Title: Mortgage Loan Servicing

Summary: Creates "Florida Homeowners Bill of Rights Act"; provides procedures, requirements, & limitations with respect to mortgage servicer's processing of borrower's application for modification of mortgage loan as foreclosure prevention alternative; requires mortgage servicer to provide single point of contract for mortgage borrower seeking mortgage modification; requires single point of contact to engage in specified activities & perform certain services with respect to borrowers; provides requirements & procedures with respect to borrower's request for short sale of mortgaged property; provides requirements, procedures, & limitations with respect to mortgage servicer's obtaining of force-placed insurance coverage on borrower's mortgaged property; defines "robo-signed" or "robo-signing"; provides for imposition of civil penalties against any mortgage servicer who engages in robo-signing; provides for private causes of action for material violations of act by mortgage servicers; provides for statutory & actual damages & attorney fees & costs in such actions.

Full Text:
An act relating to mortgage loan servicing; creating the Florida Homeowner Bill of Rights Act; providing definitions; providing procedures, requirements, and limitations with respect to a mortgage servicer's processing of a borrower's application for the modification of a mortgage loan as a foreclosure prevention alternative; requiring a mortgage servicer to provide a single point of contact for a mortgage borrower seeking mortgage modification; requiring a single point of contact to engage in specified activities and perform certain services with respect to borrowers; providing requirements and procedures with respect to a borrower's request for a short sale of the mortgaged property; providing requirements, procedures, and limitations with respect to a mortgage servicer's obtaining of force-placed insurance coverage on the borrower's mortgaged property; defining the term "robo-signed" or "robo-signing"; providing for the imposition of civil penalties against any mortgage servicer who engages in robo signing; providing for private causes of action for material violations of the act by mortgage servicers; providing for statutory and actual damages and attorney fee sand costs in such actions; providing an effective date. Be It Enacted by the Legislature of the State of Florida: HB 1177 2013 Section 1. Short title.-This act may be cited as the "Florida Homeowner Bill of Rights Act." Section 2. Definitions.-As used i nthis act, the term: (1) "Borrower" means a person obligated to repay a mortgage loan and includes, but is not limited to, a coborrower or cosignor. (2) "Force-placed insurance" means hazard insurance coverage, as well as flood, excess flood, wind-only, and excess wind-only insurance, when obtained by the mortgage servicer. (3) "Foreclosure prevention alternative" means a loan modification or another available loss mitigation option. (4) "Mortgage servicer" means a person or entity who directly or indirectly services a loan. (5) "Servicing" means the act of managing a loan account and includes acting on behalf of the owner by interacting with the borrower, managing the loan account on a daily basis, including collecting and crediting periodic loan payments, managing any escrow account, monitoring and ensuring payment of insurance and taxes, or enforcing the note and security instrument, as the current owner's authorized agent with the express written authority of the current owner of the promissory note. Section 3. Dual track restricted.-(1) If a borrower submits a complete application for a loan modification offered by, or through, the mortgage servicer of the borrower, a mortgage servicer, mortgagee, or express written authorized agent may not refer the borrower's account to HB 1177 2013 foreclosure while the borrower's complete application for any loan modification program is pending until any of the following occur: (a) The mortgage servicer makes a written determination that the borrower is not elig ible for a loan modification, the borrower is provided an opportunity to appeal the written denial within days after the date of the written denial and to provide evidence that the mortgage servicer's determination was in error, and the mortgage service rproperly responds to the appeal. (b) The borrower does not accept an offered loan modification within days after receipt of the written offer. (c) The borrower accepts a written loan modification, but defaults on, or otherwise breaches the borrowe r's obligations under, the loan modification. (2) If the borrower's application for a loan modification is denied, the mortgage servicer, mortgagee, or authorized agent may not begin foreclosure until the later of: (a) Thirty-one days after the borrowe ris notified in writing of the denial if no appeal is filed by the borrower; or (b) If the borrower appeals the denial, the later of 77 days after the written denial of the appeal or days after a loan modification is offered after appeal but declined by the borrower, or if a loan modification is offered and accepted after appeal, the date on which the borrower fails to timely submit the first payment or otherwise breaches the terms of the offer. (3) After denial of a loan modification application, the HB 1177 2013 mortgage servicer must send a written notice to the borrower identifying the reasons for denial, including the following: (a) The amount of time after the date of receipt of the denial letter that the borrower has to request an appeal of the denial, instructions for how to appeal the denial, and how and where to send the request for appeal. (b) If the denial is based on investor disallowance, the specific reasons for the investor disallowance and the name and address of the investor, or investment trust, if applicable, and a quotation or copy of the complete provision upon which the denial was based. (c) If the denial is the result of a net present value calculation, all of the inputs, assumptions, and calculations used to make that determination a nd a statement that the borrower may obtain all of the inputs used in the net present value calculation upon written request of the mortgage servicer. (d) If applicable, a finding that the borrower was previously offered a loan modification and failed to successfully make payments under the terms of the modified loan. (e) If applicable, a description of other foreclosure prevention alternatives for which the borrower may be eligible, and a list of the steps the borrower must take in order to be consider ed for those options. If the mortgage servicer has already approved the borrower for another foreclosure prevention alternative, the mortgage servicer must provide information necessary to complete the foreclosure prevention alternative. (4) For purposes of this section, a complete application includes submission of the following: HB 1177 2013 (a) A completed form that sets forth the borrower's financial, income, and hardship information, such as a uniform borrower assistance form, request for modification and affidavit, or equivalent forms. (b) Income documentation based on income type that is not more than days' old on the date that a complete application is submitted. (c) Hardship documentation based on hardship type. (d) An IRS Form 4506-T-EZ or IRS Form 4506-T signed by the borrower. (5) Before filing the foreclosure, the mortgage servicer must provide the borrower with the following: (a) A copy of the borrower's promissory note or other evidence of indebtedness. (b) A copy of the borrower's deed of trust or mortgage. (c) A copy of any assignment, if applicable, of the borrower's mortgage required to demonstrate the right of the mortgage service to foreclose. (d) All documents that substantiate the servicer's claim of its right to foreclose on behalf of the owner, if applicable. (e) A copy of the borrower's life of loan payment history. Section 4. Single point of contract.-The mortgage servicer must establish an easily accessible and reliable single point of contact for each mortgage borrow er promptly after the borrower requests loss mitigation assistance and provide the borrower one or more direct means of communication with the single point of contact. (1) The single point of contact is responsible for: HB 1177 2013 (a) Communicating information co ncerning the process available for a borrower to apply for foreclosure prevention alternatives, timelines relating to the process, and the deadlines for any submissions that are required in order for the borrower to be considered for prevention foreclosure alternatives. (b) Coordinating receipt of all documents associated with loan modification or loss mitigation activities and notifying the borrower of any missing documents necessary to complete the application. (c) Having access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative. (d) Ensuring the borrower is considered for all foreclosure prevention alternatives offered by, and through, the mortgage servicer, if any. (e) Having access to and open lines of communication with individuals with the ability and authority to stop foreclosure proceedings when necessary. (2) The single point of contact must, at a minimum, provide the following services to the borrower: (a) Contact and notify the borrower of the single point of contact's status as the single point of contact. (b) Explain programs for which the borrower is eligible. (c) Explain the requirements of programs for whi ch the borrower is eligible. (d) Explain program documentation requirements and HB 1177 2013 timelines. (e) Provide basic information about the status of the borrower's account, including pending loan modification applications, other loss mitigation alternatives, and foreclosure activity. (f) Notify the borrower of missing documents and provide a secure address or secure electronic means for submission of documents by the borrower in order to complete the loan modification application. (g) Communicate any mortg age servicer's decision concerning a loan modification application and other loss mitigation alternatives to the borrower in writing. (h) Assist the borrower in pursuing options other than foreclosure upon denial of a loan modification. (i) If a loan modification is approved, explain the loan modification program to the borrower. (j) Ensure the borrower receives all documents necessary to memorialize the loan modification and ensure the borrower has all information needed to remit the payments due und er the loan modification agreement. (k) Provide information regarding credit counseling, if necessary. (l) Facilitate the resolution of any internal processing requirements for the borrower. (m) Have access to individuals with the ability to stop foreclosure proceedings when necessary to comply with the federal Making Home Affordable Program. (3) The single point of contact shall remain assigned to HB 1177 2013 the borrower's account until the mortgage servicer determines that all loss mitigation options offered by or through the mortgage servicer have been exhausted or the borrower's account becomes current. (4) Mortgage servicers must ensure that a single point of contact has the authority to refer and transfer a borrower to an appropriate supervisor upon req uest of the borrower. (5) For purposes of this section, "single point of contact" means an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described in subsections (1)-(4). Section 5. Short sale; thirty-day settlement.-The mortgage servicer must send written confirmation acknowledging the borrower's first request for a short sale to the borrower or his or her agent within business days after receipt of the request if the mortgage servicer has been properly authorized in writing by the borrower to communicate with the borrower's agent. The confirmation must include a statement that clearly and conspicuously informs the borrower that the mortgage servicer may demand a deficiency payment if suc hdeficiency claim is permitted by applicable law. (1) The mortgage servicer must send to the borrower at the borrower's address of record or to the borrower's agent timely written notification of any missing documents that are required in order for the consideration of the short sale within days after receiving the borrower's request for a short sale. (2) The mortgage servicer must communicate any disposition of the borrower's request for a short sale within days after HB 1177 2013 receipt of all the required information and any required third party consents. Section 6. Force-placed insurance.-(1) The mortgage servicer may not obtain force-placed insurance unless there is a reasonable basis to believe the borrower has failed to comply with the loan cont ract's requirements to maintain property insurance. For escrowed accounts, the mortgage servicer must continue to advance payments for the homeowner's existing policy unless the borrower or insurance company cancels the existing policy for any purpose other than nonpayment. (2) The mortgage servicer may not impose any charge on any borrower for force-placed insurance with respect to any property securing a mortgage unless: (a) The mortgage servicer has sent, by first-class mail, two written notices, mai led at least days apart, to the borrower containing: 1. A reminder of the borrower's obligation to maintain hazard insurance on the property securing the federally-related mortgage. 2. A statement that the mortgage servicer does not have evidence of insurance coverage of such property. 3. A clear and conspicuous statement of the procedures by which the borrower may demonstrate that the borrower currently has insurance coverage. 4. A statement that if the required insurance payments are not made, that the mortgage servicer shall begin paying the insurance premium and bill the borrower for the cost and if the HB 1177 2013 borrower continues not to pay the premium, that the lender loss payable endorsement and the standard mortgage contract permit the servicer to maintain the policy in effect by paying the premiums. 5. A statement that the mortgage servicer may obtain insurance coverage at the borrower's expense if the borrower does not provide sufficient evidence of existing coverage in a timely manner. 6. A statement that the cost of such insurance coverage may be significantly higher than the cost of the borrower's coverage. 7. For first lien loans on the mortgage servicer's primary servicing system, a statement, if the borrower desires to maintain his or her voluntary policy, that the mortgage servicer shall offer an escrow account and advance the premium due on the voluntary policy if the borrower: a. Accepts the offer of the escrow account. b. Provides a copy of the invoice from the voluntary carrier. c. Agrees in writing to reimburse the escrow advances through regular escrow payments. d. Agrees to escrow and to repay the advanced premium and the future premiums necessary to maintain any required insurance policy. e. Agrees to allow the mortgagor servicer to manage the escrow account in accordance with the loan documents and with state and federal law. 8. In the case of single-interest coverage, a statement HB 1177 2013 that the coverage may only protect the mortgage holder's interest and not the bo rrower's interest. (b) The mortgage servicer has not received from the borrower written confirmation of insurance coverage for the property securing the mortgage by the end of the-day period beginning on the date the second notice required under parag raph (a) was sent by the mortgage servicer. (3) The mortgage servicer must accept any reasonable form of written confirmation from a borrower or the borrower's insurance agent of existing insurance coverage that includes the existing insurance policy num ber and the identity and contact information for the insurance company or agent. (4) The mortgage servicer may not place insurance on a mortgaged property or require a borrower to obtain or maintain such insurance in excess of percent of the insurabl evalue of the improvements. If the insurance policy purchased by the mortgage servicer on behalf of the borrower is not a single interest coverage policy and insures the interests of the borrower also, the amount of insurance coverage may equal the amount of the last known property insurance policy voluntarily purchased by the borrower. (5) Within days after receipt of evidence of a borrower's existing insurance coverage by the mortgage servicer, the mortgage servicer must: (a) Terminate the force-placed insurance. (b) Refund to the borrower all force-placed insurance premiums paid by the borrower during any period during which the borrower's insurance coverage and the force-placed insurance HB 1177 2013 coverage were each in effect at the same time, and any re lated fees charged to the borrower's account with respect to the force-placed insurance during such period. (6) Any force-placed insurance policy must be purchased for a commercially reasonable price. (7) The mortgage servicer may not request the homeowner to reimburse any portion of the force-placed insurance premium attributable to any commission earned on such policy by the mortgage servicer or any related entity, costs associated with insurance tracking or administration, or any other costs oth er than the actual cost of the force-placed insurance policy premium. (8) A mortgage servicer or affiliate of the mortgage servicer may not: (a) Accept a rebate, inducement, commission, policyholder dividend, retrospective premium adjustment, profit-sharing, or similar return of premium, or other insurance coverages at inadequate rates from any person that provides the mortgage servicer or the mortgage servicer's affiliate with forced-placed insurance; or (b) Accept insurance tracking or any other serv ices from a person that provides the mortgage servicer or the mortgage servicer's affiliate with force-placed insurance, without paying a fair market price for such services, the cost of which may not be included in the cost of insurance premiums or billed to borrower's account. (9) The mortgage servicer may not charge the borrower for more than days of coverage before the date of the force HB 1177 2013 placed insurance placement.Section 7. Robo-signing.-(1) For purposes of this section, the term "robo-signed" or "robo-signing" means the signing of a document that contains information that was not verified for accuracy by the person or persons signing, attesting, or swearing to the accuracy of the document or statement. Evidence of a failure to verify may include, but is not limited to, inaccurate, inconsistent, or vague information contained within the document or statement. For purposes of this definition, multiple people may verify the document or statement so long as the document or statement specifies the portions verified by each signer. (2) Any mortgage servicer that engages in robo-signing when filing documents in any court relative to a foreclosure proceeding is liable for a civil penalty of up to $10,000 per incident in an action brought by the De partment of Legal Affairs or Office of Financial Regulation. Section 8. Private right of action.-(1) For any material violation of this act by the mortgage servicer, the borrower may recover: (a) Statutory damages of up to $10,000, but not less th an $1,500, from the mortgage servicer. (b) Actual damages. (c) Attorney fees and costs. (2) If the court finds that the material violation was intentional or reckless, or resulted from willful misconduct by a mortgage servicer, mortgagee, or authoriz ed agent, the court may award the borrower the greater of treble actual damages or HB 1177 2013 statutory damages of $50,000. Section 9. This act shall take effect July 1, 2013.