On July 11, the California Department of Business and Oversight (DBO) published its 2015 Annual Report: Operation of Lenders and Servicers under the California Residential Mortgage Lending Act, which compiles consolidated data from unaudited annual reports filed by mortgage lenders and servicers licensed under the California Residential Mortgage Lending Act. Notably, the report identifies a significant increase in the number and aggregate principal amount of mortgage loans that were originated by such licensees in 2015 as compared to 2014 (an increase of 47.3 percent and 56.7 percent, respectively). Additionally, among other things, the aggregate principal amount of mortgage loans serviced by such licensees increased each month in 2015 compared to 2014 (by 7.4 percent), while the number of foreclosures reported by such licensees somewhat decreased in 2015 compared to 2014 (by 3.6 percent).
Recently, the Massachusetts Division of Banks released its annual report for year-end 2015. The report provides a broad overview of the Division’s 2015 efforts related to, among other things, foreclosure relief, cybersecurity protection, mortgage and depository supervision, and corporate transactions. Notable 2015 updates outlined in the report include the Division (i) approving 24 new mortgage companies in 2015, which resulted in 497 mortgage brokers and lenders being licensed to do business in Massachusetts; (ii) expanding its coordination, cooperation, and participation with the CFPB, Multi-state Mortgage Committee, and the New England Regional Mortgage Committee through sharing information in concurrent examinations of non-depository mortgage entities; and (iii) increasing oversight of the financial industry’s information technology environment, including collaborating with the Conference of State Bank Supervisors to host an event for Massachusetts bankers about common cybersecurity situations. The report includes objectives for 2016, including such as implementing and enforcing “consumer protection laws and regulations while providing consumers the information they need to know their rights and make informed financial decisions.”
On June 30, HUD announced a series of changes to its Distressed Asset Stabilization Program (DASP). Last year, HUD updated DASP to (i) extend the time period preventing foreclosure after the note is sold from six months to one year; (ii) require servicers to evaluate borrowers for the Home Affordable Modification Program (HAMP) or a substantially similar modification; and (iii) implement non-profit only sales. In accordance with the most recent changes to DASP, “[c]ertain families with distressed mortgages insured by the [FHA] may soon be eligible for a reduction of their outstanding loan amounts should their mortgages be sold through DASP.” In addition, HUD’s fact sheet for the recent changes announces that DASP will, among other things: (i) limit interest rate increases to no more than one percent per year after a five-year period where the rate is fixed, thereby implementing payment shock protection and ensuring consistency with HAMP; (ii) prohibit purchasers from “walking away” from vacant properties; (iii) revise the 120-day delinquency notice to advise borrowers that their loan may be sold; (iv) set a goal to sell 10 percent of assets to non-profits and local governments; (v) release performance and outcome data on a pool level (instead of a sale level); (vi) release demographic data on sales; (vii) strengthen requirements for investors to obtain Neighborhood Stabilization Outcome (NSO) credit when selling to non-profits; and (viii) target loans for DASP sales based on non-profit and local government interest.
On June 10, the OCC released Bulletin 2016-20 to inform national banks, federal savings associations, and federal branches and agencies of foreign banks (OCC-supervised institutions) of recent temporary amendments to the Servicemembers Civil Relief Act (SCRA). As previously covered in InfoBytes and as outlined in the OCC’s Bulletin, the Foreclosure Relief and Extension for Servicemembers Act 2015 extends through December 31, 2017 the SCRA provision that protects servicemembers against sale, foreclosure, or seizure of property based on a breach of a secured obligation without a court order or waiver for one year following completion of their service. The OCC’s Bulletin notes that HUD updated its “Servicemembers Civil Relief Act Notice Disclosure” (Form 92070) to reflect the temporary extensions.
On May 10, the New York Court of Appeals affirmed the lower court’s decision that consolidated mortgages qualify as the first mortgage of record under Real Property Law article 9-B (the Condominium Act) when the mortgages were consolidated years prior to unpaid common charges (or charges lien) being filed. Plotch v. Citibank, N.A., No. 57, slip op. at 3 (N.Y. May 10, 2016). In this case, the plaintiff purchased a condominium unit subject to “‘[t]he first Mortgage of record against the premises’” in a foreclosure action in 2010. Prior to the plaintiff’s purchase, the defendant had entered into a consolidation agreement with the unit’s previous owner, whereby the former owner’s two separate mortgages of $54,000 and $38,000 “were consolidated ‘into a single mortgage lien’ for $92,000, which the owner and [defendant] intended to be treated as a single mortgage.” Citing Societe General v. Charles & Co. Acquisition (157 Misc 2d 643 [Sup. Ct., NY County 1993]), the plaintiff contended that the initial mortgage of $54,000 is, pursuant to Real Property Law § 339-z, the first mortgage of record and, therefore, the defendant’s common charges lien against the unit for unpaid charges are unlawful. Read more…