09 LC 34
2005
Senate
Bill 57
By:
Senators Hamrick of the 30th, Harbison of the 15th, Hudgens of the 47th, Tarver
of the 22nd, Orrock of the 36th and others
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend provisions of the Official Code of Georgia Annotated relating to
mortgages, foreclosures, and evictions; to amend Chapter 6A of Title 7 of the
Official Code of Georgia Annotated, relating to the "Georgia Fair Lending Act,"
so as to provide for definitions; to provide for limitations on home loans; to
provide for limitations on high-cost home loans; to amend Code Section 15-6-77
of the Official Code of Georgia Annotated, relating to fees to be collected by
clerks of the superior courts, so as to provide for fees for filing documents
and other instruments pertaining to a deed under power more than 30 days
following the exercise of a power of sale in a mortgage, security deed, or other
lien contract; to amend Code Section 44-7-55 of the Official Code of Georgia
Annotated, relating to the writ of possession, so as to provide that a tenant
with a valid lease can stay in a foreclosed property for 60 days; to amend
Article 7 of Chapter 14 of Title 44 of the Official Code of Georgia Annotated,
relating to foreclosure on mortgages, so as to provide for examples of when an
instrument of conveyance will be an equitable mortgage; to provide for recording
of documents relating to sales under power; to provide for notice to the
occupant of the property of an impending sale of the property; to provide for
related matters; to provide for an effective date; to repeal conflicting laws;
and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Chapter
6A of Title 7 of the Official Code of Georgia Annotated, relating to the
"Georgia Fair Lending Act," is amended in Code Section 7-6A-2, relating to
definitions, by revising subparagraph (G) of paragraph (12) and subparagraph (B)
of paragraph (17) and adding paragraphs (6.1), (10.1), and (16.1), as
follows:
"(6.1)
'Excluded points and fees' means, in connection with a home loan, 1 percent of
the total loan amount attributable to bona fide fees paid to a federal or state
government agency that insures payment of some portion of a residential mortgage
loan plus an amount not to exceed 2 percent of the total loan amount
attributable to bona fide discount
points."
"(10.1)
'Non-traditional home loan' means a home loan that allows borrowers to defer
repayment of principal or interest as set forth in the 'Interagency Guidance on
Nontraditional Mortgage Product Risks, 71 C.F.R. Section 58609; provided,
however, an open-ended credit plan shall only be considered a nontraditional
mortgage if it is originated contemporaneously with a nontraditional mortgage or
subprime loan."
"(G)
Points and fees shall not include:
(i)
Taxes, filing fees, recording, and other charges and fees paid or to be paid to
public officials for determining the existence of or for perfecting, releasing,
or satisfying a security interest;
(ii)
Bona fide and reasonable fees paid to a person other than the creditor or an
affiliate of the creditor for the following: fees for tax payment services; fees
for flood certification; fees for pest infestation and flood determination;
appraisal fees; fees for inspections performed prior to closing; credit reports;
surveys; attorneys' fees, if the borrower has the right to select the attorney
from an approved list or otherwise; notary fees; escrow charges, so long as not
otherwise included under subparagraph (A) of this paragraph; title insurance
premiums; and fire and hazard insurance and flood insurance premiums, provided
that the conditions in 12 C.F.R. 226.4(d)(2) are met;
and
(iii)
Bona fide
fees paid to a federal or state government agency that insures payment of some
portion of a home loan, including, but not limited to, the Federal Housing
Administration, the Department of Veterans Affairs, the United States Department
of Agriculture for rural development loans, or the Georgia Housing and Finance
Authority; and
(iv)
Notwithstanding any provision to the contrary in this chapter, compensation in
the form of premiums, commissions, or similar charges paid to a creditor or any
affiliate of a creditor for the sale of: (I) title insurance; or (II) insurance
against loss of or damage to property or against liability arising out of the
ownership or use of property, provided that the conditions in 12 C.F.R.
226.4(d)(2) are met."
"(16.1)
'Subprime home loan' means a home loan subject to the additional reporting
requirements as set forth in 12 C.F.R. Section
203.4."
"(B)
The total points and fees payable in connection with the loan,
excluding
not more than two bona fide discount
points
less any
excluded points and fees, exceed: (i) 5
percent of the total loan amount if the total loan amount is $20,000.00 or more
or (ii) the lesser of 8 percent of the total loan amount or $1,000.00 if the
total loan amount is less than $20,000.00."
SECTION
2.
Said
chapter is further amended by revising Code Section 7-6A-3, relating to
limitations on home loans, as follows:
"7-6A-3.
All
home loans shall be subject to the following
limitations,
standards, and prohibited
practices:
(1)
No creditor shall make a home loan that finances, directly or
indirectly:
(A)
Any credit life, credit accident, credit health, credit personal property, or
credit loss-of-income insurance, debt suspension coverage, or debt cancellation
coverage, whether or not such coverage is insurance under applicable law, that
provides for cancellation of all or part of a borrower's liability in the event
of loss of life, health, personal property, or income or in the case of accident
written in connection with a home loan; or
(B)
Any life, accident, health, or loss-of-income insurance without regard to the
identity of the ultimate beneficiary of such insurance;
provided,
however, that for the purposes of this Code section, any premiums or charges
calculated and paid on a monthly basis shall not be considered financed directly
or indirectly by the creditor;
(2)
No creditor or servicer shall recommend or encourage default on an existing loan
or other debt prior to and in connection with the closing or planned closing of
a home loan that refinances all or any portion of such existing loan or
debt;
(3)
No creditor or servicer may charge a borrower a late payment charge unless the
loan documents specifically authorize the charge, the charge is not imposed
unless the payment is past due for ten days or more, and the charge does not
exceed 5 percent of the amount of the late payment. A late payment charge
may
shall
not be imposed more than once
with
respect to
on
a particular late payment. If a late payment charge is deducted from a payment
made on the home loan and such deduction results in a subsequent default on a
subsequent payment, no late payment charge
may
shall
be imposed for such default. A lender may apply any payment made in the order
of maturity to a prior period's payment due even if the result is late payment
charges accruing on subsequent payments due;
and
(4)
No creditor or servicer may charge a fee for informing or transmitting to any
person the balance due to pay off a home loan or to provide a release upon
prepayment. When such information is provided by facsimile or if it is provided
upon request within 60 days of the fulfillment of a previous request, a creditor
or servicer may charge a processing fee up to $10.00. Payoff balances shall be
provided within a reasonable time but in any event no more than five business
days after the
request.;
(5)
No prepayment fees or penalties shall be charged or collected under the terms of
a subprime home loan. Any prepayment penalty in violation of this paragraph
shall be unenforceable;
(6)
No person may provide, and no mortgage broker may receive, directly or
indirectly, any compensation that is based on, or varies with, the terms of any
subprime home loan;
(7)(A)
No creditor shall make a home loan to a borrower unless a reasonable creditor
would believe at the time the loan is closed that the borrower residing in the
home will be able to make the scheduled loan payments, real estate tax payments,
and insurance payments associated with the loan.
(B)
The determination of a borrower's reasonable ability to repay a subprime home
loan or nontraditional home loan shall include, without limitation,
consideration
of: the
borrower's income; credit history; current obligations and employment status;
the debt-to-income ratio of the borrower's monthly gross income inclusive of all
debt payments and total monthly housing payments including taxes, insurance, any
required homeowner or condominium fees, and any subordinate mortgages including
those that will be made contemporaneously to the same borrower; and other
available financial resources other than the borrower's equity in the principal
dwelling that secures or would secure the subprime or nontraditional home
loan.
(C)
The calculation assumptions used in evaluating the ability to repay for
nontraditional mortgages and subprime loans shall include:
(i)
The monthly payment amounts based on, at a minimum, the fully indexed rate,
assuming a fully amortizing repayment schedule;
(ii)
Verification of all sources of income by tax returns, payroll receipts, bank
records, or other similar reliable documentation. Verification shall be based
on the most appropriate form of documentation; and
(iii)
For products that permit negative amortization, the repayment analysis based
upon the initial loan amount plus any balance increase that may accrue from the
negative amortization provision; and
(8)
A mortgage broker, in addition to duties imposed by other statutes or at common
law, shall be considered an agent of the borrower in all cases and
shall:
(A)
Act in the borrower's best interest and in the utmost good faith toward the
borrower and shall not compromise a borrower's right or interest in favor of
another's right or interest, including a right or interest of the mortgage
broker;
(B)
Safeguard and account for any money handled for the borrower;
(C)
Follow reasonable and lawful instructions from the borrower;
(D)
Use reasonable skill, care, and diligence;
(E)
Clearly disclose to the borrower, in a timely fashion, all material information
that might reasonably affect the borrower's rights, interests, or ability to
receive the borrower's intended benefit from the home loan, including total
compensation the broker would receive from any of the loan options the broker
presents to the borrower; and
(F)
Make reasonable efforts to secure a loan that is in the best interests of the
borrower considering all the circumstances, including the product type, rates,
charges, and repayment terms of the home
loan."
SECTION
3.
Said
chapter is further amended by repealing Code Section 7-6A-4, relating to
flipping a home loan, and designating it as "Reserved."
"7-6A-4.
(a)
No creditor may knowingly or intentionally engage in the unfair act or practice
of 'flipping' a home loan. Flipping a home loan is the consummating of a
high-cost home loan to a borrower that refinances an existing home loan that was
consummated within the prior five years when the new loan does not provide
reasonable, tangible net benefit to the borrower considering all of the
circumstances including, but not limited to, the terms of both the new and
refinanced loans, the cost of the new loan, and the borrower´s
circumstances.
(b)
The home loan refinancing transaction shall be presumed to be a flipping where a
high-cost home loan refinances an existing home loan that was consummated within
the prior five years and that is a special mortgage originated, subsidized, or
guaranteed by or through a state, tribal, or local government or a nonprofit
organization, which either bears a below-market interest rate at the time the
loan was originated or has nonstandard payment terms beneficial to the borrower,
such as payments that vary with income, are limited to a percentage of income,
or where no payments are required under specified conditions and where, as a
result of the refinancing, the borrower will lose one or more of the benefits of
the special mortgage. Notwithstanding any provision to the contrary contained
in this chapter, home loan refinancing transactions of first mortgage loans
originated by, purchased by, or assigned to the Georgia Housing and Finance
Authority shall not be presumed to be a flipping under this
subsection.
(c)
Notwithstanding any provision to the contrary contained in this chapter
regarding costs and attorneys´ fees, in any action instituted by a borrower
who alleges that the defendant violated this Code section, the borrower shall be
entitled to costs and attorneys´ fees only if the presiding judge, in the
judge´s discretion, allows reasonable attorneys´ fees and costs to the
borrower as prevailing party, such fees and costs to be taxed as a part of the
court costs and payable by the losing party upon a finding by the presiding
judge that the party charged with the violation has willfully engaged in the act
or practice and there was unwarranted refusal by such party to fully resolve the
matter which constitutes the basis of such
action
Reserved."
SECTION
4.
Said
chapter is further amended in Code Section 7-6A-5, relating to limitations on
high-cost home loans, by revising paragraph (1) as follows:
"(1)
No prepayment fees or penalties shall be provided for in the loan documents for
a high-cost home loan or charged
to
the borrower
after the
last day of the twenty-fourth month following the loan closing or which exceed
in the aggregate:
(A)
In the first 12 months after the loan closing, more than 2 percent of the loan
amount prepaid; or
(B)
In the second 12 months after the loan closing, more than 1 percent of the
amount prepaid;"
SECTION
5.
Code
Section 15-6-77 of the Official Code of Georgia Annotated, relating to fees to
be collected by clerks of the superior courts, is amended by adding new
subsections to read as follows:
"(p)
Additional sums for filing documents and other instruments pertaining to a deed
under power more than 30 days following the exercise of a power of sale in a
mortgage, security deed, or other lien contract, shall be as
follows:
(1)
Filing a deed under power more than 30 days but less than
60 days following the exercise of a power of sale in a mortgage,
security
deed, or other lien
contract $500.00
(2)
Filing a deed under power more than 60 days but less than
90 days following the exercise of a power of sale in a mortgage,
security
deed, or other lien
contract $2,000.00
(3)
Filing a deed under power more than 90 days
following
the exercise of a power of sale in a mortgage, security deed, or other lien
contract $10,000.00
(q)
The sums provided for in subsection (p) of this Code section shall be assessed
and collected by the clerks of the superior courts and shall be paid
monthly:
(1)
To the governing authority of the county in which such property is located, if
such property is located in the unincorporated area of the county, for use in
code enforcement, public safety, or community development purposes;
or
(2)
To the governing authority of the municipality in which such property is
located, if such property is located within municipal limits, for use in code
enforcement, public safety, or community development purposes.
Such
funds shall be paid in addition to rather than in lieu of any other such funds.
The court officer charged with the duty of collecting moneys required by
subsection (p) of this Code section shall receive and distribute the funds
collected to the appropriate local governing authority by the last day of the
month after the month in which the funds are received; provided, however, that
the court officer shall be authorized to retain an amount not to exceed 1
percent of such funds for the purposes of defraying the costs of administration.
The court officer shall submit a monthly report of the collection and
distribution of such funds to the Georgia Superior Court Clerks' Cooperative
Authority."
SECTION
6.
Code
Section 44-7-55 of the Official Code of Georgia Annotated, relating to the writ
of possession, is amended by revising subsections (a) and (b) as
follows:
"(a)(1)
If, on the trial of the case, the judgment is against the tenant, judgment shall
be entered against the tenant for all rents due and for any other claim relating
to the dispute. The court shall issue a writ of possession, both of execution
for the judgment amount and a writ to be effective at the expiration of seven
days after the date such judgment was entered, except as otherwise provided in
Code Section 44-7-56.
(2)
However, if, on trial of the case, the tenant presents proof that he or she is a
tenant pursuant to a valid lease in which the landlord on the lease was
foreclosed upon for the property at issue, then the writ of possession shall be
effective at the expiration of 60 days so long as the tenant tenders one month's
rent to the court registry within seven days of the trial of the case and
tenders a second month's rent within 30 days of the trial.
(b)
If the judgment is for the tenant,
he
the
tenant shall be entitled to remain in the
premises and the landlord shall be liable for all foreseeable damages shown to
have been caused by
his
the
landlord's wrongful conduct. Any funds
remaining in the registry of the court shall be distributed to the parties in
accordance with the judgment of the court.
Funds paid
into the registry of the court pursuant to paragraph (2) of subsection (a) of
this Code section shall be distributed to the purchaser of a deed under power in
a foreclosure sale within seven days of being received into the registry of the
court."
SECTION
7.
Article
7 of Chapter 14 of Title 44 of the Official Code of Georgia Annotated, relating
to foreclosure on mortgages, is amended by revising Code Section 44-14-32,
relating to the use of parol evidence to prove an apparent deed is a mortgage,
as
follows:
"44-14-32.
A deed or bill of sale which is absolute on its face and which is accompanied with possession of the property shall not be proved, at the instance of the parties, by parol evidence to be a mortgage only unless fraud in its procurement is the issue to be tried. An instrument of conveyance which purports on its face to be a deed, or a series of contracts which may include a deed of conveyance, a lease, or a right of repurchase, shall be held to be an equitable mortgage when the evidence demonstrates that the essential transaction is to transfer an interest in real property as security for the performance of an obligation. The factors relevant to the determination of whether at law and in equity a transaction shall be deemed to be an equitable mortgage include, but are not limited to:
"44-14-32.
A deed or bill of sale which is absolute on its face and which is accompanied with possession of the property shall not be proved, at the instance of the parties, by parol evidence to be a mortgage only unless fraud in its procurement is the issue to be tried. An instrument of conveyance which purports on its face to be a deed, or a series of contracts which may include a deed of conveyance, a lease, or a right of repurchase, shall be held to be an equitable mortgage when the evidence demonstrates that the essential transaction is to transfer an interest in real property as security for the performance of an obligation. The factors relevant to the determination of whether at law and in equity a transaction shall be deemed to be an equitable mortgage include, but are not limited to:
(1)
The adequacy of the consideration;
(2)
The retention of possession by the prior owner;
(3)
The representation of all parties by legal counsel;
(4)
The existence of indebtedness that was in default prior to the
transaction;
(5)
The relative size of the debt in default to the fair market value of the
property; and
(6)
The avoidance of the equity of redemption.
If
a deed that is absolute on its face, or a series of contracts taken
collectively, is found to be an equitable mortgage, the rights of the transferee
shall be as the holder of a mortgage at law securing only such indebtedness as
is judicially
determined."
SECTION
8.
Said
article is further amended by revising Code Section 44-14-160, relating to
recording of foreclosure and deed under power and notations of sale in records,
as follows:
"44-14-160.
When
the holder of a deed to secure debt or a mortgage forecloses the same and sells
the real property thereby secured under the laws of this state governing
foreclosures and sales under power and the purchaser thereof presents to the
clerk of the superior court his
or
her deed under power to have the same
recorded, the clerk shall write in the margin of the page where the deed to
secure debt or mortgage foreclosed upon is recorded the word 'foreclosed' and
the deed book and page number on which is recorded the deed under power
conveying the real property; provided, however, that, in counties where the
clerk keeps the records affecting real estate on microfilm, the notation
provided for in this Code section shall be made in the same manner in the index
or other place where the clerk records transfers and cancellations of deeds to
secure debt.
The purchaser
shall present the deed under power to the clerk of the superior court to have
the same recorded no later than 30 days following the date of the exercise of a
power of sale in a mortgage, security deed, or other lien contract. Failure to
record the deed shall result in a late filing penalty pursuant to subsection (p)
of Code Section
15-6-77."
SECTION
9.
Said
article is further amended in Code Section 44-14-162.2, relating to sales made
on foreclosures under power of sale, by adding a new subsection to read as
follows:
"(c)
No later than 30 days before the date of a proposed foreclosure, the secured
creditor shall send by registered or certified mail or statutory overnight
delivery, return receipt requested, addressed to 'Occupant' at the address of
the property a notice in substantially the following form:
'NOTICE
An
action to foreclose the (mortgage/deed of trust/land installment contract) on
the property located at (insert address) has been filed in the (insert type of
court) Court of (insert county).
A
foreclosure sale of the property may occur at any time after 30 days from the
date of this notice. You may want to consult with an attorney because you could
be evicted, even if you are a tenant who has fully paid rent and complied with
your lease. If, during a dispossessory proceeding for eviction, you can prove
that you have a valid lease to rent this property, you will have a right to
remain on the property for up to 60 days so long as you pay the monthly rent to
the clerk of court. For further information, you can review the file in the
office of the Clerk of the (insert type of court) Court of (insert
county).'"
SECTION
10.
This
Act shall become effective on July 1, 2009.
SECTION
11.
All
laws and parts of laws in conflict with this Act are repealed.