§454M-5 Additional duties of a mortgage servicer; good faith and fair dealing; disclosures; payments, accounting, and records; assignment of servicing rights. (a) A mortgage servicer licensed or acting under this chapter, has a duty of good faith and fair dealing in its communications, transactions, and course of dealings with each borrower in connection with the servicing of the borrower's mortgage loan.
(b) In addition to any other duties imposed by law, a mortgage servicer shall:
(1) Safeguard and account for any money handled for the borrower;
(2) Follow reasonable and lawful instructions from the borrower consistent with the underlying note and mortgage;
(3) Act with reasonable skill, care, timeliness, promptness, and diligence;
(4) Disclose to the commissioner in the servicer's license application and each yearly renewal a complete, current schedule of the ranges of costs and fees it charges borrowers for its servicing-related activities;
(5) File a report with each yearly renewal statement in a form and format acceptable to the commissioner detailing the servicer's activities in this State, including:
(A) The number of mortgage loans the servicer is servicing;
(B) The type and characteristics of loans serviced in this State;
(C) The number of serviced loans in default, along with a breakdown of thirty-, sixty-, and ninety-day delinquencies;
(D) Information on loss mitigation activities, including details on workout arrangements undertaken;
(E) Information on foreclosures commenced in this State;
(F) The affiliations of the mortgage servicer, including any lenders or mortgagees for which the mortgage servicer provides service, any subsidiary or parent entities of the mortgage servicer, and a description of the authority held by the mortgage servicer through its affiliations; and
(G) Any other information that the commissioner may require; and
(6) Maintain an office in the State that is staffed by at least one agent or employee for the purposes of addressing consumer inquiries or complaints and accepting service of process; provided that the mortgage servicer's business constitutes at least a twenty per cent share of the portion of the total mortgage loan service market in the State that was serviced by mortgage servicers licensed under this chapter within the previous calendar year; and provided further that nothing in this section shall prohibit a mortgagee as defined by section 667-1 or a mortgage servicer from contracting with a licensee that maintains an office in this State in conformity with this section for the purposes of addressing consumer inquiries or complaints and accepting service of process.
(c) A mortgage servicer shall comply with the following requirements concerning handling and processing of mortgage payments:
(1) Except as provided in paragraph (4), all payments received by a mortgage servicer on a mortgage loan at the address where the borrower has been instructed in writing to make payments shall be accepted and credited, or treated as credited, on the business day received, to the extent that the borrower has provided sufficient information to credit the account. For all mortgage loans originated after July 1, 2015, except where inconsistent with federal law or regulation, payments shall be credited to the principal and interest due on the home loan before crediting the payments to taxes, insurance, or fees;
(2) Methods of payment and payment instruments shall be reasonable;
(3) If a mortgage servicer specifies in writing requirements for the borrower to follow in making payments, but accepts a payment that does not conform to the requirements, the mortgage servicer shall credit the payment as soon as commercially practicable, but in no event later than three business days after receipt;
(4) Late payments of principal and interest shall be credited before any late charge is collected; and
(5) If the mortgage servicer receives any payment on a mortgage loan and suspenses the payment, does not credit the payment, or does not treat the payment in accordance with this section, the mortgage servicer, within ten days of receipt, shall send the borrower notice by mail at the borrower's last known address indicating the reason the payment was suspensed or was not credited or treated as credited to the account, and specifying any actions by the borrower necessary to make the loan current.
(d) A mortgage servicer shall comply with the following requirements concerning escrows for the payment of taxes and insurance:
(1) Any mortgage servicer who receives funds from a borrower to be held in escrow for payment of taxes and insurance premiums shall pay the taxes and insurance premiums of the borrower to the appropriate taxing authority and insurance company in the amount required and at the time the taxes and insurance premiums are due, in accordance with the requirements of the Real Estate Settlement Procedures Act, including title 12 C.F.R. section 1024.17, and shall be liable to the borrower as provided therein;
(2) If the amount held in the escrow account as of the date the taxes and insurance premiums are due is insufficient to pay the taxes and insurance premiums, the mortgage servicer shall pay the taxes and insurance premiums from the mortgage servicer's own funds; provided that the borrower has paid to the mortgage servicer the amounts required to be paid into the escrow account, as determined by the mortgage servicer, for all amounts scheduled to be paid to the mortgage servicer prior to the date the taxes and insurance premiums are due; and
(3) Where an escrow account has been established and a mortgage servicer advances funds in paying a disbursement that is not the result of a borrower's payment default under the underlying mortgage document, the mortgage servicer shall conduct an escrow account analysis to determine the reasons for and extent of the deficiency and shall provide a written explanation to the borrower before seeking repayment of the funds from the borrower. The mortgage servicer shall then give the borrower the option of paying the shortage over a period of not less than one year. The mortgage servicer shall not charge or collect interest on any shortage during the payment period.
Any mortgage servicer who violates any provision of this subsection shall be liable to the borrower: for any penalties, interest, or other charges levied by the taxing authority or insurance company as a result of any violation; any actual damages suffered by the borrower as a result of the violation, including any amount that would have been paid by an insurer for a casualty or liability claim had the insurance policy not been canceled for nonpayment by the mortgage servicer; and, in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney's fees as determined by the court.
(e) A mortgage servicer shall comply with the following requirements concerning statements of account:
(1) At least once annually, within thirty days of the end of the computation year, a mortgage servicer shall deliver to the borrower a plain language statement of the borrower's account showing the unpaid principal balance of the mortgage loan at the end of the immediately preceding twelve-month period, the interest paid during that period, and the amounts deposited into escrow and disbursed from escrow during the period. The annual escrow statement may be provided separately from the annual statement showing the unpaid principal and interest paid. The format and content of the annual escrow statement shall comply with the Real Estate Settlement Procedures Act, including title 12 C.F.R. section 1024.17;
(2) A mortgage servicer shall promptly provide a borrower with an accurate accounting in plain English of the debt owed when requested by the borrower or borrower's authorized representative. Within thirty days of receipt of a request from the borrower or the borrower's authorized representative, a mortgage servicer shall deliver to the borrower a payment history for the last thirty-six months of the borrower's account, unless a different period is requested, showing the date and amount of all payments made or credited to the account and the total unpaid balance. The mortgage servicer shall have sixty days to deliver a payment history where the request is for a period longer than the last thirty-six months;
(3) A fee shall not be charged to the borrower for the annual escrow statement or for one payment history furnished to a borrower in a twelve-month period; and
(4) A shortage, surplus, or deficiency in the escrow account shall be handled in accordance with the Real Estate Settlement Procedures Act, including title 12 C.F.R. section 1024.17. Alternatively, with the consent of the borrower, an excess balance may be applied to the principal balance.
(f) Except where inconsistent with the automatic stay provisions of the Bankruptcy Code with respect to a borrower in a pending bankruptcy proceeding, a mortgage servicer shall send a payment reminder notice to a borrower at the borrower's last known address no later than seventeen days after the payment becomes due and remains unpaid; provided that a mortgage servicer is not required to send a separate payment reminder notice for each consecutive month in which the mortgage loan continues to remain unpaid.
(g) A mortgage servicer shall provide a clear, understandable, and accurate statement of the total amount that is required to pay off the mortgage loan as of a specified date, within a reasonable time, but in any event no more than five business days after receipt of a request from the borrower or borrower's authorized representative. No borrower shall be charged a fee for being informed or receiving a payoff statement or for being provided with a release upon full prepayment; provided that a mortgage servicer may charge a reasonable fee for providing a payoff statement after five or more requests in any calendar year.
(h) A mortgage servicer shall comply with the following requirements concerning handling consumer complaints and inquiries:
(1) A mortgage servicer shall follow the requirements of the Real Estate Settlement Procedures Act, including requests for error and information resolution procedures under title 12 C.F.R. sections 1024.35 and 1024.36;
(2) In addition to the requirements of the Real Estate Settlement Procedures Act, a mortgage servicer shall establish and maintain a system to respond to and resolve borrower inquiries and complaints in a prompt and appropriate manner;
(3) Within ten business days of receiving a request in writing from a borrower or the borrower's authorized representative, a mortgage servicer shall provide the borrower with the name, address, phone number or electronic mail address, if available, and other relevant contact information for the owner or assignee of the mortgage loan; and
(4) In addition to the information required to be disclosed under this section, a mortgage servicer may, at its option, provide any other information regarding the servicing of the loan that the mortgage servicer believes would be helpful to a borrower; provided that any additional information does not contradict or obscure the required disclosures.
(i) A mortgage servicer shall comply with the following requirements concerning fees:
(1) A mortgage servicer shall maintain and keep current a schedule of standard or common fees that the mortgage servicer charges borrowers for the servicer's servicing-related activities, such as nonsufficient fund fees. The schedule shall identify each fee, provide a plain English explanation of the fee, and state the amount of the fee or range of amounts. If there is no standard fee, the schedule shall explain how the fee is calculated or determined. A mortgage servicer shall make its schedule available on the mortgage servicer's website and to the borrower or the borrower's authorized representative upon request;
(2) A mortgage servicer may only collect a fee if the fee is for services actually rendered and one of the following conditions is met:
(A) The fee is clearly and conspicuously disclosed by the loan instruments and not prohibited by law;
(B) The fee is expressly permitted by law and not prohibited by the loan instruments; or
(C) The fee is not prohibited by law or the loan instruments and is a reasonable fee for a specific service requested by the borrower that is assessed only after clear and conspicuous disclosure of the fee is provided to the borrower and the borrower expressly consents to pay the fee in exchange for the services;
(3) In addition to the limitations in paragraph (2), attorneys' fees charged in connection with a foreclosure action shall not exceed reasonable and customary fees for the work. If a foreclosure action or proceeding is terminated prior to the public sale because of a loss mitigation option, a reinstatement, or payment in full, the borrower shall only be liable for reasonable and customary fees for work actually performed; and
(4) A mortgage servicer shall not impose any late fee or delinquency charge when the only delinquency is attributable to late fees or delinquency charges assessed on an earlier payment and the payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period. Late charges shall not be:
(A) Based on an amount greater than the past due amount;
(B) Collected from the escrow account or from escrow surplus without the approval of the borrower; or
(C) Deducted from any regular payment.
(j) Each mortgage servicer licensee shall maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer license.
(k) Upon assignment of servicing rights on a residential mortgage loan, the mortgage servicer shall disclose to the borrower:
(1) Any notice required by the Real Estate Settlement Procedures Act, including title 12 C.F.R. section 1024.33, within the time periods prescribed therein; and
(2) A schedule of the ranges and categories of the mortgage servicer's costs and fees for the servicer's servicing-related activities, which shall comply with state and federal law and, if the disclosure is made by a mortgage servicer licensee, shall not exceed those reported to the commissioner in accordance with this chapter.
(l) At the time a servicer accepts assignment of servicing rights for a mortgage loan, the servicer shall disclose to the borrower all of the following:
(1) Any notice required by the Real Estate Settlement Procedures Act;
(2) A schedule of the ranges and categories of its costs and fees for its servicing-related activities, which shall comply with this chapter and which shall not exceed those reported to the commissioner; and
(3) A notice in a form and content acceptable to the commissioner that the servicer is licensed by the commissioner and that complaints about the servicer may be submitted to the commissioner.
(m) Where this chapter requires compliance with the Real Estate Settlement Procedures Act, the required compliance applies to any person subject to this chapter, whether or not the Real Estate Settlement Procedures Act applies to that person or transaction. [L 2009, c 106, pt of §1; am L 2011, c 48, §10; am L 2012, c 182, §4; am L 2015, c 62, §5]
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