Bill Text: GA SB123 | 2011-2012 | Regular Session | Introduced

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Bill Title: Property; security deeds; foreclosures; transfer; Georgia Residential Mortgage Fraud and Foreclosure Fraud Act; provisions

Sponsorship: Partisan Bill (Democrat 2)

Status: (Introduced - Dead) 2011-02-22 - Senate Read and Referred [SB123 Detail]

Download: Georgia-2011-SB123-Introduced.html

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11 LC 14 0441

Senate Bill 123

By: Senators Jackson of the 2nd and James of the 35th

A BILL TO BE ENTITLED
AN ACT

To amend Title 44 of the Official Code of Georgia Annotated, relating to property, so as to revise provisions relating to foreclosure of security deeds; to change provisions relating to the transfer of security deeds; to require recording prior to foreclosure; to provide for owners' rights to obtain payoff balances from creditors; to change provisions relating to the timing, contents, and manner of delivery of foreclosure notices; to amend Title 16 of the Official Code of Georgia Annotated, relating to crimes, so as to change provisions relating to the crime of residential mortgage fraud; to provide for the crime of residential foreclosure fraud and prescribe elements of the crime and penalties; to provide for other matters related to the foregoing; to provide for an effective date and applicability; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 44 of the Official Code of Georgia Annotated, relating to property, is amended by revising Code Section 44-14-64, relating to transfers of deeds to secure debt, as follows:

"44-14-64.

(a) All transfers of deeds to secure debt shall be in writing; shall be signed by the grantee or, if the deed has been previously transferred, by the last transferee; and shall be witnessed as required for deeds.

(b) Transfers of deeds to secure debt may be endorsed upon the original deed or by a separate instrument identifying the transfer and shall be sufficient to transfer the property therein described and the indebtedness therein secured, whether the indebtedness is evidenced by a note or other instrument or is an indebtedness which arises out of the terms or operation of the deed, together with the powers granted without specific mention thereof.

(c) Transfer of a deed to secure debt and the indebtedness therein secured may be made in whole or in part; provided, however, that, where the transfer is made in part, that portion of the deed and the indebtedness therein secured to be transferred shall be stated upon a separate instrument and not upon the original deed.

(d) A transfer of a deed to secure debt and the indebtedness therein secured in whole or in part in accordance with subsections (a) through (c) of this Code section by a financial institution having deposits insured by an agency of the federal government or a transfer by a lender who regularly purchases or services residential real estate loans aggregating a minimum of $1 million secured by a first deed to secure debt encumbering real estate improved or to be improved by the construction thereon of one to four family dwelling units, where the transferor retains the right to service or supervise the servicing of the deed or interest therein, need not be recorded if:

(1) The original deed to secure debt has been recorded;

(2) An agreement in writing exists on or before the date of the transfer between the transferor and the transferee and sets forth the terms of the transfer and the interests of the parties thereto; and

(3) Possession of the deed, the instrument of indebtedness, and the instrument of transfer is taken by such new transferee for himself or in his representative capacity or by a representative of such transferee which may include the transferor or any other transferee, provided that the agreement in paragraph (2) of this subsection provides for such party to take possession.

(d) No later than 30 days after the date on which a deed to secure debt is transferred, the transferee shall notify the property owner in writing by certified mail, statutory overnight delivery, or personal service of such transfer, the identity, address, telephone number of the new creditor, the date of transfer, and the name of an agent or representative authorized to act on behalf of the new creditor.

(e) As described in subsection (d) of this Code section, the transfer by a financial institution or lender of a deed to secure debt and the indebtedness therein secured in whole or in part without recording in accordance with this Code section shall be effective to provide the new transferee with priority over all subsequent claims against the deed and the indebtedness therein secured to the extent of the interest so transferred, and the priority shall not be lessened by the fact that the transfer is not recorded; provided, however, that a transfer, satisfaction, cancellation, release, quitclaim deed, or modification executed and recorded by the holder of record of the deed to secure debt shall be effective to transfer, satisfy, cancel, release, quitclaim, or modify, as the case may be, all interest of the holder of record of the deed to secure debt and all interest of all transferees claiming by, through, or under the holder of record of the deed to secure debt.

(e) The owner of property subject to a security deed shall be entitled to receive without charge a payoff balance from the holder of the deed to secure debt by making a written request for such payoff balance. The grantor's request shall include the date or dates for which the payoff balance is requested and shall be sent to the holder of the deed to secure debt by certified mail or statutory overnight delivery. The holder of the deed to secure debt shall provide the payoff balance in writing within 30 days after receiving a written request. The payoff balance shall be delivered to the requesting owner by certified mail or statutory overnight delivery. If the request contains information insufficient to allow compliance, the holder of the deed to secure debt shall in the same manner provide the requesting owner with a written statement stating specifically what additional information is needed.

(f) Reserved. Where the holder of the right to service or supervise the servicing of the transferred deed to secure debt and the indebtedness therein secured is a financial institution or lender as described in subsection (d) of this Code section, it shall have the same rights, responsibilities, and obligations to act in all matters concerning the servicing, administration, and cancellation of the deed and indebtedness as to third parties as if no such transfer had taken place.

(g) A transfer of a deed to secure debt shall not be recorded unless it includes the mailing address of the last transferee thereof. Failure to comply with this provision shall not be a defense to any foreclosure or grounds to set aside any foreclosure of any deed to secure debt.

(h) A grantor or his transferee shall be entitled to receive without charge a payoff balance from the holder of a deed to secure debt on real property by requesting in writing said balance and providing a self-addressed stamped envelope.

If all assignments of the security deed or mortgage have not been duly recorded with the land records in the Superior Court of the county in which the property is located, the trustee, or any substitute trustee, may not proceed with the sale of the property conveyed to him by the security deed or mortgage until: (1) the recordation of any assignments necessary to trace the interest of the person who asserts that he is the holder of the obligation secured by the security deed or mortgage to the original grantee or mortgagee or, if an intervening assignment cannot be recorded because the assignee no longer exists, the provision of an affidavit by the party secured to the trustee, or any substitute trustee, attesting under penalty of perjury that the person is the party secured under the deed of trust, and (2) the payment of all fees, taxes, and other costs applicable to the recording of the assignments. The person who asserts that he is the holder of the obligation secured by the security deed or mortgage is solely responsible for paying all such fees, taxes, and other costs.

(i) Any creditor who fails to comply with any requirement imposed under this Code section with respect to any person is liable to such person in an amount equal to the sum of:

(1) Any actual damage sustained by such person as a result of the failure; or

(2) Exemplary damages in the amount of $1,000.00 together with a reasonable attorney's fee as determined by the court."

SECTION 2.

Said title is further amended by revising Code Section 44-14-162.2 relating to notice of foreclosure, as follows:

"44-14-162.2.

(a) Notice of the initiation of proceedings to exercise a power of sale in a mortgage, security deed, or other lien contract shall be given to the debtor by the secured creditor no later than 30 60 days before the date of the proposed foreclosure. Such notice shall be in writing, shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor, and shall be sent by registered or certified mail or statutory overnight delivery, return receipt requested, to the property address or to such other address as the debtor may designate by written notice to the secured creditor. The notice required by this Code section shall be deemed given on the official postmark day or day on which it is received for delivery by a commercial delivery firm. Nothing in this subsection shall be construed to require a secured creditor to negotiate, amend, or modify the terms of a mortgage instrument.

(b) The notice required by subsection (a) of this Code section shall be given by mailing or delivering to the debtor by certified mail, statutory overnight delivery, or personal service a copy of the notice of sale to be submitted to the publisher. A copy of the notice shall also be tacked to the property to be sold.

(c) In the case of residential real property, the notice of sale shall include:

(1) The name, address, and telephone number of the party secured and any agent of the party secured that can be contacted for inquiries concerning the notice, including inquiries regarding alternatives to foreclosure;

(2) The amount, if any, which the creditor will accept to cure the default and reinstate the loan, including all past due payments, penalties, and fees;

(3) An explanation of the Georgia foreclosure process and time line, as prescribed by Georgia Department of Banking and Finance;

(4) The date on which the default occurred and the nature of the default; and

(5) An abstract of the chain of title under which the foreclosing party holds the security deed, including deed book and page numbers for all recorded transfers and a copy of any unrecorded transfers.

(d) Any failure to comply with this Code section shall be grounds to set aside the foreclosure."

SECTION 3.

Title 16 of the Official Code of Georgia Annotated, the "Criminal Code of Georgia," is amended by revising Article 5 of Chapter 8 as follows:

"Article 5

16-8-100.

This article shall be known and may be cited as the 'Georgia Residential Mortgage Fraud and Foreclosure Fraud Act.'

16-8-101.

As used in this article, the term:

(1) Foreclosure means any process of judicial foreclosure of a residential mortgage loan or the exercise of a power of sale under a residential mortgage loan consisting of a security deed or similar document containing a power of sale.

(1)(2) 'Mortgage lending process' means the process through which a person seeks or obtains a residential mortgage loan including, but not limited to, solicitation, application, or origination, negotiation of terms, third-party provider services, underwriting, signing and closing, and funding of the loan. Documents involved in the mortgage lending process include, but are not limited to, uniform residential loan applications or other loan applications; appraisal reports; HUD-1 settlement statements; supporting personal documentation for loan applications such as W-2 forms, verifications of income and employment, bank statements, tax returns, and payroll stubs; and any required disclosures.

(2)(3) 'Pattern of residential mortgage fraud' means one or more misstatements, misrepresentations, or omissions made during the mortgage lending process that involve two or more residential properties, which have the same or similar intents, results, accomplices, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics.

(3)(4) 'Person' means a natural person, corporation, company, limited liability company, partnership, trustee, association, or any other entity.

(4)(5) 'Residential mortgage loan' means a loan or agreement to extend credit made to a person, which loan is secured by a deed to secure debt, security deed, mortgage, security interest, deed of trust, or other document representing a security interest or lien upon any interest in one-to-four family residential property located in Georgia including the renewal or refinancing of any such loan.

16-8-102.

(a) A person commits the offense of residential mortgage fraud when, with the intent to defraud, such person:

(1) Knowingly makes any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process;

(2) Knowingly uses or facilitates the use of any deliberate misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process;

(3) Receives any proceeds or any other funds in connection with a residential mortgage closing that such person knew resulted from a violation of paragraph (1) or (2) of this Code section;

(4) Conspires to violate any of the provisions of paragraph (1), (2), or (3) of this Code section; or

(5) Files or causes to be filed with the official registrar of deeds of any county of this state any document such person knows to contain a deliberate misstatement, misrepresentation, or omission.

An offense of residential mortgage fraud shall not be predicated solely upon information lawfully disclosed under federal disclosure laws, regulations, and interpretations related to the mortgage lending process.

(b) A person commits the offense of residential foreclosure fraud when, with the intent to defraud, such person:

(1) Knowingly makes any deliberate misstatement, misrepresentation, or omission during the process of foreclosure of a residential mortgage loan with the intention that it be relied on by any other party to the foreclosure process or by the public in general;

(2) Knowingly uses or facilitates the use of any deliberate misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the process of foreclosure of a residential mortgage loan with the intention that it be relied on by any other party to the foreclosure process or by the public in general;

(3) Receives any proceeds or any other funds in connection with a residential mortgage loan foreclosure that such person knew resulted from a violation of paragraph (1) or (2) of this Code section;

(4) Conspires to violate any of the provisions of paragraph (1), (2), or (3) of this Code section; or

(5) Files or causes to be filed with the official registrar of deeds of any county of this state any foreclosure document such person knows to contain a deliberate misstatement, misrepresentation, or omission.

(c) The owner of the residential property subject to foreclosure has a civil cause action against a person who has violated subsection (b) of this Code section and shall be entitled to recover from such person compensatory damages in the amount of three times the damages incurred by the owner as a result of the violation in addition to reasonable attorney fees and costs for said action."

16-8-103.

For the purpose of venue under this article, any violation of this article shall be considered to have been committed:

(1) In the county in which the residential property for which a mortgage loan is being sought is located and in any county in which a residential mortgage loan is foreclosed;

(2) In any county in which any act was performed in furtherance of the violation;

(3) In any county in which any person alleged to have violated this article had control or possession of any proceeds of the violation;

(4) If a closing occurred, in any county in which the closing occurred; or

(5) In any county in which a document containing a deliberate misstatement, misrepresentation, or omission is filed with the official registrar of deeds.

16-8-104.

District attorneys and the Attorney General shall have the authority to conduct the criminal investigation and prosecution of all cases of residential mortgage fraud and residential mortgage foreclosure fraud under this article or under any other provision of this title. Nothing in this Code section shall be construed to preclude otherwise authorized law enforcement agencies from conducting investigations of offenses related to residential mortgage fraud.

16-8-105.

(a) Any person violating this article shall be guilty of a felony and, upon conviction, shall be punished by imprisonment for not less than one year nor more than ten years, by a fine not to exceed $5,000.00, or both.

(b) If a violation of this article involves engaging or participating in a pattern of residential mortgage fraud or a conspiracy or endeavor to engage or participate in a pattern of residential mortgage fraud, said violation shall be punishable by imprisonment for not less than three years nor more than 20 years, by a fine not to exceed $100,000.00, or both.

(c) Each residential property transaction and each foreclosure subject to a violation of this article shall constitute a separate offense and shall not merge with any other crimes set forth in this title.

16-8-106.

All real and personal property of every kind used or intended for use in the course of, derived from, or realized through a violation of this article shall be subject to forfeiture to the state. Forfeiture shall be had by the same procedure set forth in Code Section 16-14-7. District attorneys and the Attorney General may commence forfeiture proceedings under this article."

SECTION 4.

This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval. With respect to foreclosures, this Act shall apply to foreclosures conducted on or after July 1, 2011.

SECTION 5.

All laws and parts of laws in conflict with this Act are repealed.