April 15, 2011 No. 11-16 FORECLOSURE NOTICE BILL PASSES HOUSE SUBCOMMITTEE Foreclosure Notice Bill – 1 Update on Banking-Related House Bill 1920, which would reduce the cost of the foreclosure Legislation – 3 notification process, passed out of the House Judiciary Subcommittee by unanimous vote late Wednesday afternoon. TBA would like to Interchange Letters Needed thank all bankers who contacted their legislators about supporting this From Banks – 4 bill. This was not an easy victory for TBA and it would not have been Mortgage Services Required possible without the bankers’ support. to Overhaul Operations – 4 ACTION ALERT! Resolution to Fund Gov’t Requires Audit of CFPB – 4 The next step is a vote on the bill in the full House Judiciary committee this coming Tuesday at 10:30 am. Small Banks Exempt From FHA Audit Requirement – 5 The newspapers have put a lot of pressure on legislators, especially their local Representatives, and have done everything they can to stop DIF Will Reach Positive Balance This Year – 5 this legislation as it cuts into their revenue, including giving inaccurate and misleading information about the bill and the impact it will have on Fundraiser for Sen. Corker – 5 banks and homeowners during the foreclosure process. In addition, newspapers throughout the state have been running editorials with inaccurate and misleading information. Most have even stated that TBA is “attempting to make Tennessee’s bad foreclosure law worse.” TBA has sent response letters to each newspaper publishing an editorial or story; however, none have been published yet. The newspapers’ efforts to stop this legislation will only continue in the coming days – on both the legislative level and local level through biased editorials in their newspapers. In order to win this battle and pass this legislation, we will need all bankers to get involved. ™Copyright 2011 Tennessee Bankers Association. The material contained herein is provided for general informational purposes and should not be considered legal advice. Please contact your local counsel for application to any specific matter. Timothy L. Amos, Senior Vice President/General Counsel Amy Smith, Associate Counsel Colin Barrett, Vice President/Director of Member Services TBA Legislative Update No. 11-16 Pg. No. 2 Please contact members of the House Judiciary Committee as well as your own representative if he/she is not on the committee and encourage them to support this bill. All representatives are back in their districts and will be until Monday, so this is a great time to reach out to them. Below is a list of talking points that address exactly what the bill does, what it does not do, and why TBA is pursing this legislation, as well as a list of the House Judiciary Committee members. The bill would do two things: 1. Reduce number of foreclosure notices in newspaper from three times to one 2. Clarify that only the deed book and page number are required – the lengthy and hard-to- read metes and bound description would not be required. *A subcommittee amendment clarifies that the street address and map and parcel number would be required. All essential information will remain in the newspaper notice – name of debtor, interested parties, location of property, trustee, time and place of sale The bill does not eliminate any actual notices to the debtor; debtor would continue to receive late payment notices, notice of default, notice of collection, and most importantly, notice of foreclosure sale by certified mail Newspapers advertisements only serve to notify potential bidders; but, bidders rarely come to the sale Minimum length of foreclosure process is approximately 100 days – the bill would not shorten this period The cost of foreclosure notices can be as much as $2500 Banks do not pay the costs of foreclosures, property owners do (if a borrower is able to make up late payments, to avoid foreclosure, he also must pay the newspaper cost) House Judiciary Committee: Chairman, Eric Watson (R-Cleveland): (615) 741-7799 - [email protected] Vice Chairman, Jim Coley (R-Bartlett): 615-741-8201 – [email protected] Secretary, Vance Dennis (R-Savannah): 615-741-2190 – [email protected] Eddie Bass (D-Prospect): 615-741-1864 – [email protected] Karen Camper (D-Memphis): 615-741-1898 – [email protected] Linda Elam (R-Mt. Juliet): (615) 741-7462 – [email protected] Jeremy Faison (R-Cosby): (615) 741-6871 – [email protected] Jim Gotto (R-Hermitage): (615) 741 – 6959 – [email protected] Jon Lundberg (R-Bristol): (615) 741-7623 – [email protected] Debra Maggart (R-Hendersonville): (615) 741-3893 – [email protected] Judd Matheny (R-Tullahoma): (615) 741-7448 – [email protected] Gary Moore (D-Joelton): (615) 741-4317 – [email protected] Barrett Rich (R-Somerville): (615) 741-6890 – [email protected] Janis Sontany (D-Nashville): (615) 741-6861 – [email protected] Mike Stewart (D-Nashville): (615) 741-2184 – [email protected] Rick Womick (R-Rockvale): (615) 741-2804 – [email protected] If you have any questions, please contact Tim Amos ([email protected]), Amy Smith ([email protected]), or Colin Barrett ([email protected]). TBA Legislative Update No. 11-16 Pg. No. 3 UPDATE ON BANKING-RELATED LEGISLATION In other news, many of the unfriendly bills for the banking industry have been taken office notice or not put on notice prior to the deadline, meaning that they will not come up for in the committee or subcommittee they were assigned to this session. However, a few bills TBA has serious concerns about are making their way through the legislative process; specifically, one regarding anti-terrorism and another about exemptions from the mortgage broker licensing requirements for certain persons. Anti-Terrorism Bill (SB 1028/HB 1353). As amended, this bill would create a state-version of the Office of Foreign Assets Control within the Attorney General’s office by giving the AG, in conjunction with the Governor, the authority to designate an organization as a “terrorist organization” if it threatens the security or safety of Tennessee’s residents. The AG may also require financial institutions holding assets of a “terrorist” to block all financial transactions involving those assets. TBA is concerned about the increased regulatory burdens and liability it would place on banks. The bill was passed out of the House Judiciary Subcommittee on Wednesday, and will be voted on by the full committee next Tuesday, April 19th. The bill was also discussed in the Senate Judiciary Committee this week, but was not voted on and will come up for a vote next Tuesday, April 19th. During discussion of the bill, TBA General Counsel Tim Amos and Miller and Martin attorney Wayne Hood were given the opportunity to testify. Amos discussed TBA’s efforts to negotiate amending the bill with its proponents so that no additional regulatory burdens would be placed on banks (prior to the meeting, TBA and the bill’s proponents agreed to allow the bill to pass out of committee and continue working together). Hood testified about the heavy reporting and regulatory requirements banks are already under by Federal Law regarding terrorism and terrorist activities. Mortgage Broker Licensing Exemption Bill (SB 1155/HB 758). This bill would create new exceptions to the licensure requirements under the Tennessee Residential Lending, Brokerage and Servicing Act, including licensed attorneys negotiating on behalf of clients; persons who makes 5 or fewer mortgage loans in a 12-month period; persons engaged solely in commercial real estate lending; persons who make loans to an employee as an employee benefit; and persons who are licensed real estate brokers unless compensated by a mortgage lender. Although TBA does not oppose creating these exceptions, TBA has serious concerns about there being no consumer protections that would apply to a loan made by a person exempted under this legislation. HB 758 passed out of the House Commerce Committee this week and will likely be up for a final vote on the House floor late next week. The senate’s bill will be voted on by the Commerce Committee next Tuesday, April 19th. TBA Legislative Update No. 11-16 Pg. No. 4 INTERCHANGE LETTERS NEEDED FROM BANKS The Senate and House will be on a two-week spring recess April 18-29. This period is an ideal opportunity for bankers to continue the effort against the Federal Reserve’s interchange proposal and in favor of the stop-and-study bills (S. 575 and H.R. 1081). TBA and many other state associations, as well as bankers, have already taken proactive measures to engage bankers. And the bankers’ passionate advocacy on debit interchange regulation has made a difference, ABA President and CEO Frank Keating said recently. Thanks to more than 120,000 letters to members of Congress and hundreds of in-person visits, policymakers are seeing the need for the stop-and-study bills, he said. If you have not already sent a letter to your Senator and House Member, now is the time to do so. Letters sent by community bankers will send a strong message that community-based banks are just as concerned as bankers from the larger banks about the effects of the debit interchange proposal and that they support the stop-and-study bills. Also, when reaching out to House Members, please encourage them to sign-on to H.R. 1081. So far, there are 78 co-sponsors, none of which are from Tennessee. REGULATORS REQUIRE MORTGAGE SERVICES TO OVERHAUL OPERATIONS The federal banking regulators have announced enforcement actions against the 14 largest mortgage- loan servicers that require them to fix deficiencies in their servicing and foreclosure practices.