position.
Our
friends at the Consumer Financial Protection Board are busy again. CFPB has announced revisions and new
provisions for the Mortgage Servicing Rules.
The changes primarily deal with the treatment of successors in interest
to residential property that result from death, inheritance and similar
events. Comments are due by March 16,
2015. Most of the proposals appear
unneeded under New Mexico law. The CFPB
has also announced that it will engage in a comprehensive rule making for
so-called “Pay Day” loans. One New
Mexico legislator has already announced a plan to seek legislation to limit Pay
Day loans to a 36 % interest rate. Although
Pay Day loans may be of primary interest to those in that business, sloppy
drafting or the amendment process could pose risks to banks.
In the
waning days of New Mexico Attorney General King’s term his consumer protection
division chief fired what a last shot at banks. In an article in the Albuquerque Journal in
mid-December, the Attorney General’s consumer protection division announced an
investigation into certain New Mexico banks misleading residential lending
consumers by advertising that loans would be secured by mortgages and then
using a standard form New Mexico Fannie Mae/Freddie Mac Deed of Trust at
closing. The article stated that it was
unclear whether under the New Mexico Deed of Trust Act foreclosure could be by
judicial foreclosure, as required by the Home Loan Protection Act. The Attorney General’s charge that banks are
misleading in using the Deed of Trust form betrays a lack of knowledge of the
Deed of Trust Act and current banking practices in New Mexico. It is the author’s understanding that the use
of the form deed of trust is not by choice, but is at the urging of the Federal
Home Loan Mortgage Association and Federal National Mortgage Association to
facilitate bundling of mortgages and resale.
Anyone familiar with the Deed of Trust Act and Home Loan Protection Act
is aware that in New Mexico residential foreclosure must be by judicial
foreclosure. Only commercial loans can
be foreclosed by non-judicial foreclosure. The Deed of Trust Act clearly provides for judicial
foreclosure under the mortgage statute.
Any bank or financial service business that relies on non-judicial foreclosure
with a deed of trust would have serious title problems with the foreclosed
property. It is unknown if the new
Attorney General will pursue this inquiry in the same manner as his
predecessor.
Do
good, belated Happy New Year.
MARSHALL
G MARTIN
505-228-8506
One New Mexico legislator has already announced a plan to seek legislation to limit Pay Day loans to a 36 % interest rate. Although Pay Day loans may be of primary interest to those in that business, sloppy drafting or the amendment process could pose risks to banks.
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