Chapter 054

2007 -- H 5485 SUBSTITUTE A

Enacted 06/20/07

A N A C T

RELATING TO PROPERTY -- RHODE ISLAND HOME LOAN PROTECTION ACT

Introduced By: Representative John J. McCauley

Date Introduced: February 27, 2007

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 34-25.2-7 and 34-25.2-11 of the General Laws in Chapter 34-25.2

entitled "Rhode Island Home Loan Protection Act" are hereby amended to read as follows:

34-25.2-7. Assignee liability. [Effective December 31, 2006.] -- (a) Any person who

purchases or is otherwise assigned a high-cost home loan shall be subject to all affirmative claims

and any defenses with respect to the loan that the borrower could assert against the original

creditor of the loan; provided, that this subsection (a) section shall not apply if the purchaser or

assignee demonstrates by a preponderance of the evidence that it:

      (1) Has in place at the time of the purchase or assignment of the subject loans, policies

that expressly prohibit its purchase or acceptance of assignment of any high-cost home loans;

      (2) Requires by contract that a seller or assignor of home loans to the purchaser or

assignee represents and warrants to the purchaser or assignee that either: (a) the seller or assignor

will not sell or assign any high-cost home loans to the purchaser or assignee; or (b) that such

seller or assignor is a beneficiary of a representation and warranty from a previous seller or

assignor to that effect; and

      (3) Exercises reasonable due diligence at the time of purchase or assignment of high-cost

home loans or within a reasonable period of time after the purchase or assignment of such high-

cost home loans, intended by the purchaser or assignee to prevent the purchaser or assignee from

purchasing or taking assignment of any high-cost home loans; provided, further, that reasonable

due diligence shall provide for sampling and shall not require loan-by-loan review.

      (b) Limited to amounts required to reduce or extinguish the borrower's liability under the

high-cost home loan plus amounts required to recover costs, including reasonable attorneys' fees,

a borrower acting only in an individual capacity may assert claims that the borrower could assert

against a creditor of the high-cost home loan against any subsequent holder or assignee of the

high-cost home loan as follows: In the event that a purchaser or assignee does not prevail under

subsection (a), any recovery by a borrower, under this section, shall be limited to amounts

required to reduce or extinguish the borrower's liability under the high-cost home loan plus

amounts required to recover costs, including reasonable attorneys' fees. Any such claim asserted

by a borrower against a subsequent holder or assignee of the high-cost home loan may be asserted

by a borrower acting only in an individual capacity and must be asserted as follows:

      (1) Within five (5) years of the closing of a high-cost home loan, a violation of this act in

connection with the loan as an original action; and

      (2) At any time during the term of a high-cost home loan, after an action to collect on the

high-cost home loan or foreclose on the collateral securing the high-cost home loan has been

initiated or the debt arising from the high-cost home loan has been accelerated or the high-cost

home loan has become sixty (60) days in default, any defense, claim or counterclaim, or action to

enjoin foreclosure or preserve or obtain possession of the home that secures the loan.

      (c) The provisions of this section shall be effective notwithstanding any other provision

of law; provided, that nothing in this section shall be construed to limit the substantive rights,

remedies or procedural rights available to a borrower against any creditor, assignee or holder

under any other law. The rights conferred on borrowers by subsections (a) and (b) of this section

are independent of each other and do not limit each other.

34-25.2-11. Exemption. [Effective December 31, 2006.] -- The provisions of this

chapter shall not apply to:

      (a) Any national bank, federal savings bank, federal credit union, credit union, or

financial institution, as defined under section 19-1-1, or their wholly-owned subsidiary; and

      (b) The Federal Housing Administration, the Department of Veterans Affairs, or other

state or federal housing finance agencies.

     SECTION 2. This act shall take effect upon passage.

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LC01695/SUB A

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