HB2682 - 502R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 33-808, Arizona Revised Statutes, is amended to read:

START_STATUTE33-808. Notice of trustee's sale

A. The trustee shall give written notice of the time and place of sale legally describing the trust property to be sold by each of the following methods:

1. Recording a notice in the office of the recorder of each county where the trust property is situated.

2. Giving notice as provided in section 33‑809 to the extent applicable.

3. Posting a copy of the notice of sale, at least twenty days before the date of sale in some conspicuous place on the trust property to be sold, if posting can be accomplished without a breach of the peace. If access to the trust property is denied because a common entrance to the property is restricted by a limited access gate or similar impediment, the property shall be posted by posting notice at that gate or impediment. Notice shall also be posted at one of the places provided for posting public notices at any building that serves as a location of the superior court in the county where the trust property is to be sold. Posting is deemed completed on the date the trust property is posted. The posting of notice at the superior court location is deemed a ministerial act.

4. Publication of the notice of sale in a newspaper of general circulation in each county in which the trust property to be sold is situated. The notice of sale shall be published at least once a week for four consecutive weeks. The last date of publication shall not be less than ten days prior to before the date of sale. Publication is deemed completed on the date of the first of the four publications of the notice of sale pursuant to this paragraph.

B. The sale shall be held at the time and place designated in the notice of sale on a day other than a Saturday or legal holiday between 9:00 a.m. and 5:00 p.m. mountain standard time at a specified place on the trust property, at a specified place at any building that serves as a location of the superior court or at a specified place at a place of business of the trustee, in any county in which part of the trust property to be sold is situated.

C. The notice of sale shall contain:

1. The date, time and place of the sale. The date, time and place shall be set pursuant to section 33‑807, subsection D. The date shall be no sooner than the ninety‑first day after the date that the notice of sale was recorded.

2. The street address, if any, or identifiable location as well as the legal description of the trust property.

3. The county assessor's tax parcel number for the trust property or the tax parcel number of a larger parcel of which the trust property is a part.

4. The original principal balance as shown on the deed of trust. If the amount is not shown on the deed of trust, it shall be listed as "unspecified".

5. The names and addresses, as of the date the notice of sale is recorded, of the beneficiary and the trustee, the name and address of the original trustor as stated in the deed of trust, the signature of the trustee and the basis for the trustee's qualification pursuant to section 33‑803, subsection A, including an express statement of the paragraph under subsection A on which the qualification is based. The address of the beneficiary shall not be in care of the trustee.

6. The telephone number of the trustee.

7. The name of the state or federal licensing or regulatory body or controlling agency of the trustee as prescribed by section 33-803, subsection A.

8. A statement that the trustee may postpone the trustee's sale one or more times and on request shall make available to interested persons the date and time of the rescheduled sale.

D. The notice of sale shall be sufficient if made in substantially the following form:

Notice of Trustee's Sale

The following legally described trust property will be sold, pursuant to the power of sale under that certain trust deed recorded in docket or book _______________________ at page __________ records of ______________ county, Arizona, at public auction to the highest bidder at (specific place of sale as permitted by law) _______________, in _______________ county, in or near _______________, Arizona, on ________, ____, at ___________ o'clock ___m. of said day:

(street address, if any, or identifiable

location of trust property)

(legal description of trust property)

The trustee may postpone the trustee's sale one or more times and on request shall make available to interested persons the date and time of the rescheduled sale.

Tax parcel number _______________

Original principal balance $________________________

Name and address of beneficiary ______________________________

______________________________

Name and address of original trustor _________________________

_________________________

Name, address and telephone number of trustee ________________

__________________________________

Signature of trustee _____________________________

Manner of trustee qualification ___________________________

Name of trustee’s regulator _______________________________

Dated this _____________ day of ______________, ____.

(Acknowledgement)

E. Any error or omission in the information required by subsection C or D of this section, other than an error in the legal description of the trust property or an error in the date, time or place of sale, shall not invalidate a trustee's sale. Any error in the legal description of the trust property shall not invalidate a trustee's sale if considered as a whole the information provided is sufficient to identify the trust property being sold. If there is an error or omission in the legal description so that the trust property cannot be identified, or if there is an error in the date, time or place of sale, the trustee shall record a cancellation of notice of sale. The trustee or any person furnishing information to the trustee shall not be subject to liability for any error or omission in the information required by subsection C of this section except for the wilful and intentional failure to provide such information. This subsection does not apply to claims made by an insured under any policy of title insurance.

F. The notice of trustee sale may not be rerecorded for any reason. This subsection does not prohibit the recording of a new or subsequent notice of sale regarding the same property. END_STATUTE

Sec. 2. Title 44, chapter 9, Arizona Revised Statutes, is amended by adding article 26, to read:

ARTICLE 26. MORTGAGE LOAN SERVICERS

START_STATUTE44-1382. Definitions

In this article, unless the context otherwise requires:

1. "Authorized representative" means a person designated by the borrower in a written authorization signed by the borrower, including an attorney, employee or agent of a nonprofit housing counseling or legal services organization, except that nothing restricts the ability of a servicer to share information and communicate verbally with a person acting on behalf of a borrower following a tape recorded or other verifiable verbal consent by the borrower.

2. "Home affordable mortgage program" means the program established by the United States Department of the Treasury pursuant to sections 101 and 109 of the Emergency Economic Stabilization Act of 2008, as section 109 of the Act has been amended by section 7002 of the American Recovery and Reinvestment Act of 2009.

3. "Loan modification" means the waiver, modification or variation of any material term of the mortgage loan, whether the duration is short-term, long-term or life-of-loan, that changes the interest rate, forbears or forgives the payment of principal or interest or extends the final maturity date of the loan.

4. "Loss mitigation option" means an alternative to foreclosure, including loan modification, reinstatement, forbearance, deed-in-lieu and short sale.

5. "Mortgage loan" means a loan for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling, as defined in the Truth in Lending Act (15 United States Code section 1602(v)), or for residential real estate on which a dwelling is constructed or intended to be constructed.

6. "Servicer" means the person responsible for servicing a mortgage loan, including the person who makes or holds a loan if the person also services the mortgage loan.

7. "Servicing" means receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts, and making the payments of principal and interest and other payments with respect to the amounts received from the borrower that are required pursuant to the terms of the mortgage loan. END_STATUTE

START_STATUTE44-1382.01. Applicability

A. This article shall not be construed as authorizing conduct for which a license would be required under title 6, chapter 9, article 4.

B. This article shall not be construed to require a servicer to perform services in a manner that is inconsistent with the enforceable terms of a note, mortgage or contract for the servicing of a mortgage loan or with the regulations or guidelines implementing the home affordable mortgage program. END_STATUTE

START_STATUTE44-1382.02. Servicer duties; trustee's sales

A. A servicer 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, including a duty to do all of the following:

1. Act with reasonable skill, care and diligence.

2. Educate borrowers in or at risk of default about available loss mitigation options and services.

3. Provide trained personnel and telephone facilities sufficient to respond promptly to a borrower's inquiries regarding the borrower's mortgage loans.

4. Pursue loss mitigation with the borrower whenever possible in accordance with the home affordable mortgage program or the servicer's own programs.

5. Pursue foreclosure on a primary residence only when the right to proceed is clearly established and only after it has been determined that the borrower is not eligible for or cannot qualify for any available loss mitigation option.

6. Ensure that all foreclosure documents filed or recorded are accurate, verified or acknowledged by an individual with personal knowledge of the information contained in the documents and submitted in compliance with applicable laws.

B. A servicer shall comply with the lender and beneficiary obligations in trustee's sales as set forth in section 33-807.01. END_STATUTE

START_STATUTE44-1382.03. Prohibited acts

Servicer shall not:

1. Engage in unlawful practices in connection with the servicing of a borrower's mortgage loan.

2. Misrepresent or omit any material information in connection with the servicing of the borrower's mortgage loan, including:

(a) The amount or terms of any fee or payment due or claimed to be due on a loan or pursuant to a loan modification agreement.

(b) The terms and conditions of the servicing agreement.

(d) The nature, effect or time frames of loss mitigation options, including loan modifications.

(e) The reason why the Servicer denied the borrower's request for a loan modification or other loss mitigation option. END_STATUTE

START_STATUTE44-1382.04. Loss mitigation options; servicer duties; loan modifications

A. Servicers shall make reasonable and good faith efforts consistent with usual and customary industry standards and this article to engage in appropriate loss mitigation options, including loan modifications, to avoid foreclosure. Servicers must have adequate staffing, written procedures, resources and facilities to provide timely and appropriate responses to borrower inquiries and complaints regarding available loss mitigation options and to ensure that borrowers are not required to submit multiple copies of required documents during consideration for a loss mitigation option. On request, the servicers shall provide the written procedures to borrowers or any housing counseling agency that is approved by the United States department of housing and urban development.

B. When a borrower who is in or at risk for default contacts the Servicer with respect to a loan modification or other loss mitigation assistance, the Servicer shall do all of the following:

1. Establish a single point of contact for the borrower to communicate regarding the status of the loan and all loan enforcement efforts.

2. Inform the borrower of the facts concerning the loan, the nature and extent of the delinquency or default, the Servicer's loss mitigation protocols, the loss mitigation options and services offered by the Servicer and how loss mitigation options may affect the borrower's credit.

3. If requested by the borrower, negotiate with the borrower in good faith, subject to the Servicer's duties and obligations under the mortgage servicing contract, if any, to attempt a resolution or workout of the delinquency or to prevent the borrower's default, including a loan modification.

C. Servicers shall undertake reasonable, good faith efforts to avoid foreclosure, including considering a loan modification as an alternative when both of the following apply:

1. the borrower demonstrates that the borrower is in imminent risk of defaulting on the mortgage loan as a result of a financial hardship or has experienced a financial hardship and is unable to maintain the payment at the current amount required under the mortgage loan or is unable to make up the delinquent payments.

2. The net present value of the income stream expected of the modified loan is greater than the net present value of the income stream that is expected to be recovered through the disposition of the property through a foreclosure sale.

D. When a loan modification is a reasonable alternative to foreclosure, a servicer shall make good faith efforts to structure the modification to result in payments that are affordable and sustainable for the borrower. Servicers that are participating in the home affordable mortgage program shall offer loan modifications in compliance with the home affordable mortgage program guidelines or directives, including using reasonable efforts to remove prohibitions or impediments to their authority and to obtain third‑party consents and waivers that are required, by contract or law, in order to effectuate a loan modification under the home affordable mortgage program.

E. Unless a longer time is permitted under the guidelines or directives implementing the home affordable mortgage program, within ten business days after receiving a request from a borrower or authorized representative for a loss mitigation option, the servicer shall transmit a written acknowledgement of the request to the borrower and, if applicable, to the authorized representative. The acknowledgement shall identify with specificity any information needed from the borrower in order for the servicer to review the borrower's loss mitigation request. The acknowledgement shall also include the key elements of the loss mitigation process, including, as appropriate, the following:

1. The information that the borrower may be asked to provide and third‑party approvals that may be required for the servicer to evaluate and complete the request for a loan modification or other loss mitigation option.

2. The average length of time for a decision to be made regarding a loan modification or other loss mitigation option.

3. Information about how the borrower's request for a loss mitigation option may affect the borrower's credit, including credit rating.

4. A notification of the actions the servicer, lender or owner of the mortgage may take during the loss mitigation process, such as whether the borrower may continue to receive collection letters or foreclosure notices, whether the foreclosure process will continue or whether and to what extent collection and foreclosure will be stayed.

F. Within thirty days after receiving all required documentation from the borrower and third parties, unless a shorter time is required under regulations or guidelines implementing the home affordable mortgage program, a servicer shall complete its evaluation of the borrower's eligibility for a loan modification or other loss mitigation option requested by the borrower and advise the borrower, and if applicable, the borrower's authorized representative, in writing of its determination. If the servicer approves the borrower for a loan modification, including a trial modification, or other loss mitigation option, the written notice must provide the borrower with clear and understandable written information explaining the material terms, costs and risks of the option offered. If the servicer determines that the borrower cannot be approved for a loan modification or other requested loss mitigation option, the written notice must state with specificity the reasons for the determination, contact information for a person at the mortgage servicer to reconsider a denial and any other foreclosure prevention alternatives for which the borrower may be considered.

G. A Servicer shall take reasonable steps to ensure that its staff is aware of programs designed to assist borrowers avoid foreclosure or resolve delinquency. The Servicer shall make available to homeowners who are at least sixty days delinquent, or who the servicer has reason to believe are experiencing a financial hardship and are in imminent risk of default, a list of government approved nonprofit housing counselors in the homeowner's geographic area.

H. A Servicer shall maintain and make available to borrowers and borrowers' authorized representatives current contact information to communicate and negotiate with the Servicer's designated loss mitigation staff who are authorized to discuss and negotiate loss mitigation options. The contact information shall include toll‑free telephone numbers for direct communication with a loss mitigation staff person, fax numbers for receipt of documents and e-mail addresses.

I. The servicer shall establish an effective process through which borrowers may escalate disagreements to a supervisory level where a separate review of the borrower's eligibility or qualification for a loss mitigation option can be performed. The servicer shall also designate special escalation contacts for nonprofit housing counselors, government representatives, legal services organizations and attorneys to use when necessary to review or intervene in the handling of a pending loss mitigation matter.

J. It shall be presumed that a servicer has engaged in good faith loss mitigation efforts if the servicer offers loan modifications and other loss mitigation options in accordance with the home affordable mortgage program guidelines or directives developed by the united states department of the treasury.

K. This section shall not be construed to prevent a servicer from offering or accepting alternative loss mitigation options, including other modification programs offered by the servicer, a short sale, a deed-in-lieu of foreclosure or a forbearance, if the borrower requests such an alternative, is not eligible for or does not qualify for a loan modification under the home affordable mortgage program or rejects the servicer's loss mitigation proposal.

L. A Servicer shall develop and implement policies and procedures to provide notification to its foreclosure attorneys and trustees regarding a borrower's status for consideration of a loss mitigation option and whether the borrower is being evaluated for, or is currently in, a trial or permanent modification. A Servicer shall not initiate or advance a foreclosure action if the borrower has requested and is being considered for a loss mitigation option or if the borrower is in a trial or permanent modification and is not more than thirty days in default under the modification agreement.END_STATUTE

START_STATUTE44-1382.05. Enforcement and remedies

A. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general shall investigate and take appropriate action as prescribed by chapter 10, article 7 of this title.

B. The rights, remedies and penalties provided pursuant to this article are cumulative and do not abrogate and are in addition to any other rights, remedies and penalties that may exist at law or in equity.END_STATUTE

Sec. 3. Section 44-1533, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1533. Cumulative remedies; private right of action

A. The provisions of this article are in addition to all other causes of action, remedies and penalties available to this state.

B. The provisions of this article shall not bar any claim against any person who has acquired any monies or property, real or personal, by means of any practice declared to be unlawful by this article.

C. A person may bring a private right of action against another person for a violation of this article. END_STATUTE

Sec. 4. Applicability

Section 33-808, Arizona Revised Statutes, as amended by this act, applies to any deed of trust for which a notice of trustee's sale is recorded on or after the effective date of this act.