New Mexico Administrative Code › Title 12 - TRADE, COMMERCE AND BANKING › Chapter 15 - FINANCIAL INSTITUTIONS - GENERAL › Part 7 - HOME LOAN PROTECTION ACT - LIABILITY EXPOSURE OF CREDITORS AND ASSIGNEES › Section 12.15.7.8 - LEGAL LIABILITY EXPOSURE OF CREDITORS AND ASSIGNEES

Current through Register Vol. 35, No. 13, July 16, 2024
A. The purpose of this rule is to clarify the
				inter-relationship of Sections
				58-21A-9,
				58-21A-11
				and
				58-21A-12
				of the act and the various levels of exposure to legal liability and damages
				that may apply for violations of the act.
B. The legal liability of creditors, and
				assignees is set forth, variously, in Sections
				58-21A-9,
				58-21A-11
				and
				58-21A-12
				of the act.
C. Subject to certain
				provisions regarding timely restitution and adjustments by a creditor, Section
				58-21A-9
				NMSA 1978 generally authorizes a borrower to bring a civil action for
				violations of the act. This section authorizes actual damages, specified
				statutory damages, punitive damages, costs and reasonable attorney fees, as
				well as injunctive, declaratory and other relief. The civil action authorized
				in Section
				58-21A-9
				NMSA 1978 is non-exclusive; it will lie in addition to any other action or
				remedy available to a borrower under applicable law. Punitive damages are
				recoverable under Section
				58-21A-9
				NMSA 1978 only if it is proven that the violation in question was malicious or
				reckless. In the sense that malicious and reckless, interpreted broadly,
				suggest the absence of either a good faith reason or of an innocent mistake, it
				follows that any person who, in good faith, exercises reasonable due diligence
				when seeking to comply with the act will not be liable for punitive damages
				under Section
				58-21A-9
				NMSA 1978.
D. Section
				58-21A-11
				NMSA 1978 limits the liability of a purchaser or assignee of a high-cost home
				loan where the purchaser or assignee demonstrates by a preponderance of the
				evidence that a reasonable person exercising reasonable due diligence could not
				determine that the mortgage was a high-cost home loan. Section
				58-21A-11
				NMSA 1978 also specifies circumstances under which a purchaser or assignee
				shall be deemed to have exercised due diligence. The circumstances listed in
				Section
				58-21A-11
				NMSA 1978 are not intended as exclusive proof of due diligence.
E. Section
				58-21A-11
				NMSA 1978 also provides the limiting time periods during which there may be
				individual actions brought against a creditor or any subsequent holder or
				assignee for certain violations of the act. Section
				58-21A-11
				NMSA 1978 further specifies that in an individual action that is authorized
				under this section the borrower may recover only the amounts necessary to
				reduce or extinguish the borrower's liability under the loan plus costs and
				reasonable attorney fees. An action, claim or counterclaim under Subsection B
				of Section
				58-21A-11
				NMSA 1978 may be brought only in the borrower's individual capacity and not as
				a class action lawsuit. Subsection C of Section
				58-21A-11
				NMSA 1978 precludes a borrower from recovering punitive damages in an action
				brought under Subsection B of this section.
F. Section
				58-21A-12
				NMSA 1978 specifies that a violation of this act also constitutes an unfair or
				deceptive trade practice under the Unfair Practices Act (Sections
				57-12-1 et
				seq. NMSA 1978) The maximum exposure for damages under the Unfair Practices Act
				is:
(1) actual damages or the sum of $100,
				whichever is greater; and
(2) where
				the practice was willfully engaged in, the court may award up to three times
				actual damages or $300, whichever is greater; plus
(3) reasonable attorneys' fees and costs. See
				Section
				57-12-10 NMSA
				1978.