An Act To Preserve Home Ownership and Stabilize the Economy by Preventing Unnecessary Foreclosures
Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, the State's rate of mortgages in foreclosure is rising to unprecedented levels, both for prime and subprime mortgages; and
Whereas, foreclosures are expected to continue in the State because homeowners will not be able to afford payments due to rising adjustable mortgage payments, rising unemployment and job loss; and
Whereas, homeowners are expected to have continued problems selling their properties at the value of their mortgages due to falling housing prices; and
Whereas, foreclosures contribute to the decline in the State's housing market, loss of property values and loss of tax revenues; and
Whereas, the number of foreclosure actions in the courts is rapidly increasing and the current system for resolving foreclosure actions is creating a burden on the court system; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Sec. 1. 4 MRSA §18-B, sub-§12 is enacted to read:
Sec. 2. 9-A MRSA §9-404, as enacted by PL 1987, c. 396, §12, is amended to read:
§ 9-404. Stay, modification, revocation or relief from judgment
At any time after the entry of a judgment in favor of a creditor against a consumer in an action arising from a consumer credit transaction, the court, for cause and upon motion of a party or on its own motion, while such court retains jurisdiction, may modify, revoke or stay enforcement of the judgment by order upon just and equitable conditions and continue, modify or revoke the order as the interests of justice may require. This provision may not be limited by the timelines for seeking relief from judgment pursuant to the Maine Rules of Civil Procedure.
Sec. 3. 9-A MRSA §9-405, sub-§5, as enacted by PL 1987, c. 396, §12, is repealed.
Sec. 4. 9-A MRSA §9-408 is enacted to read:
§ 9-408. Violation of the Maine Unfair Trade Practices Act
Any violation of this article or any other provision of the Maine Consumer Credit Code constitutes a violation of the Maine Unfair Trade Practices Act.
Sec. 5. 14 MRSA §2401, sub-§3, as amended by PL 1993, c. 114, §2 and affected by §4, is further amended to read:
Unless a proposed judgment with the provisions required in this subsection is presented to the court at the time of the court's decision, the court shall name the party responsible for preparing a judgment with the required provisions. An attested copy of the judgment with the signed clerk's certification must be recorded in the registry of deeds for the county or counties where the subject property is located within one year of the entry of the final judgment unless otherwise ordered by the court. For the purposes of this section, a judgment is not final until all applicable appeal periods have expired and any appellate proceedings and subsequent actions on remand, if any, have been concluded. The court shall name the party responsible for recording the attested copy of the judgment and for paying the appropriate recording fees. The judgment has no effect as to any person not a party to the proceeding who has no actual knowledge of the judgment unless an attested copy of the judgment is recorded in accordance with this section. A register of deeds may not accept a judgment of foreclosure and sale for recording unless it is in compliance with the requirements of this section. Failure to comply with this section does not affect the validity of the underlying judgment.
Sec. 6. 14 MRSA §6001, sub-§2-A is enacted to read:
Sec. 7. 14 MRSA §6021, sub-§1, as enacted by PL 1977, c. 401, §4, is repealed and the following enacted in its place:
Sec. 8. 14 MRSA §6111, sub-§1, as amended by PL 1997, c. 579, §1, is further amended to read:
Sec. 9. 14 MRSA §6111, sub-§1-A is enacted to read:
Sec. 10. 14 MRSA §6111, sub-§3-A is enacted to read:
On a quarterly basis the Maine State Housing Authority shall transmit foreclosure data to the Department of Professional and Financial Regulation for the purposes of data collection and reporting to the Legislature pursuant to section 6113.
Sec. 11. 14 MRSA §6111, sub-§4-A is enacted to read:
Sec. 12. 14 MRSA §6111, sub-§5, as enacted by PL 1997, c. 579, §4, is amended to read:
Sec. 13. 14 MRSA §6112 is enacted to read:
§ 6112. Statewide hotline
The Maine State Housing Authority shall establish a statewide hotline to facilitate a mortgagor's communication with housing counselors certified by the United States Department of Housing and Urban Development for the purposes of discussing options to avoid foreclosure.
Sec. 14. 14 MRSA §6113 is enacted to read:
§ 6113. Report
The Department of Professional and Financial Regulation shall report quarterly to the joint standing committee of the Legislature having jurisdiction over insurance and financial services matters on the number of foreclosure notifications received pursuant to section 6111, subsection 3-A.
Sec. 15. 14 MRSA §6203-A, first ¶, as amended by PL 1995, c. 106, §1, is further amended to read:
Any holder of a mortgage on real estate that is granted by a corporation, partnership, including a limited partnership, limited liability company or trustee of a trust and that contains a power of sale, or a person authorized by the power of sale, or an attorney duly authorized by a writing under seal, or a person acting in the name of the holder of such mortgage or any such authorized person, may, upon breach of condition and without action, do all the acts authorized or required by the power; except that a sale under the power is not effectual to foreclose a mortgage unless, previous to the sale, notice has been published once in each of 3 successive weeks, the first publication to be not less than 21 days before the day of the sale in a newspaper of general circulation in the town where the land lies and which notice must prominently state the street address of the real estate encumbered by the mortgage deed and the book and page number of the mortgage. This provision is implied in every power of sale mortgage in which it is not expressly set forth. For mortgage deeds executed on or after October 1, 1993, the power of sale may be used only if the mortgage deed states that it is given primarily for a business, commercial or agricultural purpose. A copy of the notice must , at least 21 days before the date of the sale under the power in the mortgage, be recorded in each registry of deeds in which the mortgage deed is or by law ought to be recorded and must be served on the mortgagor or its representative in interest, or and must be served upon a tenant as a party in interest. The mortgagee shall provide such notice to a tenant if the mortgagee knows or should know by exercise of due diligence that the property is occupied as a rental unit. Notice may be sent by registered mail addressed to it the mortgagor or the mortgagor's representative at its the mortgagor's last known address, or to the person and to the address as may be agreed upon in the mortgage, at least 21 days before the date of the sale under the power in the mortgage. Notice may be served on a tenant by registered mail at the tenant's last known address only after the mortgagee has made 3 good faith efforts to serve the tenant in person. Any power of sale incorporated into a mortgage is not affected by the subsequent transfer of the mortgaged premises from the corporation, partnership, including a limited partnership, limited liability company or trustee of the trust to any other type of organization or to an individual or individuals. The power of sale may not be used to foreclose a mortgage deed granted by a trustee of a trust if at the time the mortgage deed is given the real estate is used exclusively for residential purposes, the real estate has 4 or fewer residential units and one of the units is the principal residence of the owner of at least 1/2 of the beneficial interest in the trust. If the mortgage deed contains a statement that at the time the mortgage deed is given the real estate encumbered by the mortgage deed is not used exclusively for residential purposes, that the real estate has more than 4 residential units or that none of the residential units is the principal residence of the owner of at least 1/2 of the beneficial interest in the trust, the statement conclusively establishes these facts and the mortgage deed may be foreclosed by the power of sale. The method of foreclosure of real estate mortgages provided by this section is specifically subject to the order of priorities set out in section 6205.
Sec. 16. 14 MRSA §6203-A, as amended by PL 1995, c. 106, §1, is further amended by adding after the first paragraph a new paragraph to read:
A party that acquires property pursuant to foreclosure of a mortgage, whether as a result of a judicial or nonjudicial process, may only terminate a tenancy with the mortgagor as set forth in the lease or rental agreement with the mortgagor or a tenancy at will as set forth in section 6002. Foreclosure does not terminate the tenancy agreement of a tenant with the mortgagor.
Sec. 17. 14 MRSA §6321, 2nd ¶, as amended by PL 2007, c. 391, §9, is further amended to read:
After breach of condition of any mortgage other than one of the first priority, the mortgagee or any person claiming under the mortgagee may proceed for the purpose of foreclosure by a civil action against all parties in interest, except for parties in interest having a superior priority to the foreclosing mortgagee, in either the Superior Court or the District Court in the division in which the mortgaged premises or any part of the mortgaged premises is located. In a foreclosure proceeding commenced by a mortgagee, whether by judicial or nonjudicial process, notice of process must be served upon a tenant as a party in interest. The tenant so named as a party in interest is not required to file any responsive pleadings and must receive notice of all subsequent proceedings including all matters through and including sale of the property. The mortgagee is obligated to provide notice to the tenant if it knows or should know by exercise of due diligence that the property is occupied as a rental unit. Parties in interest having a superior priority may not be joined nor will their interests be affected by the proceedings, but the resulting sale under section 6323 is of the defendant or mortgagor's equity of redemption only. The plaintiff shall notify the priority parties in interest of the action by sending a copy of the complaint to the parties in interest by certified mail.
Sec. 18. 14 MRSA §6321, 3rd ¶, as amended by PL 2007, c. 391, §9, is further amended to read:
The foreclosure must be commenced in accordance with the Maine Rules of Civil Procedure, and the mortgagee shall within 10 days of commencing the foreclosure also record a copy of the complaint or a clerk's certificate of the filing of the complaint in each registry of deeds in which the mortgage deed is or by law ought to be recorded and such a recording thereafter constitutes record notice of commencement of foreclosure. The mortgagee shall further certify and provide evidence that all steps mandated by law to provide notice to the mortgagor pursuant to section 6111 were strictly performed. The mortgagee shall certify proof of ownership of the mortgage note and produce evidence of the mortgage note, mortgage and all assignments and endorsements of the mortgage note and mortgage. The complaint must allege with specificity the plaintiff's claim by mortgage on such real estate, describe the mortgaged premises intelligibly, including the street address of the mortgaged premises, which must be prominently stated on the first page of the complaint, state the book and page number of the mortgage, state the existence of public utility easements, if any, that were recorded subsequent to the mortgage and prior to the commencement of the foreclosure proceeding and without mortgagee consent, state the amount due on the mortgage, state the condition broken and by reason of such breach demand a foreclosure and sale. A clerk’s certificate presented for recording pursuant to this section may not be accepted by the registry of deeds unless the certificate bears the title "Clerk’s Certificate of Foreclosure and Sale" and prominently states, immediately after the title, the street address of the mortgaged premises and the book and page number of the mortgage. Service of process on all parties in interest and all proceedings must be in accordance with the Maine Rules of Civil Procedure. "Parties in interest" includes mortgagors, holders of fee interest, mortgagees, tenants, lessees pursuant to recorded leases or memoranda thereof, lienors and attaching creditors all as reflected by the indices in the registry of deeds and the documents referred to therein affecting the mortgaged premises, through the time of the recording of the complaint or the clerk's certificate. Failure to join any party in interest does not invalidate the action nor any subsequent proceedings as to those joined. Failure of the mortgagee to join, as a party in interest, the holder of any public utility easement recorded subsequent to the mortgage and prior to commencement of foreclosure proceedings is deemed consent by the mortgagee to that easement. Any other party having a claim to the real estate whose claim is not recorded in the registry of deeds as of the time of recording of the copy of the complaint or the clerk's certificate need not be joined in the foreclosure action, and any such party has no claim against the real estate after completion of the foreclosure sale, except that any such party may move to intervene in the action for the purpose of being added as a party in interest at any time prior to the entry of judgment.
Sec. 19. 14 MRSA §6321, as amended by PL 2007, c. 391, §9, is further amended by adding at the end a new paragraph to read:
Upon commencement of a foreclosure proceeding, by either judicial or nonjudicial process, the mortgagor and mortgagee are jointly liable for maintenance and repair of the premises pursuant to section 6021. If the mortgagor fails to maintain the premises as required by the implied warranty of fitness for human habitation as established in section 6021 then the mortgagee shall ensure that the property remains in compliance. If either the mortgagor or mortgagee fails to maintain the premises as required by the implied warranty of fitness for human habitation then the tenant may petition the court with jurisdiction over the foreclosure proceedings to enforce the tenant's rights pursuant to section 6021. In the case of a nonjudicial foreclosure process the tenant may petition any court of competent jurisdiction for said relief. In any such action brought by the tenant, the court in its discretion may establish an escrow account into which the tenant may make escrow payments and the court may distribute the funds as necessary to maintain the property pursuant to section 6021. The court may also direct that payment be made to the mortgagee and direct the mortgagee to expend such funds as are necessary to maintain the premises as required by section 6021.
Sec. 20. 14 MRSA §6321-A is enacted to read:
§ 6321-A. Mandatory foreclosure mediation program
Communications during mediation are confidential and may not be used in subsequent legal proceedings.
The plaintiff’s or defendant’s rights in the foreclosure action are not waived by participating in the program.
(1) Are trained in mediation and all relevant aspects of the law;
(2) Have knowledge of community-based resources that are available in the judicial districts in which they serve;
(3) Have knowledge of mortgage assistance programs; and
(4) Are trained in using the relevant Federal Deposit Insurance Corporation forms and worksheets.
The court may establish a training program for mediators and require that mediators receive such training prior to being appointed;
(1) The performance of the program, including numbers of homeowners who are notified of mediation, who attend mediation and who receive legal counseling or legal assistance; and
(2) The outcome of the mediation process, including the number of loans restructured, number of principal write-downs, interest rate reductions and number of homeowners who default on mortgages within a year after restructuring; and
Any waiver of mediation agreed to by the defendant must include an agreement by the plaintiff to waive any deficiency that may result upon sale of the property.
Sec. 21. 36 MRSA §4641-C, sub-§2, as repealed and replaced by PL 1993, c. 680, Pt. A, §31, is amended to read:
Sec. 22. 36 MRSA §4641-C, sub-§13, as enacted by PL 1993, c. 398, §4, is repealed.
Sec. 23. Rules. The Supreme Judicial Court shall adopt rules pursuant to the Maine Revised Statutes, Title 14, section 6321-A, subsection 3 no later than 60 days after the effective date of this Act.
The court shall also amend its existing rules to remove Rule 16B(b)(7), which exempts actions for nonpayment in mortgage foreclosures from the court's requirements for alternative dispute resolution.
Sec. 24. Outreach program. The Maine State Housing Authority shall conduct a pilot project regarding the coordination of an outreach program to help families with their housing needs through the NeighborWorks Program with the intent of expanding the outreach program statewide.
Sec. 25. Collaboration with community organizations. The Maine Supreme Court and the Maine State Housing Authority shall facilitate outreach with community organizations to help increase mortgagors' awareness of options other than foreclosure.
Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved.
This bill amends the laws pertaining to foreclosures.
1. It establishes the mandatory foreclosure mediation program within the Court Alternative Dispute Resolution Service.
2. It makes violation of provisions of the Maine Consumer Credit Code a violation of the Maine Unfair Trade Practices Act.
3. It requires that the words "judgment of foreclosure and sale," the street address of the real estate involved and the book and page number of the mortgage be on a foreclosure judgment when filed in the registry of deeds.
4. It clarifies that a foreclosure on a rental property does not terminate a tenancy.
5. It describes what a mortgagee must include in a notice of foreclosure to a mortgagor.
6. It requires a mortgagee to provide certain information to the Maine State Housing Authority about foreclosure, which the Maine State Housing Authority shall transmit to the Department of Professional and Financial Regulation.
7. It requires the Maine State Housing Authority to notify a mortgagor who is a party to a foreclosure about the mortgagor's rights and available resources as they relate to the foreclosure as well as the mandatory foreclosure mediation program. It also requires the Maine State Housing Authority to establish a statewide hotline to help mortgagors communicate with housing counselors certified by the United States Department of Housing and Urban Development.
8. It requires the Department of Professional and Financial Regulation to report quarterly on the number of foreclosure notifications received to the joint standing committee of the Legislature having jurisdiction over insurance and financial services matters.
9. It amends the procedure and notice for foreclosures.
10. It amends the procedure for commencement of foreclosure by civil action.