By Scott Lundberg, Esq., Lundberg & Associates

The 2014 Utah legislative session resulted in five bills of interest to the default mortgage industry. Two of the bills, Senate Bill 20 and Senate Bill 130, have a direct impact on default mortgage servicers. The remaining three, Senate Bill 79, House Bill 16 and House Bill 315, have only limited, indirect impact. All five of the bills have been signed into law by the governor and go into effect May 13, 2014.

Of the two bills having a direct impact, one, Senate Bill 130, requires prompt consideration by mortgage servicers and foreclosure trustees. It is discussed in detail below. The other four bills are also described briefly.

Senate Bill 130 (“Trust Deed Foreclosure Amendments”) amends the provisions of Utah Code section 57-1-24.3. Senate Bill 130 clarifies some provisions in 57-1-24.3 and specifies that the single point of contact notice required by the statute must give the borrower at least 30 days in which to cure the loan default before foreclosure can be commenced. This change will require servicers whose single point of contact notice gives less than 30 days to change the notice to provide at least 30 days.

Senate Bill 130 also amends section 57-1-24.3 to require that the servicer provide the borrower with written notice of the servicer’s decision regarding foreclosure relief for which the borrower has applied. Previously the statute did not specify that the servicer’s decision had to be in written notice form.

The most significant change brought about by Senate Bill 130 is a change in the language of subsection 57-1-24.3(12) which provides financial institution servicers an exemption from compliance with the requirements of the section. The statute’s requirement that the servicer designate and use a single point of contact was modified. A servicer which is a financial institution is now exempted from the pre-foreclosure single point of contact notice and other requirements of 57-1-24.3 if it makes use of “assigned personnel” in compliance with 12 C.F.R. 1024, Real Estate Settlement Procedures Act, “or other federal law, rules, regulations, guidance, or guidelines” governing the servicer and issued by the Fed, FDIC, OCC, NCUA or CFPB.

This change, coupled with the implementation of the final servicing regulations by the CFPB in January 2014, qualify financial institutions (as defined in the bill) for complete exemption from the provisions of section 57-1-24.3. Financial institutions in compliance with the CFPB’s final servicing regulations are, therefore, exempt from compliance with section 57-1-24.3 in its entirety – effective May 13, 2014. Servicers should promptly analyze Senate Bill 130 and either (a) avail themselves of the exemption, or (b) take steps to ensure that their notices and procedures under section 57-1-24.3 comply with the changes enacted this year.

Senate Bill 20 extends the provisions of Utah Code section 57-1-25, subsections (1)(c), (3)(b), and (4) until December 31, 2016. Those subsections, which require that the foreclosure sale notice contain a specific notice to tenants regarding protections available under the Protecting Tenants at Foreclosure Act, were set to expire on December 31, 2014. This bill simply extends that sunset provision for an additional two years.

Senate Bill 79 enacts the Utah Uniform Real Property Electronic Recording Act (the “Act”). It provides for the immediate establishment of a commission to create electronic recording standards. It also provides for a phased implementation by class of county and authorizes the county recorder to collect an electronic recording surcharge to recover implementation costs. The focus of the Act is upon electronic recording of electronic documents. It goes into effect July 1, 2015. Utah already has electronic recording of traditional paper documents in most counties.

House Bill 16 was enacted in an effort to cut down on the recording of nonconsensual “common law” liens against public officials. It requires anyone filing such a document for record to initiate a judicial proceeding to determine the enforceability of the lien and subjects anyone recording an unenforceable nonconsensual common law lien to liability for damages and criminal liability. If there is not a judicial determination of the enforceability of the lien within the time allowed by statute, the lien can be disregarded.

Finally, House Bill 315 requires parties asserting judgment liens against real property to file a separate information sheet with the county recorder.