An Act To Require Mortgage Servicers To Act in Good Faith in Dealings with Homeowners
Maine Legislature, Session 128, LD 0731
Committee: Judiciary
Sponsors: CARPENTER, TUCKER
Amends: 14 MRSA §6113, 14 MRSA §6321-A

Legislative Document
No. 731
S.P. 243
In Senate, February 28, 2017
An Act To Require Mortgage Servicers To Act in Good Faith in 
Dealings with Homeowners
Reference to the Committee on Judiciary suggested and ordered printed.
HEATHER J.R. PRIEST
Secretary of the Senate
Presented by Senator CARPENTER of Aroostook.
Cosponsored by Representative TUCKER of Brunswick.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  14 MRSA §6113 is enacted to read: 
§6113.  Mortgage servicer duty of good faith 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Good faith" means honesty in fact and the observance of reasonable commercial 
standards of fair dealing. 
B.  "Mortgage servicer" means a servicer who is responsible for: 
(1)  Receiving any scheduled periodic payments from a borrower pursuant to the 
terms of any mortgage described in section 6111, subsection 1, including 
amounts for escrow accounts; 
(2)  Making or advancing payments to the owner of a mortgage loan or other 3rd 
parties with respect to the amounts received from the borrower pursuant to a loan 
servicing contract; and 
(3)  Evaluating borrowers for loss mitigation or loan modification options. 
C.  "Obligation" means a debt or other duty or liability of an obligor secured by a 
mortgage of the type described in section 6111, subsection 1. 
D.  "Obligor" means a person that: 
(1)  Owes payment or performance of an obligation; 
(2)  Has provided property other than the mortgaged property to secure payment 
of an obligation; 
(3)  Has granted a mortgage interest with respect to the mortgaged property; or 
(4)  Is otherwise accountable in whole or in part for payment of an obligation. 
E.  "Servicer" means a person responsible for servicing an obligation, including a 
person that holds or owns an obligation or originates a mortgage loan if the person 
also services the obligation. 
F.  "Servicing" means any combination of the following: 
(1)  Receiving a scheduled periodic payment from an obligor under the terms of 
an obligation, including an amount received for an escrow account; 
(2)  Making or advancing a payment to the owner of an obligation on account of 
an amount due from the obligor under a mortgage servicing loan document or a 
servicing contract; 
(3)  Making a payment to an obligor under a home equity conversion mortgage or 
reverse mortgage; 
(4)  Evaluating an obligor for loss mitigation options or communicating with an 
obligor with respect to loss mitigation options; 
(5)  Collecting funds from a homeowner for deposit into an escrow account and 
making payments out of an escrow account; and 
(6)  Taking any other action with respect to an obligation that affects the obligor's 
payment or performance of the obligation or that relates to enforcement of the 
obligation. 
2.  Duty of good faith.  A mortgage servicer shall act in good faith toward a 
borrower in the servicing of an obligation secured by a mortgage and in any foreclosure 
action relating to that obligation. 
3.  Effect of violation during foreclosure.  If, during a foreclosure action, a 
mortgage servicer controlling or managing the action on its own behalf or on behalf of 
the owner of the obligation subject to foreclosure is shown to have committed a material 
violation of its duty of good faith under this section, the court may dismiss the foreclosure 
action, stay the action on appropriate terms and conditions or impose other appropriate 
sanctions until the violation is cured. 
4.  Remedies for violation.  The following remedies may apply to a violation of this 
section. 
A.  A homeowner or obligor injured by a violation of this section may bring an action 
against the mortgage servicer for actual damages sustained by the homeowner or 
obligor. 
B.  In addition to actual damages, the court may award a homeowner or obligor 
statutory damages not to exceed $15,000 for a pattern or practice of violating the duty 
of good faith. In determining whether to award statutory damages and the amount of 
those damages, the court shall consider all relevant factors, including: 
(1)  The frequency and persistence of violations by the mortgage servicer; 
(2)  The nature of the violations; 
(3)  The extent to which the violations were intentional; 
(4)  The extent to which the actions that constitute violations are prohibited by 
federal regulations or state rules; and 
(5)  The extent to which such actions constitute violations by the mortgage 
servicer of any consent judgments to which it is a party. 
C.  If a court determines during a foreclosure or an attendant action for damages that 
there has been a material violation of the duty of good faith, the mortgage servicer 
may not charge the owner of the mortgage loan for or add to the amount of the 
obligation any attorney's fees or costs incurred as a result of the violation or any 
attorney's fees or costs incurred before the owner of the mortgage loan cures the 
violation. 
Sec. 2.  14 MRSA §6321-A, sub-§11, as amended by PL 2009, c. 476, Pt. B, §6 
and affected by §9, is further amended to read: 
11.  Parties to mediation.  A mediator shall include in the mediation process under 
this section any person the mediator determines is necessary for effective mediation. 
Mediation and appearance in person is mandatory for: 
A.  The mortgagee, who has the authority to agree to a proposed settlement, loan 
modification or dismissal of the action, except that the mortgagee may participate by 
telephone or electronic means as long as that mortgagee is represented with authority 
to agree to a proposed settlement; 
B.  The defendant; 
C.  Counsel for the plaintiff; and 
D.  Counsel for the defendant, if represented. 
A mortgage servicer as defined in section 6113, subsection 1, paragraph B participating 
in the mediation process submits to the jurisdiction of the court with respect to the power 
of the court to sanction parties who fail to participate in the mediation process in good 
faith as required by section 6113, subsection 2. 
Sec. 3.  14 MRSA §6321-A, sub-§12, as enacted by PL 2009, c. 402, §18, is 
amended to read: 
12.  Good faith effort.  Each party and each party's attorney, if any, must be present 
at mediation as required by this section and shall make a good faith effort to mediate all 
issues.  If any party or attorney fails to attend or to make a good faith effort to mediate, 
the court may impose appropriate sanctions.  A mortgage servicer as defined in section 
6113, subsection 1, paragraph B participating in the mediation process is obligated to 
participate in good faith as required by section 6113, subsection 2. In determining the 
nature and extent of appropriate sanctions, the court shall consider the need for deterrence 
of similar future conduct by the party being sanctioned and by others and is permitted to 
take into account prior orders imposing sanctions upon the sanctioned party, whether in 
the same case or in other previous cases. The imposition of any sanction does not bar any 
independent action by a defendant to seek recovery with respect to the actions giving rise 
to the order of sanctions. 
Sec. 4.  14 MRSA §6321-A, sub-§13, as amended by PL 2013, c. 521, Pt. F, §2, 
is further amended to read: 
13.  Report.  A mediator must complete a report for each mediation conducted under 
this section.  The mediator's report must indicate in a manner as determined by the court 
that the parties completed in full the Net Present Value Worksheet in the Federal Deposit 
Insurance Corporation Loan Modification Program Guide or other reasonable 
determination of net present value.  If the mediation did not result in the settlement or 
dismissal of the action, the report must include the outcomes of the Net Present Value 
Worksheet or other determination of net present value.  As part of the report, the mediator 
may notify the court if, in the mediator's opinion, either party failed to negotiate in good 
faith.  The mediator's report must also include a statement of all agreements reached at 
mediation, with sufficient specificity to put all parties on notice of their obligations under 
agreements reached at mediation, including but not limited to a description of all 
documents that must be completed and provided pursuant to the agreements reached at 
mediation and the time frame during which all actions are required to be taken by the 
parties, including decisions and determinations of eligibility for all loss mitigation 
options.  The mediator's report must state the identity of any mortgage servicer as defined 
in section 6113, subsection 1, paragraph B who participates in the mediation process, and 
any order of sanctions made by the court must also state the identity of the mortgage 
servicer. 
Sec. 5.  14 MRSA §6321-A, sub-§14, as enacted by PL 2009, c. 402, §18, is 
amended to read: 
14.  Records.  The court shall maintain records or other information relating to the 
program as necessary to meet the reporting requirements in subsection 7, paragraph B.  
The court shall collect and maintain a record of all sanction orders imposed on all 
mortgage servicers as defined in section 6113, subsection 1, paragraph B as a result of a 
failure to comply with the requirements for mediation or as a result of the filings of 
motions for sanctions. The record must include summaries of the nature of the acts 
resulting in the imposition of sanctions, the nature of the sanctions imposed and the 
identity of the mortgage servicers whose conduct resulted in sanctions. The record of 
sanction orders must be appropriately published so that the record is available to judges 
and parties in the mediation process.  
SUMMARY 
This bill requires servicers of residential mortgage loans to act in good faith when 
dealing with homeowners who are borrowers under those loans. The bill also makes 
changes in the foreclosure mediation process providing that, if courts have previously 
sanctioned the conduct of a mortgage servicer in a foreclosure process, the courts are 
authorized to directly sanction the mortgage servicer if the mortgage servicer's conduct 
evidences a failure to mediate in good faith. The bill requires the collection of data on 
sanctions imposed to provide that, when a mortgage servicer is found to have failed to act 
in good faith, the court may take into account previous conduct in determining a sanction 
sufficient to deter such conduct in the same case or future cases.