2024 -- H 7965

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LC005306

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

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A N   A C T

RELATING TO PROPERTY -- MORTGAGE FORECLOSURE AND SALE

     Introduced By: Representatives Cruz, Kislak, Felix, and Dawson

     Date Introduced: March 05, 2024

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 34-27 of the General Laws entitled "Mortgage Foreclosure and Sale"

is hereby amended by adding thereto the following section:

     34-27-9. Foreclosure bundling prohibited.

     (a) The purpose and intent of this section is to:

     (1) Allow for prospective owner-occupants and eligible bidders to have the first

opportunity to purchase properties that have been acquired through the foreclosure process by an

entity that annually forecloses on twenty-five (25) or more residential real properties in Rhode

Island.

     (2) Promote owner occupancy by enacting legislation that provides owner-occupants and

affordable housing providers an opportunity for their offers to be considered on foreclosed

properties prior to other offers.

     (3) Ensure that the requirements of this section are consistent with the goal to expand home

ownership opportunities, strengthen neighborhoods and communities, while also providing that

sellers are required to respond to offers received during the first look period before accepting or

considering investor offers to purchase single-family homes.

     (b) For purpose of this section:

     (1) "Bundled sale" means the sale of two (2) or more parcels of real property containing

one to four (4) residential dwelling units, inclusive, at least two (2) of which have been acquired

through foreclosure under a mortgage.

     (2) "Eligible bidder" means any of the following:

     (i) A prospective owner-occupant.

     (ii) A nonprofit corporation that meets all of the following requirements:

     (A) The nonprofit corporation has a determination letter from the Internal Revenue Service

affirming its tax-exempt status pursuant to Section 501(c)(3) of the Internal Revenue Code and is

not a private foundation as that term is defined in Section 509 of the Internal Revenue Code;

     (B) The nonprofit corporation is based in Rhode Island;

     (C) All of the board members of the nonprofit corporation have their primary residence in

Rhode Island; and

     (D) The primary activity of the nonprofit corporation is the development and preservation

of affordable rental or home ownership housing in Rhode Island;

     (iii) Any public land trust based in Rhode Island.

     (iv) The state, or any city, town, public authority, public agency, and any other political

subdivision or public corporation located in the state.

     (3) "Institution" means any of the following, if that person or entity, during its immediately

preceding annual reporting period, as established with its primary regulator, foreclosed on twenty-

five (25) or more residential real properties, containing no more than four (4) dwelling units:

     (i) A depository institution chartered under state or federal law; and

     (ii) Any person or institution licensed pursuant to § 19-14-2 that provides consumer or

commercial loans.

     (4) "Prospective owner-occupant" means a natural person whose affidavit or declaration

under subsection (c)(2) of this section states all of the following:

     (i) They will occupy the property as their primary residence within sixty (60) days of the

forclosure deed being recorded;

     (ii) They will maintain their occupancy for at least one year; and

     (iii) They are not any of the following:

     (A) The mortgagor;

     (B) The child, spouse, or parent of the mortgagor;

     (C) The grantor of a living trust that was named in the title to the property when the notice

of default was recorded;

     (D) An employee, officer, or member of the mortgagor; or

     (E) A person with an ownership interest in the mortgagor, unless the mortgagor is a publicly

traded company.

     (iv) They are not acting as the agent of any other person or entity in purchasing the real

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property.

     (c) All of the following shall apply to sales of real property containing one to four (4)

residential dwelling units, inclusive, that is acquired through foreclosure under a mortgage by an

institution or that is acquired at a foreclosure sale by an institution:

     (1) During the first thirty (30) days after the property is listed for sale, the institution shall

only accept offers from eligible bidders;

     (2) An eligible bidder shall submit with their offer to the institution an affidavit or

declaration, that states they are either of the following:

     (i) An eligible bidder pursuant to subsection (b)(2)(ii) through (iv) of this section; or

     (ii) A prospective owner-occupant purchasing the property as a primary residence pursuant

to this subsection.

     (3) Any fraudulent statements may be subject to criminal or civil liability;

     (4) The institution shall respond, in writing, to all offers received from eligible bidders

during the first thirty (30) days after the property is listed for sale before considering any other

offers; and

     (5) Notwithstanding any other general or public law to the contrary, an institution shall not

conduct a bundled sale.

     SECTION 2. This act shall take effect on January 1, 2025.

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LC005306

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY -- MORTGAGE FORECLOSURE AND SALE

***

     This act would provide prospective owner-occupants a first opportunity to purchase

properties acquired through foreclosure and would prohibit bundled foreclosure sales.

     This act would take effect on January 1, 2025.

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