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S1392.......................................by COMMERCE AND HUMAN RESOURCES FORECLOSURES - Adds to and amends existing law relating to foreclosures; to provide legislative findings; to provide for certain contracts in writing; to provide for notice relating to mortgage foreclosure; to provide for right of contract rescission; and to provide penalties. 02/08 Senate intro - 1st rdg - to printing 02/11 Rpt prt - to Com/HuRes
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE SENATE SENATE BILL NO. 1392 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO LIENS AND FORECLOSURES; AMENDING TITLE 45, IDAHO CODE, BY THE 3 ADDITION OF A NEW CHAPTER 16, TITLE 45, IDAHO CODE, TO PROVIDE LEGISLATIVE 4 FINDINGS, TO PROVIDE FOR CERTAIN CONTRACTS IN WRITING, TO PROVIDE FOR 5 NOTICE RELATING TO MORTGAGE FORECLOSURE, TO PROVIDE FOR RIGHT OF CONTRACT 6 RESCISSION AND TO PROVIDE PENALTIES; AND AMENDING SECTION 45-1505, IDAHO 7 CODE, TO PROVIDE FOR NOTICE RELATING TO MORTGAGE FORECLOSURE. 8 Be It Enacted by the Legislature of the State of Idaho: 9 SECTION 1. That Title 45, Idaho Code, be, and the same is hereby amended 10 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 11 ter 16, Title 45, Idaho Code, and to read as follows: 12 CHAPTER 16 13 CONSUMER FORECLOSURE PROTECTION ACT 14 45-1601. LEGISLATIVE FINDINGS. The legislature finds that some persons 15 and businesses are engaging in patterns of conduct that defraud innocent 16 homeowners of their title, equity interest, or other value in residential 17 dwellings under the guise of stopping or postponing a foreclosure sale. The 18 legislature also finds this activity to be contrary to the public policy of 19 this state and therefore establishes notice requirements governing contracts 20 or agreements entered into during the foreclosure period. The legislature fur- 21 ther finds that the provisions of this chapter shall be construed in such a 22 manner that it does not inhibit transactions with legitimate lenders and 23 investors. 24 45-1602. CONTRACT NOTICE. (1) During the foreclosure period described in 25 section 45-1505, Idaho Code, any contract or agreement that involves the 26 transfer of any interest in property subject to foreclosure or the transfer of 27 money in regard to property subject to foreclosure, must be in writing and 28 must be accompanied by and affixed to the following notice in twelve (12) 29 point boldface type and on a separate sheet of canary yellow or some similarly 30 colored yellow paper no smaller than eight and one-half (8 1/2) inches by 31 eleven (11) inches: 32 "(Side one of two) 33 NOTICE REQUIRED BY IDAHO LAW 34 Mortgage foreclosure is a complex process. Some people or businesses 35 may approach you about "saving" your home from foreclosure. You 36 should be careful about any such claims. For further information, 37 please contact the Consumer Protection Unit of the Idaho Attorney 38 General's Office, toll free at 1-800-432-3545. Do not delay asking 39 for help because your options may become more limited as time passes. 40 (Side two of two) 41 Illegitimate foreclosure businesses operate by falsely promising to 2 1 save a consumer's home from foreclosure, either for a fee or by 2 securing the property's title to the rescue company. Many illegiti- 3 mate offers contain one (1) or more of the following: 4 (1) You are asked to sign a contract agreeing to turn over your 5 home to the person or business. 6 (2) The contract states that you may lease your home for a spe- 7 cific amount of time, with the option to buy back your home. 8 (3) The person or business requires you to pay a fee for assis- 9 tance in "rescuing" you from foreclosure. The fee may be sub- 10 stantial, and may even equal all of the equity in your home. 11 (4) At the end of the contract date, the person or business 12 promises to return home ownership back to you. 13 Consumer problems associated with illegitimate business practices 14 include: 15 (1) It may cost more money to rent your former property from 16 the person or business than you can afford. 17 (2) If you default or cannot make a full payment, you are 18 evicted from your home. 19 (3) If you try to refinance the home to get out from under the 20 contract, you may not qualify for the payoff amount required 21 under the terms of the contract or agreement. 22 (4) Once you fulfill the terms of the contract, you find the 23 person or business refuses to return your home.". 24 (2) If during the foreclosure period described in section 45-1505, Idaho 25 Code, any contract or agreement that involves the transfer of any interest in 26 property subject to foreclosure or the transfer of money in regard to property 27 subject to foreclosure, was solicited, negotiated, or represented to the con- 28 sumer in the Spanish language, the written notice to be provided to the con- 29 sumer and set forth in this section shall be in the Spanish language on a form 30 to be prepared and made available by the office of the attorney general. 31 45-1603. RIGHT OF RESCISSION OF CONTRACT. (1) In addition to any other 32 legal right to cancel or rescind a contract, any person whose property is in 33 foreclosure as described in section 45-1505, Idaho Code, has the right to can- 34 cel or rescind any and all contracts or agreements relating to such property, 35 entered into during the foreclosure period, within five (5) business days of 36 entering into such contract or agreement. 37 (2) Cancellation occurs when such person gives written notice of cancel- 38 lation to all other parties to the contract. Notice of cancellation need not 39 take any particular form and, however expressed, is effective if it indicates 40 the intention not to be bound by the contract. 41 (3) Notice of cancellation, if given by mail, is effective when deposited 42 in the mail properly addressed with postage prepaid. Notice by certified mail, 43 return receipt requested, addressed to the address specified in the contract 44 or agreement, shall be conclusive proof of notice of service. 45 45-1604. PENALTIES. In addition to any other penalty provided by law, any 46 person who violates the provisions of this chapter shall be liable for penal- 47 ties and damages in accordance with chapter 6, title 48, Idaho Code. 48 SECTION 2. That Section 45-1505, Idaho Code, be, and the same is hereby 49 amended to read as follows: 3 1 45-1505. FORECLOSURE OF TRUST DEED, WHEN. The trustee may foreclose a 2 trust deed by advertisement and sale under this act if: 3 (1) The trust deed, any assignments of the trust deed by the trustee or 4 the beneficiary and any appointment of a successor trustee are recorded in 5 mortgage records in the counties in which the property described in the deed 6 is situated; and 7 (2) There is a default by the grantor or other person owing an obligation 8 the performance of which is secured by the trust deed or by their successors 9 in interest with respect to any provision in the deed which authorizes sale in 10 the event of default of such provision; and 11 (3) The trustee or beneficiary shall have (a) filed for record in the 12 office of the recorder in each county wherein the trust property, or some part 13 or parcel, is situated, a notice of default identifying the deed of trust by 14 stating the name or names of the trustor or trustors and giving the book and 15 page where the same is recorded, or a description of the trust property, and 16 containing a statement that a breach of the obligation for which the transfer 17 in trust is security has occurred, and setting forth the nature of such breach 18 and his election to sell or cause to be sold such property to satisfy such 19 obligation; and (b) mailed a copy of such notice by registered or certified 20 mail, return receipt requested, to any person requesting such notice of record 21 as provided in section 45-1511, Idaho Code. Service by mail in accordance with 22 this subsection (3) shall be deemed effective at the time of mailing. In 23 addition, the trustee shall mail the notice required in this section to any 24 individual who owns an interest in property which is the subject of this sec- 25 tion. Such notice shall be accompanied by and affixed to the following notice, 26 which shall be in English and Spanish language translations, in twelve (12) 27 point boldface type, on a separate sheet of canary yellow or some similarly 28 colored yellow paper, no smaller than eight and one-half (8 1/2) inches by 29 eleven (11) inches: 30 "NOTICE REQUIRED BY IDAHO LAW: 31 Mortgage foreclosure is a complex process. Some people or businesses 32 may approach you about "saving" your home from foreclosure. You 33 should be careful about any such claims. There are government agen- 34 cies and nonprofit organizations that you may contact to help explain 35 the process to you and to explain to you your rights. For further 36 information, please contact the Consumer Protection Unit of the Idaho 37 Attorney General's Office, toll free at 1-800-432-3545. Do not delay 38 asking for help because your options may become more limited as time 39 passes.". 40 The Spanish language version of the notice set forth in this subsection 41 shall be on a form to be prepared and made available by the office of the 42 attorney general. 43 (4) No action, suit or proceeding has been instituted to recover the debt 44 then remaining secured by the trust deed, or any part thereof, or if such 45 action or proceeding has been instituted, the action or proceeding has been 46 dismissed.
STATEMENT OF PURPOSE
RS 17713
This legislation provides that all contracts entered into while a
residential home is in the foreclosure process must be in writing
and that consumers have a five day right of rescission. In
addition, a warning for consumers about foreclosure rescue scams
is included in foreclosure notification papers and in any written
contract.
FISCAL NOTE
None
Contact
Name: Senator Elliot Werk
Representative Bill Killen
Representative Phylis King
Phone: 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE S 1392