Chapter
242
2006 -- S 2777 SUBSTITUTE A
Enacted 06/30/06
A N A
C T
RELATING TO
BUSINESSES AND PROFESSIONS - MORTGAGE FORECLOSURE CONSULTANT REGULATION
Introduced By: Senators
Metts, and Pichardo
Date Introduced: February
14, 2006
It is
enacted by the General Assembly as follows:
SECTION
1. Title 5 of the General Laws entitled "BUSINESSES AND PROFESSIONS"
is
hereby amended by adding thereto the following chapter:
CHAPTER 79
MORTGAGE FORECLOSURE CONSULTANT REGULATION
5-79-1.
Definitions. -- As uses in this chapter:
(a)
"Foreclosure consultant" means any person who, directly or
indirectly, makes any
solicitation,
representation, or offer to any owner to perform for compensation or who, for
compensation,
performs any service which the person in any manner represents will in any
manner
do any of the following:
(1)
Stop or postpone the foreclosure sale;
(2)
Obtain any forbearance from any beneficiary or mortgagee;
(3)
Assist the owner to exercise the right of redemption provided in section
34-23-2;
(4)
Obtain any extension of the period within which the owner may reinstate the
owner's
obligation;
(5)
Obtain any waiver of an acceleration clause contained in any promissory note or
contract
secured by a mortgage on a residence in foreclosure or contained in the
mortgage;
(6)
Assist the owner in foreclosure or loan default to obtain a loan or advance of
funds;
(7)
Avoid or ameliorate the impairment of the owner's credit resulting from the
recording
of a
notice of default or the conduct of a foreclosure sale; or
(8)
Save the owner's residence from foreclosure.
(b)
A foreclosure consultant does not include any of the following:
(1)
A person licensed to practice law in this state when the person renders service
in the
course
of his or her practice as an attorney-at-law;
(2)
A person licensed as a credit counselor under chapter 19-14.7, when the person
is
acting
as a credit counselor in accordance with the chapter;
(3)
A person licensed as a real estate broker or salesperson under chapter 5-20.5
when the
person
engages in acts whose performance requires licensure under that chapter;
(4)
A person licensed as an accountant under chapter 5-3.1 when the person is
acting in
any
capacity for which the person is licensed under those provisions;
(5)
A person or the person's authorized agent acting under the express authority or
written
approval
of the department of housing and urban development or other department or
agency of
the
United States or this state to provide services;
(6)
A person who holds or is owed an obligation secured by a lien on any residence
in
foreclosure
when the person performs services in connection with this obligation or lien of
the
obligation
or lien did not arise as the result of or as part of a proposed foreclosure
reconveyance;
(7)
Any person or entity doing business under any law of this state, or of the
United
States
relating banks, trust companies, savings and loan associations, industrial loan
and thrift
companies,
regulated lenders, credit unions, insurance companies, or a mortgagee which is
a
United
States Department of Housing and Urban Development approved mortgagee and any
subsidiary
or affiliate of these persons or entities, and any agent or employee of these
persons or
entities
while engaged in the business of these persons or entities;
(8)
A person licensed as a residential mortgage originator or servicer pursuant to
chapter
19-14,
when acting under the authority of that license or a foreclosure purchaser as
defined in
section
5-78 79-10;
(9)
A nonprofit agency or organization that offers counseling or advice to an owner
of a
home
in foreclosure or loan default if they do not contract for services with
for-profit lenders or
foreclosure
purchasers; and
(10)
A judgment creditor of the owner, to the extent that the judgment creditor's
claim
accrued
prior to the personal service of the foreclosure notice required by section
34-27-4, but
excluding
a person who purchased the claim after such personal service.
(c)
"Foreclosure reconveyance" means a transaction involving:
(1)
The transfer of title to real property by a foreclosed homeowner during a
foreclosure
proceeding,
either by transfer of interest from the foreclosed homeowner or by creation of
a
mortgage
or lien or encumbrance during the foreclosure process that allows the acquirer
to obtain
title
to the property by redeeming the property as a junior lienholder; and
(2)
The subsequent conveyance, or promise of a subsequent conveyance, of an
interest
back
to the foreclosed homeowner by the acquirer or a person acting in participation
with the
acquirer
that allows the foreclosed homeowner to possess the real property following the
completion
of the foreclosure proceeding, which interest includes, but is not limited to,
an interest
in a
contract for deed, purchase agreement, option to purchase, or lease.
(d)
"Person" means any individual, partnership, corporation, limited
liability company,
association,
or other group, however organized.
(e)
"Service" means and includes, but is not limited to, any of the
following activities:
(1)
Debt, budget or financial counseling of any type;
(2)
Receiving money for the purpose of distributing it to creditors in payment or
partial
payment
of any obligation secured by a lien on a residence in foreclosure;
(3)
Contacting creditors on behalf of an owner of a residence in foreclosure;
(4)
Arranging or attempting to arrange for an extension of the period within which
the
owner
of a residence in foreclosure may cure the owner's default and reinstate his or
her
obligation
pursuant to section 34-23-3;
(5)
Arranging or attempting to arrange for any delay or postponements of the time
of sale
of
the residence in foreclosure;
(6)
Advising the filing of any document or assisting in any manner in the
preparation of
any
document for filing with any bankruptcy court; or
(7)
Giving any advise, explanation, or instruction to an owner of a residence in
foreclosure,
which in any manner relates to the cure of a default in or the reinstatement of
an
obligation
secured by a lien of the residence in foreclosure, the full satisfaction of
that obligation,
or
the postponement or avoidance of a sale of a residence in foreclosure, pursuant
to a power of
sale
contained in any mortgage;
(f)
"Residence in foreclosure" means residential real property consisting
of one to four (4)
family
dwelling units, one of which the owner occupies as his or her principal place
of residence,
and
against which there is an outstanding notice of pendency of foreclosure,
pursuant to section
34-27-4,
or against which a summons and complaint has been served under section 34-27-1.
(g)
"Owner" means the record owner of the residential real property in
foreclosure at the
time
the notice of pendency was recorded, or the summons and complaint served.
(h)
"Contract" means any agreement, or any term in any agreement, between
a
foreclosure
consultant and an owner for the rendition of any services as defined in
paragraph (e).
5-79-2.
Rescission of foreclosure consultant contract. -- (a) In addition to
any other
right
under law to rescind a contract, an owner has the right to cancel such a
contract until
midnight
of the third (3rd) business day after the day on which the owner signs a
contract that
complies
with section 5-78 79-3.
(b)
Cancellation occurs when the owner gives written notice of cancellation to the
foreclosure
consultant at the address specified in the contract.
(c)
Notice of cancellation, if given by mail, is effective when deposited in the
mail
properly
addressed with postage prepaid.
(d)
Notice of cancellation given by the owner need not take the particular form as
provided
with the contract and, however expressed, is effective if it indicates the
intention of the
owner
not to be bound by the contract.
5-79-3.
Contract. -- (a) Every contract must be in writing and must fully
disclose the
exact
nature of the foreclosure consultant's services and the total amount and terms
of
compensation.
(b)
The following notice, printed in at least 14-point boldface type and completed
with
the
name of the foreclosure consultant, must be printed immediately above the
statement required
by
paragraph (c):
"NOTICE REQUIRED BY RHODE ISLAND LAW
(Name or anyone working for him or her CANNOT:
(1)
Take any money from you or ask you for money until
..(Name) has completely
finished
doing everything he or she said he or she would do; and
(2) Ask you to sign or have you sign any
lien, mortgage or deed."
(c)
The contract must be written in the same language as principally used by the
foreclosure
consultant to describe his or her services or to negotiate the contract, must
be dated
and
signed by the owner, and must contain in immediate proximity to the space
reserved for the
owner's
signature a conspicuous statement in a size equal to at least 10-point boldface
type, as
follows:
"You,
the owner, may cancel this transaction at any time prior to midnight of the
third
(3rd)
business day after the date of this transaction. See the attached notice of
cancellation form
for
an explanation of this right."
(d)
The contract must contain on the first (1st) page, in a type size no smaller
than that
generally
used in the body of the document, each of the following:
(1)
The name and address of the foreclosure consultant to which the notice of
cancellation
is to be mailed; and
(2)
The date the owner signed the contract.
(e)
The contract must be accompanied by a completed form in duplicate, captioned
"notice
of cancellation," which must be attached to the contract, must be easily
detachable, and
must contain
in at least 10-point type the following statement written in the same language
as
used
in the contract:
"NOTICE OF CANCELLATION
..(Enter date of transaction)
You
may cancel this transaction, without any penalty or obligation, until midnight
of the
third
(3rd) business day from the above date.
To
cancel this transaction, mail or deliver a signed and dated copy of this
cancellation
notice,
or any other written notice to
(Name of foreclosure consultant) at
(Address
of
foreclosure consultant's place of business) NOT LATER THAN MIDNIGHT OF
(Date)
I hereby cancel this transaction
(Date)
.(Owner's signature)"
(f)
The foreclosure consultant shall provide the owner with a copy of the contract
and the
attached
notice of cancellation immediately upon execution of the contract.
(g)
The three (3) business days during which the owner may cancel the contract
shall not
begin
to run until the foreclosure consultant has complied with this section.
5-79-4.
Violations. (a) It is a violation for a foreclosure consultant to:
(1)
Claim, demand, charge, collect, or receive any compensation until after the
foreclosure
consultant has fully performed each and every service the foreclosure
consultant
contracted
to perform or represented he or she would perform;
(2)
Claim, demand, charge, collect, or receive any fee, interest, or any other
compensation
for any reason which exceeds eight percent (8%) per annum of the amount of any
loan
which the foreclosure consultant may make to the owner;
(3)
Take any wage assignment, any lien on any type of real or personal property, or
other
security
to secure the payment of compensation. Any such security is void and
unenforceable;
(4)
Receive any consideration from any third-party in connection with services
rendered
to an
owner unless the consideration is first fully disclosed to the owner;
(5)
Acquire any interest, directly, or indirectly, or by means of a subsidiary or
affiliate in
a
residence in foreclosure from an owner with whom the foreclosure consultant has
contracted;
(6)
Take any power of attorney from an owner for any purpose, except to inspect
documents
as provided by law; or
(7)
Induce or attempt to induce any owner to enter a contract which does not comply
in
all
respects with section 5-78 79-3.
5-79-5.
Waiver not allowed. Any waiver by an owner of the provisions of
sections 5-
78 79-1 through 5-78 79-9 is void and
unenforceable as contrary to public policy. Any attempt by a
foreclosure
consultant to induce an owner to waive the owner's rights is a violation of
sections 5-
78 79-1 through 5-78 79-9.
5-79-6.
Remedies. (a) Any violation of sections 5-78 79-1 through
5-78 79-9 is considered to
be a
violation of section 6-13.1-2, and all remedies of section 6-13.1-5.2 are
available for such an
action.
A private cause of action under section 6-13.1-5.2 by a foreclosed homeowner is
in the
public
interest. An owner may bring an action against a foreclosure consultant for any
violation of
sections
5-78 79-1 through 5-78 79-9. Any judgment against the mortgage
foreclosure consultant actual
damages,
reasonable attorney fees and costs, and appropriate equitable relief.
(b)
The court may award punitive damages up to one and one half (1½) times the
compensation
charged by the foreclosure consultant if the court finds that the foreclosure
consultant
violated the provisions of subsections 5-78 79-4 (1), (2) or (4), and
the foreclosure
consultant's
conduct was in bad faith.
(c)
The rights and remedies provided in paragraph (a) are cumulative to, and not a
limitation
of, any other rights and remedies provided by law.
(d)
Any action brought pursuant to this section must be commenced within four (4)
years
from
the date of the alleged violation.
(e)
Notwithstanding any other provision of this section, no action may be brought
on the
basis
of a violation of section 5-78 79-1 through 5-78 79-9, except by
an owner against whom the
violation
was committed or by the department of attorney general.
5-79-7.
Penalty. -- Any person who commits any violation described in
section 5-78 79-4
may,
upon conviction, be fined not more than ten thousand dollars ($10,000) or
imprisoned for
not
more than one year, or both. Prosecution or conviction for any violation
described in section
5-78
79-4 will not bar prosecution or conviction for any other offenses. These
penalties are
cumulative
to any other remedies or penalties provided by law.
5-79-8.
Provisions severable. -- If any provision of sections 5-78
79-1 through 5-48 79-9 or the
application
of any of these provisions to any person or circumstance is held to be unconstitutional
and
void, the remainder of sections 5-78 79-1 through 5-78 79-9
remains valid.
5-79-9.
Liability. -- (a) Any provision in a contract that attempts or
purports to require
arbitration
of any dispute arising under sections 5-78 79-1 through 5-78 79-9
is void at the option of the
owner.
SECTION
2. Title 5 of the General Laws entitled "BUSINESSES AND PROFESSIONS"
is
hereby amended by adding thereto the following chapter:
CHAPTER 80
MORTGAGE FORECLOSURE PURCHASERS
5-80-1. Definitions. -- As used for sections 5-79-1 through
5-79-9:
(a)
"Foreclosed homeowner" means an owner of residential real property,
including a
condominium,
that is the primary residence of the owner and whose mortgage on the real
property
is or was in foreclosure.
(b)
"Foreclosure conveyance" means a transaction involving:
(1)
The transfer of title to real property by a foreclosed homeowner during a
foreclosure
proceeding,
either by transfer of interest from the foreclosed homeowner or by creation of
a
mortgage
or other lien or encumbrance during the foreclosure process that allows the
acquirer to
obtain
title to the property by redeeming the property as a junior lienholder; and
(2)
The subsequent conveyance, or promise of a subsequent conveyance, of an
interest
back
to the foreclosed homeowner by the acquirer or a person acting in participation
with the
acquirer
that allows the foreclosed homeowner to posseses the real property following
the
completion
of the foreclosure proceeding, which interest includes, but is not limited to,
an interest
in a
contract for deed, purchase agreement, option to purchase, or lease.
(c)
"Foreclosure purchaser" means a person that has acted as the acquirer
in more than
four
(4) foreclosure reconveyances during any twenty-four (24) month period.
Foreclosure
purchaser
also includes a person that has acted in joint venture or joint enterprise with
one or
more
acquirers in more than four (4) foreclosure reconveyances during any
twenty-four (24)
month
period. A federal or state chartered bank, savings bank, thrift, or credit
union is not a
foreclosure
purchaser.
(d)
"Resale" means a bona fide market sale of the property subject to the
foreclosure
reconveyance
by the foreclosure purchaser to an unaffiliated third-party.
(e)
"Resale price" means the gross sale price of the property on resale.
5-80-2.
Contract requirement; form and language. -- A foreclosure purchaser
shall
enter
into every foreclosure reconveyance in the form of a written contract. Every
contract must
be
written in letters of a size equal to at least 12-point boldface type, in the
same language
principally
used by the foreclosure purchaser and foreclosed homeowner to negotiate the
sale of
the
residence in foreclosure and must be fully completed and signed and dated by
the foreclosed
homeowner
and foreclosure purchaser before the execution of any instrument of conveyance
of
the
resident in foreclosure.
5-80-3.
Contract terms. -- (a) Every contract required by section 5-79
80-2 must contain
the
entire agreement of the parties and must include the following terms:
(1)
The name, business address, and the telephone number of the foreclosure
purchaser;
(2)
The address of the residence in foreclosure;
(3)
The total consideration to be given by the foreclosure purchaser in connection
with or
incident
to the sale;
(4)
A complete description of the terms of payment or other consideration
including, but
not
limited to, any services of any nature that the foreclosure purchaser
represents he or she will
perform
for the foreclosed homeowner before or after the sale;
(5)
The time at which possession is to be transferred to the foreclosure purchaser;
(6)
A complete description of the terms of any related agreement designed to allow
the
foreclosed
homeowner to remain in the home, such as a rental agreement, repurchase
agreement,
contract
for deed, or lease with option to buy;
(7)
A notice of cancellation as provided in subsection 5-79 80-5(b); and
(8)
The following notice in at least 14-point boldface type, if the contract is
printed or in
capital
letters if the contract is typed, and completed with the name of the
foreclosure purchaser,
immediately
above the statement required by subsection 5-79 80-5(a):
"NOTICE REQUIRED BY RHODE ISLAND LAW
Until your right to cancel this contract has ended,
(Name)
or anyone working for
.(Name) CANNOT ask you to
sign
or have you sign any deed or any other document."
The
contract required by this section survives delivery of any instrument of
conveyance
of
the residence in foreclosure, and has no effect on persons other than the
parties to the contract.
5-80-4. Contract cancellation. (a) In addition to any other
right of rescission, the
foreclosed
homeowner has the right to cancel any contract with a foreclosure purchaser
until
midnight
of the fifth (5th) business day following the day on which the foreclosed
homeowner
signs
a contract that complies with sections 5-79 80-1 through 5-79
80-6 or until 8:00 a.m. on the last
day of
the period during which the foreclosed homeowner has a right of redemption,
whichever
occurs
first.
(b)
Cancellation occurs when the foreclosed homeowner delivers, by any means,
written
notice
of cancellation to addresses specified in the contract.
(c)
A notice of cancellation given by the foreclosed homeowner need not take the
particular
from as provided with the contract.
(d)
Within ten (10) days following the receipt of a notice of cancellation given in
accordance
with this section, the foreclosure purchaser shall return without condition any
original
contract
and any other documents signed by the foreclosed homeowner.
5-80-5.
Notice of cancellation. (a) The contract must contain in immediate
proximity
to the
space reserved for the foreclosed homeowner's signature a conspicuous statement
in a size
equal
to at least 14-point boldface type, if the contract is printed, or in capital
letters, if the
contract
is typed, as follows:
"You
may cancel this contract for the sale of your house without any penalty or
obligation
at anytime before
..(Date and time of day) See the attached notice of
cancellation
form
for an explanation of this right."
The
foreclosure purchaser shall accurately enter the date and time of day on which
the
cancellation
right ends.
(b)
The contract must be accompanied by a completed form in duplicate, captioned
"notice
of cancellation" in a size equal to a 12-point boldface type if the
contract is printed, or in
capital
letters, if the contract is typed, followed by a space in which the foreclosure
purchaser
shall
enter the date on which the foreclosed homeowner executes any contract. This
form must be
attached
to the contract, must be easily detachable, and must contain in type of at
least 10-points,
if
the contract is printed or in capital letters if the contract is typed, the
following statement
written
in the same language as used in the contract:
"NOTICE OF CANCELLATION
(Enter date contract signed)
You may cancel this contract for the sale of your
house, without any penalty or
obligation, at any time before
(enter date and time
of day)
To
cancel this transaction, personally deliver a signed and dated copy of this
cancellation
notice
to
(Name of purchaser) at
(Street address of purchaser's place of business)
NOT
LATER THAN (Enter date and time of day_ I hereby cancel this
transaction
..(Date)
.(Seller's signature)"
(c)
The foreclosure purchaser shall provide the foreclosed homeowner with a copy of
the
contract
and the attached notice of cancellation at the time the contract is executed by
all parties.
(d)
The five (5) business days during which the foreclosed homeowner may cancel the
contract
must not begin to run until all parties to the contract have executed the
contract and the
foreclosure
purchaser has complied with this section.
5-80-6.
Waiver. -- Any waiver of the provisions of sections 5-79 80-1
through 5-79 80-9 is
void
and unenforceable as contrary to public policy except a consumer may waive the
five (5) day
right
to cancel provided in section 5-79 80-4 if the property is subject to a
foreclosure sale within the
five
(5) business days, and the foreclosed homeowner agrees to waive his or her
right to cancel in
a
handwritten statement signed by all parties holding title to the foreclosed
property.
5-80-7.
Arbitration. -- (a) Any provision in a contract that attempts or
purports to require
arbitration
of any dispute arising under sections 5-79 80-1 through 5-79 80-9
is void at the option of the
owner.
5-80-8.
Prohibited practices. -- A foreclosure purchaser shall not:
(a)
Enter into, or attempt to enter into, a foreclosure reconveyance with a
foreclosed
homeowner
unless:
(1)
The foreclosure purchaser verifies and can demonstrate that the foreclosed
homeowner
has a reasonable ability to pay for the subsequent conveyance of an interest
back to
the
foreclosed homeowner. In the case of a lease with an option to purchase, payment
ability also
included
the reasonable ability to make the lease payments and purchase the property
within the
term
of the option to purchase. There is a rebuttable presumption that a homeowner
is reasonably
able
to pay for the subsequent conveyance if the owner's payments for primary
housing expenses
and
regular principal and interest payments on other personal debt, on a monthly
basis, do not
exceed
sixty percent (60%) of the owner's monthly gross income. For the purposes of
this section,
"primary
housing expenses" means the sum of payments for regular principal,
interest, rent,
utilities,
hazard insurance, real estate taxes, and association dues. There is a
rebuttable
presumption
that the foreclosure purchaser has not verified reasonable payment ability if
the
foreclosure
purchaser has not obtained documents other than a statement by the foreclosed
homeowner
of assets, liabilities, and income;
(2)
The foreclosure purchaser and the foreclosed homeowner complete a closing for
any
foreclosure
reconveyance in which the foreclosure purchaser obtains a deed or mortgage from
a
foreclosed
homeowner. For purposes of this section, "closing" means an in-person
meeting to
complete
final documents incident to the sale of the real property or creation of a
mortgage on the
real
property conducted by a closing agent who is not employed by or an affiliate of
the
foreclosure
purchaser;
(3)
The foreclosure purchaser obtains the written consent of the foreclosed
homeowner to
a
grant by the foreclosure purchaser of any interest in the property during such
times as the
foreclosed
homeowner maintains any interest in the property; and
(4)
The foreclosure purchaser complies with the requirements of the federal home
Ownership
Equity Protection Act, United States Code, title 15, section 1639, or its
implementing
regulation,
Code of Federal Regulations, title 12, sections 226.31 to 226.34, for any
foreclosure
reconveyance
in which foreclosed homeowner obtains a vendee interest in a contract for deed;
(b)
Fail to either;
(1)
Ensure that title to the subject dwelling has been reconveyed to the foreclosed
homeowner;
or
(2)
Make a payment to the foreclosed homeowner such that the foreclosed homeowner
has received
consideration in an amount of at least eighty two percent (82%) of the fair
market
value
of the property within one hundred fifty (150) days of either the eviction or
voluntary
relinquishment
of possession of the dwelling by the foreclosed homeowner. The foreclosure
purchaser
shall make a detailed accounting of the basis for the payment amount, or a
detailed
accounting
of the reasons for failure to make a payment, including providing written
documentation
of expenses, within this one hundred fifty (150) day period. The accounting
shall
be on
a form prescribed by the department of attorney general, in consultation with
the
department
of business regulation, without being subject to the rulemaking procedures of
chapter
42-35.
For purposes of this provision, the following applies:
(i)
There is a rebuttable presumption that an appraisal by a person licensed or
certified by
an
agency of the federal government or this state to appraise real estate constitutes
the fair market
value
of the property;
(ii)
The time for determining the fair market value amount shall be determined in
the
foreclosure
reconveyance contract as either at the time of the execution of the foreclosure
reconveyance
contract or at resale. If the contract states that the fair market value shall
be
determined
at the time of resale, the fair market value shall be the resale price if it is
sold within
one
hundred twenty (120) days of the eviction or voluntary relinquishment of the property
by the
foreclosed
homeowner. If the contract states that the fair market value shall be
determined at the
time
of resale, and the resale is not completed within one hundred twenty (120) days
of the
eviction
or voluntary relinquishment of the property by the foreclosed homeowner, the
fair
market
value shall be determined by an appraisal conducted during this one hundred
twenty (120)
period
and payment, if required, shall be made to the homeowner, but the fair market
value shall
be
recalculated as the resale price, on resale and an additional payment amount,
if appropriate
based
on the resale price, shall be made to the foreclosed homeowner within fifteen
(15) days of
resale,
and a detailed accounting of the basis for the payment amount, or a detailed
accounting of
the
reasons for failure to make additional payment, shall be made within fifteen
(15) days of
resale,
including providing written documentation of expenses. The accounting shall be
on a form
prescribed
by the department of attorney general, in consultation with the department of
business
regulation,
without being subject to the rulemaking procedures of chapter 42-35;
(iii)
"Consideration" shall mean any payment or item of value provided to
the foreclosed
homeowner,
including unpaid rent or contract for deed payments owed by the foreclosed
homeowner
prior to the date of eviction or voluntary relinquishment of the property,
reasonable
costs
paid to third parties necessary to complete the foreclosure reconveyance
transaction,
payment
of money to satisfy a debt or legal obligation of the foreclosed homeowner, or
the
reasonable
cost of repairs for damage to the dwelling caused by the foreclosed homeowner;
(iv)
"Consideration" shall not include amounts imputed as a down payment
or fee to the
foreclosure
purchaser, or a person acting in participation with the foreclosure purchaser,
incident
to a
contract for deed, lease, or option to purchase entered into as part of the
foreclosure
reconveyance,
except for reasonable costs paid to third parties necessary to complete the
foreclosure
reconveyance;
(c)
Enter into repurchase or lease terms as part of the subsequent conveyance that
are
unfair
or commercially unreasonable, or engage in any other unfair conduct;
(d)
Represent, directly or indirectly, that:
(1)
The foreclosure purchaser is acting as an advisor or a consultant, or in any
other
manner
represents that the foreclosure purchaser is acting on behalf of the homeowner;
(2)
The foreclosure purchaser has certification or licensure that the foreclosure
purchaser
does
not have, or that the foreclosure purchaser is not a member of a licensed
profession if that is
untrue;
(3)
The foreclosure purchaser is assisting the foreclosed homeowner to "save
the house"
or
substantially similar phrase; or
(4)
The foreclosure purchaser is assisting the foreclosed homeowner in preventing a
completed
foreclosure if the result of the transaction is that the foreclosed homeowner
will not
complete
a redemption of the property;
(e)
Make any other statements, directly or by implication, or engage in any other
conduct
that
is false, deceptive, or misleading, or that has the likelihood to cause
confusion or
misunderstanding,
including, but not limited to, statements regarding the value of the residence
in
foreclosure,
the amount of proceeds the foreclosed homeowner will receive after a
foreclosure
sale,
any contract term, or the foreclosed homeowner's rights or obligations incident
to or arising
out
of the foreclosure reconveyance; or
(f)
Do any of the following until the time during which the foreclosed homeowner
may
cancel
the transaction has fully elapsed:
(1)
Accept from any foreclosed homeowner an execution of, or induce any foreclosed
homeowner
to execute, any instrument of conveyance of any interest in the residence in
foreclosure;
(2)
Record with the records of land evidence in the city or town where such
foreclosed
property
is located any document, including, but not limited to, any instrument of
conveyance,
signed
by the foreclosed homeowner;
(3)
Transfer or encumber or purport to transfer or encumber any interest in the
residence
in
foreclosure to any third-party, provided no grant of any interest or
encumbrance is defeated or
affected
as against a bona fide purchaser or encumbrance for value and without notice of
a
violation
of section 5-79 80-1 through 5-79 80-9, and knowledge on the part
of any such person or
entity
that the property was "residential real property in foreclosure" does
not constitute notice of
a
violation of sections 5-79 80-1 through 5-79 80-9. This section
does not abrogate any duty of inquiry
which
exists as to rights or interest of persons in possession of the residential
real property in
foreclosure;
or
(4)
Pay the foreclosed homeowner any consideration.
5-80-9.
Enforcement. -- (a) Remedies- A violation of sections 5-79
80-1 through 5-79 80-8 is
considered
to be a violation of section 6-13.1-2 and all the remedies of section
6-13.1-5.2 are
available
for such an action. A private right of action under section 6-13.1-5.2 by a
foreclosed
homeowner
is in the public interest.
(b)
Exemplary damages- In a private right of action under section 6-13.1-5.2 for a
violation
of section 5-79 80-8, the court may award exemplary damages of any
amount. In the event
the
court determines that an award of exemplary damages is appropriate, the amount
of
exemplary
damages awarded shall not be less than one and one half (1 ½) times the
foreclosed
homeowner's
actual damages. Any claim for exemplary damages brought pursuant to this
section
must be
commenced within four (4) years after the date of the alleged violation.
(c)
Remedies cumulative The remedies provided in this section are cumulative and
do
not
restrict any remedy that is otherwise available. The provisions of section 5-79
80-1 through 5-79 80-
9 are
not exclusive and are in addition to any other requirements, rights, remedies
and penalties
provided
by law.
(d)
Criminal penalty Any foreclosure purchaser who engages in any practice which
would
operate as a fraud or deceit upon a foreclosed homeowner may, upon conviction,
be fined
not
more than fifty thousand dollars ($50,000) or imprisoned not more then one
year, or both.
Prosecution
or conviction for any one of the violations does not bar prosecution or
conviction for
any
other offenses.
(e)
Failure of transaction Failure of the parties to complete the reconveyance
transaction,
in the absence of additional misconduct, shall not be subject a foreclosure
purchaser
to
the criminal penalties under section 5-78 79-7 or 5-79 80-9.
(f)
Limitation Notwithstanding any other provisions of this section, no action
may be
brought
on the basis of a violation of sections 5-79 80-1 through 5-79
80-9, except by an owner against
whom
the violation was committed or by the department of attorney general.
SECTION
3. This act shall take effect upon passage.
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LC02043/SUB A
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