Source: https://www.statewidetitle.com/newsletterarticle.asp?Article=314
Timestamp: 2019-03-19 08:20:30
Document Index: 707631478

Matched Legal Cases: ['§ 39', '§ 39', '§ 39', '§ 45', '§ 501', '§ 101', '§ 502', '§ 75', '§ 75', '§ 75', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 1', '§ 36', '§ 1396', '§ 45', '§ 45', '§ 2605', '§ 2801', '§ 45', '§ 45', '§ 45', '§ 45', '§ 45', '§ 45']

8/1/2010 Newsletter and Legal Memorandum Article
Issue 181 Article 314
Published: 8/1/2010View the Entire Newsletter
Here is a wrap up summary dealing with several legislative enactments for 2010 that will likely affect real property practitioners or their clients.
Senate Bill 35, Session Law 2010-32
Transfer Fee Covenants Prohibited from Running with the Land
This Act prohibits transfer fee covenants from obligation subsequent purchasers to pay fees to the developer and assignees upon a subsequent transfer of the property. It has been argued that these covenants are an unfair tax and that the subsequent purchasers derive no benefit from the imposition of the covenants. The statute creates a new Chapter 39A and provides that the stated "public policy of this State favors the marketability of real property and the transferability of interests in real property free from title defects, unreasonable restraints on alienation, and covenants or servitudes that do not touch and concern the property." And goes on to provide that a "transfer fee covenant violates this public policy by impairing the marketability of title to the affected real property and constitutes an unreasonable restraint on alienation and transferability of property, regardless of the duration of the covenant or the amount of the transfer fee set forth in the covenant.
The Act is not retroactive, so the enforceability of existing covenants may yet be tested in the courts. However, the statute provides that "Nothing in this act shall be interpreted to mean that a transfer fee covenant recorded prior to the effective date of this act is valid or enforceable." evidencing the Legislature's clear intent not to validate such covenants.
It also creates liability for damages for putting them to record after the effective date (7/1/10). "(b) A person who records a transfer fee covenant, files a lien that purports to secure payment of a transfer fee, or enters into an agreement imposing a private transfer fee obligation shall be liable for:
(2) All attorney fees, expenses, and costs incurred by a party to the transfer or mortgagee of the real property to recover the transfer fee paid or in connection with an action to quiet title or register the title or a proceeding subsequent to initial registration. If an agent acts on behalf of a principal to file or secure a private transfer fee obligation, liability shall be assessed to the principal, but not to the agent."
As to existing covenants
1. The title insurer's liability to an insured likely doesn't exist when there is only a general exception to recorded CCR's in the policy.
2. The title insurer's liability to an insured likely doesn't exist when there is only an exception to recorded CCR's referencing the recording Book and Page.
3. The attorney's liability to the insurer likely exists when only reporting a general exception to recorded CCR's.
4. The attorney's liability to the insurer likely exists when only reporting an exception to recorded CCR's referencing the recording Book and Page.
5. The attorney's liability to the client likely exists when only reporting a general exception to recorded CCR's.
6. The attorney's liability to the client likely exists when only reporting an exception to recorded CCR's referencing the recording Book and Page.
Section 3 of this bill may have an impact on existing covenants beyond the limitations articulated in Section 2 and discussed above. Note that the italicized language in subsection (ii) does not reference the date of recording of a covenant as does the immediate prior phrase. Grammatically it is referring to the lien as being recorded after the effective date of the statute. Thus it can be argued that filing a lien to enforce a pre-existing covenant after the effective date of the act may be prohibited.
This argument is supported by the provision in the new N.C.G.S. Section 39A-3(a) that provides that any "transfer fee covenant or any lien that is filed to enforce a transfer fee covenant or purports to secure payment of a transfer fee, shall not run with the title to real property and is not binding on or enforceable at law or in equity against any subsequent owner, purchaser, or mortgagee of any interest in real property as an equitable servitude or otherwise."
SECTION 3. This act is effective when it becomes law and applies to:
(i) any transfer fee covenant that is recorded after the effective date of this act;
(ii) any lien that is filed to enforce a transfer fee covenant that is recorded after the effective date of this act or purports to secure payment of a transfer fee that is recorded after the effective date of this act; and
(iii) any agreement imposing a private transfer fee obligation entered into after the effective date of this act.
As of this writing, the Federal Housing Finance Agency has proposed guidance that would restrict government sponsored enterprises from investing in mortgages with private transfer fee covenants. A notice of proposed guidance was submitted to the Federal Register on August 16, 2010 and a 60 day public comment period opened.
Senate Bill 1400, Session Law 2010-190
Chapter 45 Foreclosure Prohibited for Soldiers on Active Duty.
This bill provides that foreclosure by power of sale (Chapter 45) would be prohibited against a debtor on active military duty. Judicial foreclosure would still be available to creditors.
The bill provides that a mortgagee or trustee shall not exercise a power of sale contained in a mortgage or deed of trust, or provided by statute, during or within 90 days of a mortgagor's or trustor's period of military service. The bill provides that the clerk of court shall not conduct a hearing pursuant to N.C.G.S. 45-21.16(d) unless the mortgagee or trustee seeking to exercise a power of sale under a mortgage or deed of trust files with the clerk a certification that the hearing will take place at a time that is not during or within 90 days of a period of military service for the mortgagor or trustor. This subsection would apply only to mortgages and deeds of trust that originated before the mortgagor's or trustor's period of military service.
Senate Bill 1015, Session Law 2010-164
This Bill was adopted by the House and Senate and sent to the Governor for her signature. However, several additional amendments affecting the bill were sought. As a result, the following day the House Judiciary I Committee, stripped the original provisions of Senate Bill 1242 and added various "technical corrections" which amended several statutes and Bills, including to Senate Bill 1015.
The resulting law regulates the misuse of installment sales contracts and lease option contracts as vehicles to implement foreclosure rescue schemes and scams. It creates a right of action under Chapter 75 and exempts foreclosure rescue transactions where the transferee is any of the following:
The Act defines a foreclosure rescue transaction as a "transfer of residential real property, including a manufactured home that is permanently attached to the real property, which includes all of the following features:
d. The transferor retains an interest in the property conveyed, including a tenancy interest, an interest under a lease purchase agreement, an option to reacquire the property, or any other legal, equitable, or possessory interest in the property conveyed."
It is limited to residential property with single family dwellings, including an individual condominium unit, cooperative unit, manufactured home, or mobile home and exempts transactions where he transferee pays the transferor at least fifty percent of the fair market value of the property as determined by a licensed appraiser prior to the transfer. The section does not apply to exempt transactions in which the transferee pays at least 50% of the fair market value of the property and is in writing, signed and acknowledged by all parties to it, and which at least contains all of the following:
The Act creates new Chapters 47G and 47H which regulate option contracts and contracts for deed respectively. The provisions set out the application of the law, how to comply and its effects. The Act also requires that the agreements be in writing, contain certain detailed information, that they be recorded and remedies for violation of the provisions. As our courts have repeatedly held that these transactions are the legal equivalent of mortgages, that they enjoy the protection of a deed when recorded and that there is a common law equity of redemption, the Act is extremely helpful in that it also codifies how to properly extinguish these agreements.
Senate Bill 1242, Session Law 2010-97
Clarifying Changes to the Gen. Statutes
The original Bill as noted above was amended in the House Judiciary I Committee to include various "technical corrections" to various statutes. With respect to Senate Bill 1015, the changes deal with Section 2, Foreclosure Rescue Scams, and they include clarification that nothing in the legislation is to be construed in such a way as to subject an individual homeowner selling his or her primary residence to liability for an unfair and deceptive trade practice.
In addition to the amendments to Senate Bill 1015 discussed above, the bill:
1. Amended the filing time enlargement in N.C.G.S. 1-398 to clarify that the Court can grant a 30 day extension of time to file an answer in a partitions action unlike the 10 days allowable in other special proceedings.
2. Amended N.C.G.S. 36C-4-401.2 to rename the section "Creation of trust by a court", and to replace the existing language of the section with language providing that a court may create or establish a trust by judgment or decree upon the petition of an interested party.
Senate Bill 1216, Session Law 2010-168
This Legislation extended until mid-2013 the existing foreclosure prevention program originally scheduled to end November 11, 2010. Mortgage firms have been required since 2008 to warn homeowners with subprime loans before pursuing a foreclosure in court. The state banking commissioner is also notified and encourages homeowners to get help from a nonprofit housing counselor. The bill was amended to expand the Program to all borrowers at risk, not just those with subprime loans. Proceeds from a $75 fee on mortgage services could support counseling and nonprofit legal services.
SESSION LAW 2010-32
AN ACT TO PROVIDE THAT TRANSFER FEE COVENANTS DO NOT RUN WITH THE
TITLE TO REAL PROPERTY AND ARE NOT BINDING ON OR ENFORCEABLE
AGAINST ANY SUBSEQUENT OWNER, PURCHASER, OR MORTGAGEE.
"Chapter 39A. "Transfer Fee Covenants Prohibited.
"§ 39A-1. Public policy.
(b) A transfer fee covenant violates this public policy by impairing the marketability of title to the affected real property and constitutes an unreasonable restraint on alienation and transferability of property, regardless of the duration of the covenant or the amount of the transfer fee set forth in the covenant.
"§ 39A-2. Definitions.
a. Any consideration payable by the grantee to the grantor for the interest in real property being transferred, including any subsequent additional consideration for the property payable by the grantee based upon any subsequent appreciation, development, or sale of the
property that, once paid, shall not bind successors in title to the property.
d. Any rent, reimbursement, charge, fee, or other amount payable by a lessee to a lessor under a lease, including any fee payable to the Page 2 Session Law 2010-32 SL2010-0032
lessor for consenting to an assignment, subletting, encumbrance, or transfer of the lease.
i. Any reasonable fee payable by the original transferee to a unit owners' association as defined in G.S. 47C-1-103(3), or owners' association as defined in G.S. 47F-1-103(3), as long as no portion of the fee is required to be passed through to a third party designated or
identifiable by description in the document or another document referenced therein.
"§ 39A-3. Transfer fee covenants prohibited.
(2) All attorney fees, expenses, and costs incurred by a party to the transfer or mortgagee of the real property to recover the transfer fee paid or in connection with an action to quiet title or register the title or a proceeding subsequent to initial registration. If an agent acts on behalf of a principal to
file or secure a private transfer fee obligation, liability shall be assessed to the principal, but not to the agent."
SECTION 2. Nothing in this act shall be interpreted to mean that a transfer fee covenant recorded prior to the effective date of this act is valid or enforceable.
SECTION 3. This act is effective when it becomes law and applies to: (i) any transfer fee covenant that is recorded after the effective date of this act; (ii) any lien that is filed to enforce a transfer fee covenant that is recorded after the effective date of this act or purports to secure payment of a transfer fee that is recorded after the effective date of this act; and (iii) any agreement imposing a private transfer fee obligation entered into after the effective date of this act.
In the General Assembly read three times and ratified this the 24th day of June,2010.
Approved 9:00 a.m. this 1st day of July, 2010
AN ACT TO PROHIBIT FORECLOSURES WHILE MORTGAGORS OR TRUSTORS ARE
"§ 45-21.12A. Power of sale barred during periods of military service.
(a) Power of Sale Barred. – A mortgagee, trustee, or other creditor shall not exercise a power of sale contained in a mortgage or deed of trust, or provided by statute, during, or within 90 days after, a mortgagor's, trustor's, or debtor's period of military service. The clerk of court shall not conduct a hearing pursuant to G.S. 45-21.16(d) unless the mortgagee, trustee or other creditor seeking to exercise a power of sale under a mortgage or deed of trust, or provided by statute, files with the clerk a certification that the hearing will take place at a time that is not during, or within 90 days after, a period of military service for the mortgagor, trustor or debtor. This subsection applies only to mortgages and deeds of trust that originated before the mortgagor's or trustor's period of military service.
(b) Waiver. – This section shall not apply if the mortgagor, trustor, or debtor waives his or her rights under this section pursuant to a written agreement of the parties executed during or after the mortgagor's, trustor's, or debtor's period of military service, as an instrument separate from the obligation or liability to which the waiver applies. Any waiver in writing of a right or protection provided by this section must be in at least 12 point type and shall specify the legal instrument creating the obligation or liability to which the waiver applies.
(c) Purpose. – The purpose of this section is to supplement and complement the provisions of the Service members Civil Relief Act, 50 U.S.C. App. § 501, et seq., and to afford greater peace and security for persons in federal active duty.
(1) Military service. –
1. Active duty, as defined in 10 U.S.C. § 101(d)(1), and 2. In the case of a member of the National Guard, includes service under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under 32 U.S.C. § 502(f), for purposes of responding to a national emergency declared by the President and supported by federal funds.
(2) Period of military service. – The period beginning on the date on which a servicemember enters military service and ending on the date on which the servicemember is released from military service or dies while in military service.
(3) Servicemember. – A member of the Army, Navy, Air Force, Marine Corps, Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the Public Health Service."
SECTION 2. G.S. 45-21.16(c) is amended by adding a new subdivision to read:
(12) That if the debtor is currently on military duty the foreclosure may be prohibited by G.S. 45-21.12A."
SECTION 3. G.S. 45-21.16(d) reads as rewritten:
"(d) (Effective until October 31, 2010) The hearing provided by this section shall be held before the clerk of court in the county where the land, or any portion thereof, is situated. In the event that the property to be sold consists of separate tracts situated in different counties or a single tract in more than one county, only one hearing shall be necessary. However, prior to that hearing, the mortgagee or trustee shall file the notice of hearing in any other county where any portion of the property to be sold is located. Upon such hearing, the clerk shall consider the evidence of the parties and may consider, in addition to other forms of evidence required or permitted by law, affidavits and certified copies of documents. If the clerk finds the existence of (i) valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, (iv) notice to those entitled to such under subsection (b), and (v) that the underlying mortgage debt is not a subprime loan as defined in G.S. 45-101(4), or if the loan is a subprime loan under G.S. 45-101(4), that the pre-foreclosure notice under G.S. 45-102 was provided in all material respects, and that the periods of time established by Article 11 of this Chapter have elapsed, and (vi) that the sale is not barred by G.S. 45-21.12A, then the clerk shall authorize the mortgagee or trustee to proceed under the instrument, and the mortgagee or trustee can give notice of and conduct a sale pursuant to the provisions of this Article. A certified copy of any authorization or order by the clerk shall be filed in any other county where any portion of the property to be sold is located before the mortgagee or trustee may proceed to advertise and sell any property located in that county. In the event that sales are to be held in more than one county, the provisions of G.S. 45-21.7 apply.
(d) (Effective October 31, 2010) The hearing provided by this section shall be held before the clerk of court in the county where the land, or any portion thereof, is situated. In the event that the property to be sold consists of separate tracts situated in different counties or a single tract in more than one county, only one hearing shall be necessary. However, prior to that hearing, the mortgagee or trustee shall file the notice of hearing in any other county where any portion of the property to be sold is located. Upon such hearing, the clerk shall consider the evidence of the parties and may consider, in addition to other forms of evidence required or permitted by law, affidavits and certified copies of documents. If the clerk finds the existence of (i) valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, and (iv) notice to those entitled to such under subsection (b), and (v) that the sale is not barred by G.S. 45-21.12A, then the clerk shall authorize the mortgagee or trustee to proceed under the instrument, and the mortgagee or trustee can give notice of and conduct a sale pursuant to the provisions of this Article. A certified copy of any authorization or order by the clerk shall be filed in any other county where any portion of the property to be sold is located before the mortgagee or trustee may proceed to advertise and sell any property located in that county. In the event that sales are to be held in more than one county, the provisions of G.S. 45-21.7 apply."
AN ACT TO ENACT THE HOMEOWNER AND HOMEBUYER PROTECTION ACT TO PROHIBIT HOME FORECLOSURE RESCUE SCAMS IN WHICH A TRANSFEROR IS INDUCED TO SELL PROPERTY FOR LESS THAN FIFTY PERCENT OF ITS FAIR MARKET VALUE TO AVOID FORECLOSURE, TO PROVIDE PROTECTIONS IN LEASE OPTION CONTRACTS BY REQUIRING THAT SUCH CONTRACTS BE IN WRITING, INCLUDE SPECIFIED MINIMUM CONTENTS, BE RECORDED, GIVE PURCHASERS UNDER THE CONTRACT NOTICE OF AND THE RIGHT TO CURE ANY DEFAULT, AND SPECIFY THE CONSEQUENCES OF A SELLER'S DEFAULT ON A LOAN SECURED BY A LIEN ON THE PROPERTY, TO PROVIDE PROTECTIONS IN CONTRACT FOR DEED TRANSACTIONS BY REQUIRING THAT SUCH CONTRACTS BE IN WRITING, INCLUDE SPECIFIED MINIMUM
CONTENTS, BE RECORDED, GIVE PURCHASERS UNDER THE CONTRACT NOTICE OF AND THE RIGHT TO CURE ANY DEFAULT, AND INVOLVE PROPERTY TO WHICH THE SELLER HOLDS TITLE, AND TO MAKE VIOLATION OF CHAPTERS 47G AND 47H OF THE GENERAL STATUTES A BASIS FOR DISCIPLINE UNDER THE MANUFACTURED HOMES LICENSING ACT.
"§ 75-120. Definitions.
(1) Default. – Whenever a property owner is more than 60 days delinquent on any loan or debt that is secured by the property, including real estate taxes.
(2) Exempt transaction. – A foreclosure rescue transaction in which the transferee is any of the following:
(3) Foreclosure rescue transaction. – A transfer of residential real property, including a manufactured home that is permanently attached to the real property, which includes all of the following features:
(4) Property. – Real property upon which there is located one or more single-family dwellings, including an individual condominium unit, cooperative unit, manufactured home, or mobile home.
"§ 75-121. Foreclosure rescue transactions prohibited; exceptions; violation.
(a) It is unlawful for a person or entity other than the transferor to engage in, promise to engage in, arrange, offer, promote, solicit, assist with, or carry out a foreclosure rescue transaction for financial gain or with the expectation of financial gain, unless prior to or at the time of transfer, the transferee pays the transferor at least fifty percent (50%) of the fair market value of the property as determined by a licensed appraiser. An appraisal to determine the fair market value of the property must be performed no more than 90 days prior to the transfer. The appraisal shall be delivered to the transferor no more than three days after the appraisal is performed and no less than seven days prior to the transfer of the property. This section does not apply to exempt transactions. (b) Every contract to effectuate a foreclosure rescue transaction in which the transferee pays at least 50% of the fair market value of the property, shall be in writing, shall be signed and acknowledged by all parties to it, and shall contain all the terms to which the parties have agreed. The contract shall contain at least all of the following:
"§ 75-122. Remedies.
A violation of G.S. 75-121 is an unfair trade practice under G.S. 75-1.1. A homeowner may bring an action for the recovery of damages, to void a prohibited foreclosure rescue transaction, as well as for declaratory or equitable relief for a violation of this Article. The provisions of this section shall not be enforceable against a bona fide purchaser for value. The rights and remedies provided herein are cumulative to, and not a limitation of, any other rights and remedies provided by law or equity."
"§ 47G-1. Definitions.
(1) Covered lease agreement or lease agreement. – A residential lease agreement that is combined with, or is executed concurrently with, an option contract. (2) Cure the default. – To perform the obligations under the lease agreement and/or option contract that are described in the notice of default and intent to forfeit required by G.S. 47G-5 and that are necessary to reinstate the lease agreement and/or the option contract. This term is synonymous with the term 'cure.'
(3) Forfeiture. – The termination of an option purchaser's rights to exercise an option to purchase property that is the subject of the option contract, and those rights of persons or entities claiming by or through an option purchaser, to the extent permitted by this Chapter, because of a breach of one or more of the purchaser's obligations under the option contract and/or covered lease agreement.
(4) Option contract or contract. – An option contract for the purchase of property that includes or is combined with, or is executed in conjunction with, a covered lease agreement.
(5) Option fee. – Any payment, however denominated, made by the option purchaser to the option seller that constitutes the price the option purchaser pays for the right to buy the property at a specified price in the future.
(6) Option purchaser or purchaser. – An individual who purchases an interest in property under an option contract, or any legal successor in interest to that individual.
(7) Option seller or seller. – A person or entity that makes a sale of an option by means of an option contract, or the person's or entity's successor in interest. If an option contract is subsequently assigned or sold to a third party, the assignor shall be deemed to be an option seller or seller for purposes of this Chapter.
(8) Property. – Real property located in this State, upon which there is located or there is to be located a structure or structures designed principally for occupancy of from one to four families that is or will be occupied by the purchaser as the purchaser's principal dwelling.
"§ 47G-2. Minimum contents of option contracts; recordation.
(a) Writing Required. – Every option contract, including any assignment of an option contract, shall be evidenced by a contract signed and acknowledged by all parties to it and containing all the terms to which they have agreed. The seller shall deliver to the purchaser an exact copy of the contract, containing all the disclosures required by subsection (b) of this section, at the time the purchaser signs the contract.
(b) Contents. – An option contract shall contain at least all of the following:
(9) A conspicuous statement, in not less than 14-point bold face type, immediately above the purchaser's signature, that the purchaser has the right to cancel the contract at anytime until midnight of the third business day following execution of the option contract or delivery of the contract, whichever occurs last.
(c) Right to Cancel. – The purchaser may exercise the right to cancel the option contract until midnight of the third business day following execution of the option contract or delivery of a copy of the option contract, with the required minimum disclosures, whichever occurs last. If the purchaser cancels the option contract, the seller shall, not later than the tenth day after the date the seller receives the purchaser's notice of cancellation, return to the purchaser any and all property exchanged or payments made by the purchaser under the option contract minus an offset of an amount equal to the fair rental value of the use of the property during the duration of the purchaser's possession of the property plus an amount necessary to compensate the seller for any damages caused to the property by the purchaser beyond normal wear and tear.
(d) Recordation. – Within five business days after the option contract has been signed and acknowledged by both the seller and the purchaser, the seller shall cause a copy of the option contract or a memorandum of the option contract to be recorded in the office of the register of deeds in the county in which the property is located. If a memorandum of the contract is recorded, it shall be entitled "Memorandum of Option Contract" and shall contain, as a minimum, the names of the parties, the signatures of the parties, a description of the property, and applicable time periods as described in subdivisions (b)(7) and (8) of this section. A person other than a seller and purchaser may rely on the recorded materials in determining whether the requirements of this subsection have been met. The seller shall pay the fee to record the document unless the parties agree otherwise.
(e) Effect of Forfeiture. – Upon default and forfeiture after proper notice of default and intent to forfeit and failure of the purchaser to substantially cure the default, the purchaser's equitable right of redemption shall be extinguished by:
"§ 47G-3. Application of Landlord Tenant Law.
"§ 47G-4. Condition of forfeiture; right to cure.
A purchaser's right to exercise an option to purchase property under an option contract cannot be forfeited unless a breach has occurred in one or more of the purchaser's express obligations under the option contract and the option contract provides that as a result of such breach the seller is entitled to forfeit the contract. Notwithstanding any option contract or covered lease agreement provisions to the contrary, the purchaser's rights shall not be forfeited until the purchaser has been notified of the intent to forfeit in accordance with G.S. 47G-5 and been given a right to cure the default and has failed to do so within the time period allowed. The option purchaser is entitled to the right to cure a default once in every 12-month period during the period of the covered lease agreement.
"§ 47G-5. Notice of default and intent to forfeit.
(b) Any notice of default and intent to forfeit must be delivered to the option purchaser by hand delivery or by any manner authorized by G.S. 1A-1, Rule 4.
"§ 47G-6. Effect of seller's default on loan secured by mortgage or lien on property.
"§ 47G-7. Remedies.
A violation of any provision of this Chapter constitutes an unfair trade practice under G.S. 75-1.1. An option purchaser may bring an action for the recovery of damages, to void a transaction executed in violation of this Chapter, as well as for declaratory or equitable relief for a violation of this Chapter. The rights and remedies provided herein are cumulative to, and not a limitation of, any other rights and remedies provided by law or equity. Nothing in this Chapter shall be construed to subject an individual homeowner selling his or her primary residence directly to an option purchaser to liability under G.S. 75-1.1."
SECTION 4. The General Statutes are amended by adding a new Chapter to read:
"§ 47H-1. Definitions.
(1) Contract for deed or contract. – An agreement, whether denominated a "contract for deed," "installment land contract," "land contract," "bond for title," or any other title or description in which the seller agrees to sell an interest in property to the purchaser and the purchaser agrees to pay the purchase price in five or more payments exclusive of the down payment, if any, and the seller retains title to the property as security for the purchaser's obligation under the agreement.
(2) Cure the default. – To perform the obligations under the contract that are described in the notice of default and intent to forfeit required by G.S. 47H-4 and that are necessary to reinstate the contract. This term is synonymous with the term 'cure.'
(3) Down payment. – A payment made by the purchaser to the seller that constitutes part of the purchase price of property that is the subject of a contract for deed and that is made or agreed to in connection with the execution of that contract.
(4) Forfeiture. – The termination of all of a purchaser's rights, title, and interest, and those of persons or entities claiming by or through a purchaser, in property that is the subject of a contract for deed, to the extent permitted by this Chapter, because of a breach of one or more of the purchaser's obligations under the contract.
(5) Property. – Either (i) real estate located in this State, upon which there is located or there is to be located a structure or structures designed principally for occupancy of from one to four families that is or will be occupied by the purchaser as the purchaser's principal dwelling, or (ii) a manufactured home, as that term is defined in G.S. 143-149.9, that is located in this State and is or will be occupied by a purchaser as the purchaser's principal dwelling, if the purchase price is five thousand dollars ($5,000) or more.
(6) Purchaser. – An individual or entity that purchases an interest in property under a contract for deed, or any legal successor in interest to that individual.
(7) Seller. – A person or entity that makes a sale of property by means of a contract for deed, or the person's or entity's successor in interest.
"§ 47H-2. Minimum contents for contracts for deed; recordation.
(a) Writing Required. – Every contract for deed shall be evidenced by a contract signed and acknowledged by all parties to it and containing all the terms to which they have agreed. The seller shall deliver to the purchaser an exact copy of the contract, containing all the disclosures required by subsection (b) of this section, at the time the purchaser signs the contract.
(b) Contents. – A contract for deed contract shall contain at least all of the following:
(c) Right to Cancel. – The purchaser may exercise the right to cancel the contract for deed until midnight of the third business day following execution of the contract for deed or delivery of a copy of the contract with the required minimum contents, whichever occurs later. If the purchaser cancels the contract, the seller shall, not later than the tenth day after the date the seller receives the purchaser's notice of cancellation, return to the purchaser any and all property exchanged or payments made by the purchaser under the contract minus an offset of an amount equal to the fair rental value of the use of the property during the duration of the purchaser's possession of the property plus an amount necessary to compensate the seller for any damages caused to the property by the purchaser beyond normal wear and tear.
(d) Recordation. – Within five business days after the contract has been signed and acknowledged by both the seller and the purchaser, the seller shall cause a copy of the contract or a memorandum of the contract to be recorded in the office of the register of deeds in the county in which the property is located. If a memorandum of the contract is recorded, it shall be entitled "Memorandum of a Contract for Deed" and shall contain, as a minimum, the names of the parties, the signatures of the parties, a description of the property, and applicable time periods as described in subdivisions (b)(8) and (11) of this section. A person, other than a seller and purchaser may rely on the recorded materials in determining whether the requirements of this subsection have been met. The seller shall pay the fee to record the document unless the parties agree otherwise.
"§ 47H-3. Conditions of forfeiture; right to cure.
A purchaser's rights under a contract for deed shall not be forfeited except as provided in this Chapter. A contract for deed cannot be forfeited unless a breach has occurred in one or more of the purchaser's express obligations under the contract and the contract provides that as a result of such breach the seller is entitled to forfeit the contract. Furthermore, the purchaser's rights shall not be forfeited until the purchaser has been notified of the intent to forfeit in accordance with G.S. 47H-4 and been given a right to cure the default and has failed to do so within the time period allowed. A timely tender of cure shall reinstate the contract for deed.
"§ 47H-4. Notice of default and intent to forfeit.
(b) Any notice of default and intent to forfeit must be delivered to the purchaser by hand or by any manner authorized in G.S. 1A-1, Rule 4.
"§ 47H-5. Periodic statements of account.
(7) If the property is encumbered by a lien or mortgage pursuant to G.S. 47H-6, the outstanding balance of the loan that is secured by the property.
"§ 47H-6. Title requirements.
(2) It was placed on the property by the seller prior to the execution of the contract for deed if the seller is a licensed general contractor within the meaning of Chapter 87 of the General Statutes, a licensed manufactured home dealer within the meaning of Article 9A of Chapter 143 of the General
Statutes, or a licensed real estate broker within the meaning of Chapter 93A of the General Statutes, provided that the general contractor, manufactured home dealer, or real estate broker continues to make timely payments on the outstanding mortgage or encumbrance.
(3) It was placed on the property by the seller prior to the execution of the contract for deed, if the seller is not a licensed general contractor within the meaning of Chapter 87 of the General Statutes, a licensed manufactured home dealer within the meaning of Article 9A of Chapter 143 of the General
Statutes, or a licensed real estate broker within the meaning of Chapter 93A of the General Statutes, if the lien is attached only to the property sold to the purchaser under the contract for deed, and the seller continues to make timely payments on the outstanding mortgage or encumbrance.
(b) If the property being sold is encumbered by one or more deeds of trust, mortgages,
or other encumbrances evidencing or securing a monetary obligation which constitutes a lien on the property, the seller must notify the purchaser in a separate written disclosure, provided at or before the execution of the contract, in 14-point type, boldface, capital letters, the following statement: THIS PROPERTY HAS EXISTING LIENS ON IT. IF THE SELLER FAILS TO MAKE TIMELY PAYMENTS TO THE LIEN HOLDER, THE LIEN HOLDER MAY FORECLOSE ON THE PROPERTY, EVEN IF YOU HAVE MADE ALL YOUR PAYMENTS.
"§ 47H-7. Late fees.
"§ 47H-8. Remedies.
A violation of any provision of this Chapter constitutes an unfair trade practice under G.S. 75-1.1. A purchaser may bring an action for the recovery of damages, to rescind a transaction, as well as for declaratory or equitable relief, for a violation of this Chapter. The rights and remedies provided herein are cumulative to, and not a limitation of, any other rights and remedies provided by law or equity. Nothing in this Chapter shall be construed to subject an individual homeowner selling his or her primary residence directly to a buyer to liability under G.S. 75-1.1."
SECTION 5. G.S. 143-143.13(a) is amended by adding a new subdivision to read:
SECTION 6. This act becomes effective October 1, 2010, and applies to In the General Assembly read three times and ratified this the 8th day of July, 2010.
SESSION LAW 2010-97
AN ACT TO MAKE VARIOUS CLARIFYING CHANGES TO THE GENERAL STATUTES
AND THE SESSION LAWS.
SECTION 1. G.S. 1-398 reads as rewritten:
"§ 1-398. Filing time enlarged.
The time for filing the complaint, petition, or any pleading may be enlarged by the court for good cause shown by affidavit, shown, but may not be enlarged by more than 10 additional days, days or 30 additional days for partitions, nor more than once, unless the default was occasioned by accident over which the party applying had no control, or by the fraud of the opposing party."
SECTION 5.(a) G.S. 36C-4-401.2 reads as rewritten:
"§ 36C-4-401.2. Trust pursuant to 46 U.S.C § 1396p(d)(4).Creation of trust by a court.
Any interested party may petition the court, in accordance with the provisions of this Chapter, to establish a trust pursuant to section 1396p(d)(4) of Title 42 of the United States Code. This section is not the exclusive method of establishing a trust pursuant to section 1396p(d)(4) of Title 42 of the United States Code; and the court shall maintain its authority to SL2010-0097 Session Law 2010-97
create or establish any trust, including a trust pursuant to section 1396p(d)(4) of Title 42 of the United States Code, by means of judgment, order, or decree in any matter properly before the court. A court may create or establish a trust by judgment or decree, including a trust pursuant to section 1396p(d)(4) of Title 42 of the United States Code, upon petition of an interested party in accordance with the provisions of this Chapter or in any other matter properly before the court."
SECTION 5.(b) G.S. 36C-8-816.1(c)(7) reads as rewritten:
"(7) If the power to distribute principal or income in the original trust is subject to an ascertainable standard, If a trustee of an original trust exercises a power to distribute principal or income that is subject to an ascertainable standard by appointing property to a second trust, then the power to distribute income or principal in the second trust must be subject to the same ascertainable
standard as in the original trust and must be exercisable in favor of the same current beneficiaries as to whom such distribution could be made in the original trust."
SECTION 15.(a) If Senate Bill 1015, 2009 Regular Session, becomes law, then G.S. 75-122, as enacted by Section 2 of Senate Bill 1015, reads as rewritten:
SL2010-0097 Session Law 2010-97 A violation of G.S. 75-121 is an unfair trade practice under G.S. 75-1.1. A homeowner may bring an action for the recovery of damages, to void a prohibited foreclosure rescue transaction, as well as for declaratory or equitable relief for a violation of this Article. The provisions of this section shall not be enforceable against a bona fide purchaser for value. The rights and remedies provided herein are cumulative to, and not a limitation of, any other rights and remedies provided by law or equity. Nothing in this Chapter shall be construed to subject an individual homeowner selling his or her primary residence to liability under G.S. 75-1.1."
SECTION 15.(b) This section becomes effective October 1, 2010, and applies to transactions entered on or after that date.
Approved 3:08 p.m. this 20th day of July, 2010
"§ 45-100. (For expiration date, see note) Title.
"§ 45-101. (For expiration date, see note) Definitions.
(1a) Annual percentage rate. – Defined in G.S. 24-1.1F.
(1b) Home loan. – A loan that has all of the following characteristics:
a. The loan is not (i) an equity line of credit as defined in G.S. 24-9, (ii) a construction loan as defined in G.S. 24-10, (iii) a reverse mortgage transaction, or (iv) a bridge loan with a term of 12 months or less, such as a loan to purchase a new dwelling where the borrower plans to sell a current dwelling within 12 months.
d. The principal amount of the loan does not exceed the conforming loan size limit for a single-family dwelling as established from time to time by Fannie Mae.
e. The loan is secured by (i) a security interest in a manufactured home, as defined in G.S. 143-145, in the State which is or will be occupied by the borrower as the borrower's principal dwelling, (ii) a mortgage or deed of trust on real property in the State upon which there is located an existing structure designed principally for occupancy of from one to four families that is or will be occupied by the borrower as the borrower's principal dwelling, or (iii) a mortgage or deed of trust on real property in the State upon which there is to be constructed using the loan proceeds a structure or structures designed principally for occupancy of from one to four families which, when completed, will be occupied by the borrower as the borrower's principal dwelling.
f. A purpose of the loan is to (i) purchase the dwelling, (ii) construct, repair, rehabilitate, remodel, or improve the dwelling or the real property on which it is located, (iii) satisfy and replace an existing
obligation secured by the same real property, or (iv) consolidate existing consumer debts into a new home loan.
(3) Mortgage servicer. – A person who directly or indirectly acts as a mortgage servicer as that term is defined in subdivision (1) of this section or who otherwise meets the definition of the term "servicer" in the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(i), with respect to mortgage loans.
(3a) Rate spread home loan. – A home loan in which all the following apply:
a. The difference between the annual percentage rate for the loan and the yield on U.S. Treasury securities having comparable periods of maturity is either equal to or greater than (i) three percentage points (3%), if the loan is secured by a first lien mortgage or deed of trust, or (ii) five percentage points (5%), if the loan is secured by a subordinate lien mortgage or deed of trust. Without regard to whether the loan is subject to or reportable under the provisions of the Home Mortgage Disclosure Act (12 U.S.C. § 2801, et seq.) (HMDA), the difference between the annual percentage rate and the yield on Treasury securities having comparable periods of maturity shall be
determined using the same procedures and calculation methods applicable to loans that are subject to the reporting requirements of HMDA, as those procedures and calculation methods are amended from time to time, provided that the yield on Treasury securities shall be determined as of the fifteenth day of the month prior to the application for the loan. b. The difference between the annual percentage rate for the loan and the conventional mortgage rate is either equal to or greater than (i) one and three-fourths percentage points (1.75%), if the loan is secured by a first lien mortgage or deed of trust, or (ii) three and three-fourths percentage points (3.75%), if the loan is secured by a subordinate lien mortgage or deed of trust. For purposes of this calculation, the "conventional mortgage rate" means the most recent daily contract interest rate on commitments for fixed-rate first mortgages published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15, or any publication that may supersede it, during the week preceding the week in which the interest rate for the loan is set.
(4) Subprime loan. – A loan, originated on or after January 1, 2005, but before December 31, 2007, that meets the definition of a rate spread home loan under this Article. A mortgage servicer may rely on a chart reflecting the appropriate interest rate triggers for rate spread home loans for each day of
the period covered by this Article provided by the Commissioner of Banks for the purposes of determining if a loan is a subprime loan covered by this Article. The Commissioner shall provide the chart at least 60 days prior to the effective date of this act.
"§ 45-102. (For expiration date, see note) Pre-foreclosure notice for subprime home loans.
"§ 45-103. (For expiration date, see note) Pre-foreclosure information to be filed with the
Administrative Office of the Courts for certain subprime home loans.
(a) Within three business days of mailing the notice required by G.S. 45-102, the mortgage servicer shall file certain information with the Administrative Office of the Courts. The filing shall be in an electronic format, as designated by the Administrative Office of the Courts, and shall contain the name and address of the borrower, the due date of the last scheduled payment made by the borrower, and the date the notice was mailed to the borrower. The Administrative Office of the Courts shall establish an internal database to track information required by this section. The Commissioner of Banks shall design and develop the database, in consultation with the Administrative Office of the Courts. Only the Administrative Office of the Courts, the Office of Commissioner of Banks, and the clerk of court as provided by G.S. 45-107 shall have access to the database.
(b) As permitted by applicable State and federal law, optional information may be requested from the mortgage servicer to facilitate further review by the State Home Foreclosure Prevention Project described in G.S. 45-104. The nature of the optional information requested shall be determined in connection with the design of the database established by subsection (c) of this section. This optional information shall be used by the State Home Foreclosure Prevention Project to prioritize efforts to reach borrowers most likely to avoid foreclosure and to prevent delay for defaults where foreclosure is unavoidable.
(c) No later than October 1, 2008, the Administrative Office of the Courts shall establish an internal database to track information provided in this section. The Commissioner of Banks shall design and develop this database, in consultation with the Administrative Office of the Courts, in a manner to promote the efforts of the State Home Foreclosure Prevention Project. Only the Administrative Office of the Courts, the Office of Commissioner of Banks, and the clerk of court as provided by G.S. 45-107 shall have access to the database.
"§ 45-104. (For expiration date, see note) State Home Foreclosure Prevention Project.
Project and Fund.
(a) The Commissioner of Banks is authorized to establish the State Home Foreclosure Prevention Project. The purpose of the Project is to seek solutions to avoid foreclosures for certain subprime home loans. In developing the Project, the Commissioner may include input from HUD-approved housing counselors, community organizations, the Credit Union Division and other State agencies, mortgage lenders, mortgage servicers, and other partners.
(c) Upon the filing of the information required under G.S. 45-103, the mortgage servicer shall pay a fee of seventy-five dollars ($75.00) to the State Home Foreclosure Prevention Trust Fund. The fee shall not be charged more than once for a home loan covered by this act. The collection of this fee shall be managed by the Office of the Commissioner of Banks in a manner so as to minimize burdens on mortgage servicers in complying with the requirements of this section.
(1) An amount, not to exceed the greater of two million two hundred thousand dollars ($2,200,000) or thirty percent (30%) of the funds per year, to cover the administrative costs of the operation of the program by the Office of the Commissioner of Banks, including managing on behalf of the Administrative Office of the Courts the database identified in G.S. 45-103, expenses associated with informing homeowners of State resources available for foreclosure prevention, expenses associated with connecting homeowners to available resources, and assistance to homeowners and counselors in communicating with mortgage servicers.
(3) An amount, not to exceed thirty percent (30%) of the total funds collected per year, to make grants to or reimburse nonprofit legal service providers for services rendered on behalf of homeowners in danger of defaulting on a home loan to avoid foreclosure, limited to legal representation such as negotiation of loan modifications or other loan work-out solutions, defending homeowners in foreclosure or representing homeowners in bankruptcy proceedings, and research and counsel to homeowners regarding the status of their home loans.
"§ 45-105. (For expiration date, see note) Extension of foreclosure process.
The Commissioner of Banks shall review information provided in the database created by G.S. 45-103 to determine which subprime home loans are appropriate for efforts to avoid foreclosure. If the Commissioner reasonably believes, based on a full review of the loan information, the mortgage servicer's loss mitigation efforts, the borrower's capacity and interest in staying in the home, and other appropriate factors, that further efforts by the State Home Foreclosure Prevention Project offer a reasonable prospect to avoid foreclosure on primary residences, the Commissioner shall have the authority to extend one time under this Article the allowable filing date for any foreclosure proceeding on a primary residence by up to 30 days beyond the earliest filing date established by the pre-foreclosure notice. If the Commissioner makes the determination that a loan is subject to this section, the Commissioner shall notify the borrower, mortgage servicer, and the Administrative Office of the Courts. If the mortgage servicer is a state or federally chartered credit union, the Commissioner shall also notify the Administrator of the Credit Union Division of the determination.
"§ 45-106. (For expiration date, see note) Use and privacy of records.
The data provided to the Administrative Office of the Courts pursuant to G.S. 45-103 shall be exclusively for the use and purposes of the State Home Foreclosure Prevention Project developed by the Commissioner of Banks in accordance with G.S. 45-104. The information provided to the database is not a public record, except that a mortgage lender and a mortgage servicer shall have access to the information submitted only with regard to its own loans. Any notice provided by the Commissioner to the Administrator of the Credit Union Division under G.S. 45-105 is not a public record. Provision of information to the Administrative Office of the Courts for use by the State Home Foreclosure Prevention Project shall not be considered a violation of G.S. 53B-8. A mortgage servicer shall be held harmless for any alleged breach of privacy rights of the borrower with respect to the information the mortgage servicer provides in accordance with this Article.
"§ 45-107. (For expiration date, see note) Foreclosure filing.
(a) For the duration of the program authorized by this Article, foreclosure notices filed on subprime home loans on or after November 15, 2008, November 1, 2010, shall contain a certification by the filing party that the pre-foreclosure notice required by G.S. 45-102 and the pre-foreclosure information required by G.S. 45-103 were provided in accordance with this Article and that the periods of time established by the Article have elapsed.
(b) The clerk of superior court or other judicial officer may have access to the pre-foreclosure database to confirm information provided in subsection (a) of this section. A materially inaccurate statement in the certification shall be cause for dismissal without prejudice of any foreclosure proceeding on a primary residence initiated by the mortgage servicer and for payment by the filing party of costs incurred by the borrower in defending the foreclosure proceeding."
SECTION 2. G.S. 45-21.16(c2) reads as rewritten:
"(c2) (Expires October 31, 2010) In any foreclosure filed on or after November 15, 2008, November 1, 2010, where the underlying mortgage debt is a subprime home loan as defined in G.S. 45-101(4), G.S. 45-101(1b), the notice required by subsection (b) of this section shall contain a certification by the filing party that the pre-foreclosure notice and information required by G.S. 45-102 and G.S. 45-103 were provided in all material respects and that the periods of time established by Article 11 of this Chapter have elapsed."
"(d) (Effective until October 31, 2010) The hearing provided by this section shall be held before the clerk of court in the county where the land, or any portion thereof, is situated. In the event that the property to be sold consists of separate tracts situated in different counties or a single tract in more than one county, only one hearing shall be necessary. However, prior to that hearing, the mortgagee or trustee shall file the notice of hearing in any other county where any portion of the property to be sold is located. Upon such hearing, the clerk shall consider the evidence of the parties and may consider, in addition to other forms of evidence required or permitted by law, affidavits and certified copies of documents. If the clerk finds the existence of (i) valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, (iv) notice to those entitled to such under subsection (b), and (v) that the underlying mortgage debt is not a subprime home loan as defined in G.S. 45-101(4), G.S. 45-101(1b), or if the loan is a subprime home loan under G.S. 45-101(4), G.S. 45-101(1b), that the pre-foreclosure notice under G.S. 45-102 was provided in all material respects, and that the periods of time established by Article 11 of this Chapter have elapsed, then the clerk shall authorize the mortgagee or trustee to proceed under the instrument, and the mortgagee or trustee can give notice of and conduct a sale pursuant to the provisions of this Article. A certified copy of any authorization or order by the clerk shall be filed in any other county where any portion of the property to be sold is located before the mortgagee or trustee may proceed to advertise and sell any property located in that county. In the event that sales are to be held in more than one county, the provisions of G.S. 45-21.7 apply."
SECTION 4. G.S. 53-244.090(b) reads as rewritten:
"(b) Each principal and each branch office of a mortgage broker or mortgage lender licensed under the provisions of this Article shall be issued a separate license for which the Commissioner shall assess a nonrefundable filing fee of one hundred twenty-five dollars ($125.00) three hundred dollars ($300.00) in addition to the Nationwide Mortgage Licensing System and Registry processing fee. A licensed mortgage broker or mortgage lender shall file with the Commissioner a notice on a form prescribed by the Commissioner that identifies the address of the principal office and each branch office and its designated branch manager. Payment of the license fee under subsection (a) of this section shall be deemed to cover the location license fee for the principal office of each mortgage lender, mortgage broker, or mortgage servicer without payment of an additional one hundred twenty-five dollars ($125.00) three hundred dollars ($300.00) under this subsection."
SECTION 5. G.S. 53-244.010(b) reads as rewritten:
(1) Licensed mortgage lenders, licensed mortgage brokers, and licensed mortgage servicers shall pay an annual renewal fee of six hundred twenty-five dollars ($625.00), licensed exclusive mortgage brokers shall pay an annual renewal fee of three hundred dollars ($300.00), and licensed mortgage lenders and mortgage brokers shall pay one hundred twenty-five dollars ($125.00) three hundred dollars ($300.00) for each licensed branch office.
(2) Licensed mortgage loan originators shall pay an annual renewal fee of sixty-seven dollars and fifty cents ($67.50). one hundred twenty-five dollars ($125.00)."
SECTION 6. G.S. 53-244.119 is amended by adding a new subsection to read:
"(e) The Commissioner may require a licensee to pay, through the National Mortgage Licensing System, a reasonable administrative processing fee, not to exceed seventy-five dollars ($75.00), for each of the following licensing status changes:
SECTION 7. G.S. 24-1.1E(a)(5) reads as rewritten:
1. All items paid by a borrower at or before closing and that are required to be disclosed under sections 226.4(a) and 226.4(b) of Title 12 of the Code of Federal Regulations, as amended from time to time, except interest or the time-price differential. However, the meaning of the term "points and fees" shall not include either (i) the portion of the up-front fees collected and paid to the Federal Housing Administration, the Veterans' Administration, or the U.S. Department of Agriculture to insure or guarantee a home loan that exceeds one and one-quarter percent (1.25%) of the total loan amount or (ii) the portion of any up-front private mortgage insurance premium, charge, or fee that exceeds one and one-quarter percent (1.25%) of the total loan amount, provided that the private mortgage insurance premium, charge or fee is required to be refundable on a prorated basis, the refund is automatically issued upon notification of the satisfaction of the underlying mortgage loan, and the borrower has the right to request or receive a prorated refund in accordance with state or federal law.
c. For open-end credit plans, the term includes those points and fees described in sub-subdivisions a.1. through a.3. of this subdivision, plus (i) the minimum additional fees the borrower would be required to pay to draw down an amount equal to the total loan amount, and (ii) the maximum prepayment fees and penalties which may be charged or collected under the terms of the loan documents."
SECTION 8. G.S. 24-1.1E(a)(6) reads as rewritten:
b. The total points and fees, as defined in G.S. 24-1.1E(a)(5), exceed five four percent (5%) (4%) of the total loan amount if the total loan amount is twenty thousand dollars ($20,000) or more, or (ii) the lesser of eight percent (8%) of the total loan amount or one thousand dollars ($1,000), if the total loan amount is less than twenty thousand dollars ($20,000); provided, the following discount points and prepayment fees and penalties shall be excluded from the calculation of the total points and fees payable by the borrower:
4. For an open-end credit plan, prepayment fees and penalties which may be charged or collected under the terms of the loan documents which do not exceed one percent (1%) of the amount prepaid, provided the loan documents do not permit the lender to charge or collect any prepayment fees or penalties more than (i) 30 months after the loan closing if the borrower has no right or option under the loan documents to repay all or any portion of the outstanding balance of the open-end credit plan at a fixed interest rate over a specified period of time or, (ii) if the borrower has a right or option
under the loan documents to repay all or any portion of the outstanding balance of the open-end credit plan at a fixed interest rate over a specified period of time, 30 months after the date the borrower voluntarily exercises that right or option; or
SECTION 9. Section 6 of S.L. 2008-226 reads as rewritten: