This legislation establishes a licensing and regulatory system for third party loan servicers. A third party loan servicer is a person that collects residential mortgage loan payments on behalf of the owner of the loan. The third party loan servicer collects the monthly loan payments (including principal, interest, tax escrow amounts, and insurance escrow amounts.) The servicer then makes payments of principal and interest to the owner of the loan and makes payments to other third parties, such as tax and insurance, as required by the loan documents. This legislation requires that third party loan servicers will be licensed and regulated in a manner similar to the way the state regulates licensed lenders and mortgage brokers.
Effective date: January 1, 2011.
When a consumer applies for a mortgage loan with a lender, it may "trigger" information about the loan application being sent to another lender. The other lender, typically a lender the consumer has not contacted about the current loan, may call the consumer offering the consumer a mortgage loan. Problems have arisen when the second lender does not make it clear that it is not the same entity as the original lender. This bill provides limitations, disclosure requirements, and remedies for trigger lead solicitation of consumers.
Effective date: July 1, 2010.
The bill only applies to foreclosure actions involving loans that are subject to HAMP.
Effective date: July 1, 2010 and sunsets on the expiration date of the HAMP program.
Mortgage broker and sales finance license applications. This amendment clarifies that a licensed lender can also secure a sales finance or mortgage broker license in one application, but must pay the applicable fee to secure each license. Application fees are currently being paid in accordance with the proposed clarification, so there would be no change in fees assessed or collected.
Money transmission service licensees. This amendment clarifies that a money transmission service licensee must secure a license for its “authorized delegates” only if the delegate is located in this state. This is the construction that both the Department and the licensees have been using in administering the licensing program, so the amendment will not change current practice.
Debt adjusters. This amendment clarifies the definition of “debt adjuster”, so that the activities that define the licensee accurately describe the business of a debt adjuster. The bill also re-codifies the debt adjuster statute from Part 3 of title 8, the insurance statutes, to Part 2 of Title 8, the statutes relating to financial institutions and entities other than banks and credit unions.
Vermont agent for mortgage holders or servicers. The bill requires certain holders of mortgages on 1-4 unit residential dwellings to designate a Vermont agent to handle transactions relating to the mortgage. Typically, the original mortgage requires that the borrower carry home insurance to protect both the borrower and the mortgage holder’s collateral. When a claim settlement is made under the insurance policy, the financial institution must approve the payment. Obtaining approval is often difficult when the current mortgage holder is an out of state company. This bill requires mortgage holders, or the agent or other person who services the mortgage, to designate a Vermont agent for insurance claims settlement purposes. Exceptions to the agent designation requirement are included for banks and credit unions located in Vermont, an individual holding a mortgage loan to a family member, and an individual who holds a mortgage loan on the mortgage holder's prior residence.
Effective date: Generally, July 1, 2010. The registered agent requirement for financial institutions will take effect on October 1, 2010.