Chapter 309
2008 -- S 2057
SUBSTITUTE A AS AMENDED
Enacted 07/08/08
A N A C T
RELATING
TO PROPERTY - MORTGAGE FORECLOSURE AND SALE
Introduced
By: Senators Doyle, Tassoni, McBurney, and Connors
Date
Introduced: January 10, 2008
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:
34-27-6.
Payment of outstanding taxes. -- (a) In connection with any sale by
public
auction made under and according to the
provisions of any mortgage of real estate or any power
of sale contained therein or annexed thereto, if
the mortgagee or an affiliate of the mortgagee is
the successful bidder for the real estate or
property offered for sale, the foreclosure deed shall be
recorded in the records of land evidence for the
municipality where the real estate is located
within forty-five (45) days after the date of the
sale. The deed shall be captioned "foreclosure
deed" and the date of the foreclosure shall
be stated in the deed. This subsection (a) shall not
apply to any such sale if, prior to the
recording of the foreclosure deed: (1) the mortgagor files a
voluntary proceeding, or an order for relief is
entered in any involuntary proceeding against the
mortgagor, under any federal or state bankruptcy
or insolvency statute; or (2) the mortgagee
abandons or otherwise terminates such sale.
(b)
Notwithstanding any other general law or local ordinance to the contrary, the
grantee
of real estate named in the foreclosure deed
shall pay to the municipality, on or before the date
the foreclosure deed is recorded, all taxes and
other assessments, including water charges, interest
and penalties, if any, which constitute liens on
the real estate described in the foreclosure deed
and which are due and owing on the recording
date (collectively, "taxes due and owing");
provided, however, that a grantee shall not be deemed
in violation of this subsection (b) if the
grantee shall apply for a municipal lien
certificate from the tax collector for the municipality
during the forty-five (45) day period ending on
the day on which the foreclosure deed is recorded
and shall pay the taxes due and owing within
thirty (30) days after the date on which the
municipal lien certificate is mailed by the tax
collector by the United States mail, postage prepaid,
certified, return receipt requested, and
addressed to the grantee at the address therefor set forth in
the application for the municipal lien
certificate. Taxes due and owing for purposes of this
section shall include only installments thereof
required by law to be paid as of the date the
foreclosure deed is recorded.
(c) Upon a
violation of any one or more of the requirements of this section, a penalty
shall accrue at the rate of forty dollars
($40.00) per month (in the aggregate) for each month or
part thereof during which such violation or
violations continue. For purposes of determining the
penalty due hereunder, a month commences on the
day on which the first such violation occurs
and a new month commences on the same day (or if
there is no such day, then on the last day) of
each succeeding calendar month until all taxes
due and owing are paid. In the event of a violation
of subsection (a), taxes due and owing shall be
determined as of the date required thereunder for
the recording of a foreclosure deed.
(d) As used in this
section, the term "affiliate" shall mean, with respect to any
mortgagee,
any individual or legal entity that controls, is
controlled by or is under common control with such
mortgagee, and the term "foreclosure
deed" shall mean the mortgagee's deed or other conveyance
of title to the successful bidder at any sale by
public auction made under and according to the
provisions of any mortgage of real estate or any
power of sale contained therein or annexed
thereto.
SECTION 2. Section
19-9-2 of the General Laws in Chapter 19-9 entitled "Community
Obligations and Banking Offenses" is hereby
amended to read as follows:
19-9-2.
Escrow accounts -- Interest. -- (a) Every mortgagee holding funds of a
mortgagor in escrow for the payment of taxes and
insurance premiums with respect to mortgaged
property located in this state shall pay or
credit interest on those funds at a rate of not less than
four percent (4%) per annum, which shall be
credited annually on December 31. equal to the rate
paid to the mortgagee on its regular savings
account, if offered, and otherwise at a rate not less
than the prevailing market rate of interest for
regular savings accounts offered by local financial
institutions as determined by the director, said
determination to be made within thirty (30) days of
the effective date of this provision and
thereafter annually on the first business day of the year.
Said credit of interest shall accrue on the
daily balance and be made annually on December 31. If
the mortgage debt is paid prior to December
thirty-first in any year, the interest to the date of
payment shall be paid to the mortgagor. The
provision of this section shall apply only with
respect to mortgages on owner-occupied
residential property consisting of not more than four (4)
living units. The provisions of this section
shall not be waived. No mortgagee holding the
mortgagor's funds in escrow for the payment of
taxes shall also charge an annual "tax service fee"
or other annual fee for ascertaining whether or
not the real estate taxes have in fact been paid.
Any mortgagee violating the provisions of this
section shall be fined not more than one hundred
dollars ($100) for each offense.
(b) Mortgages insured
or guaranteed by the farmer's home loan administration, federal
housing administration, or the veterans'
administration, or a private mortgage insurer licensed to
do business in the state of Rhode Island or made
pursuant to the provisions of chapter 55 of title
42 shall be exempt from the requirements of this
section.
(c) The director
or the director's designee shall adopt any regulations that are necessary
to carry out the provisions of this section.
SECTION 3. Section
1 of this act shall take effect sixty (60) days after passage and shall
apply to foreclosure auction sales occurring
after the date on which section 1 takes effect.
Sections 2 and 3 of this act shall take effect
upon passage, provided that the rate of interest
payable under section 19-9-2 shall change as of
the date of determination by the director of the
prevailing market rate of interest.
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LC00525/SUB A/2
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