Banking Regulation 5-Mortgage Foreclosure Disclosure

Regulation Authority:

R.I. Gen. Laws § 34-27-3.2

Purpose and Reason:

The purpose of this Regulation is to promulgate the form of written notice pursuant to R.I. Gen. Laws §§ 34-27-3.1 and 34-27-3.2. The notices implemented by this Regulation inform Individual Consumer Mortgagors of their default, of the Mortgagee’s right to foreclose, the availability of counseling for Mortgagors through HUD-approved counseling agencies in Rhode Island, and the availability of a mediation conference with a mediation coordinator designated by a HUD-approved counseling agency as part of an effort to avoid foreclosure. This Regulation also clarifies the Mortgagee’s duties and consequences of its failure to comply with R.I. Gen. Laws §§ 34-27-3.1 and 34-27-3.2 and this Regulation.

Brief statement of Reason for Finding Imminent Peril:

R.I. Gen. Laws § 34-27-3.2 was enacted on July 15, 2013 (and effective on September 13, 2013) and required that the Department of Business Regulation (“Department”) promulgate a specific notice and certificates related to foreclosure mediation at least 30 days prior to the effective date of the statute which is August 14, 2013. An Emergency Regulation was filed and in effect on August 14, 2013; however, on August 21, 2013 it was necessary to file a second amendment to the Emergency Regulation in order to: provide the Portuguese and Spanish translations of required Appendix B (Notice of Mediation Conference) and to add Affidavits related to certain applicable exemptions to facilitate the confirmation of compliance by Mortgagees with R.I. Gen. Laws § 34-27-3.2 and to facilitate the filing and recording of deeds. After reviewing comments received and requests for clarification, it is necessary to file this third emergency amendment to Banking Regulation 5. This emergency amendment does not change the effective date or term of the initial Emergency Regulation. That is, the initial Emergency regulation is effective for 120 days from August 14, 2013 and renewable once for a period not to exceed 90 days as allowed under R.I. Gen. Laws § 42-35-3(b). Due to the time constraints posed by the enactment and requirements of the statute and in order to ensure the stability and continuity of related real estate transactions (including but not limited to providing affected parties with notice and certification allowing foreclosures to proceed consistent with statutory requirements, and the effect on title to real estate resulting in title insurance issues), the Department is required to amend its Banking Regulation 5 in order to comply with statutory requirement via the emergency promulgation process. While the amendments to Banking Regulation 5 are being implemented on an emergency basis and effective immediately, the Department will be issuing a Public Notice of Proposed Rulemaking for a hearing date to be set in the near future. Therefore, the hearing dates previously noted for September 16, 2013 and then September 23, 2013 will not be held on those dates; but will be rescheduled and noticed via the filing of a public notice. The regulatory promulgation process will provide an opportunity for hearing and subsequent amendments based on comments if necessary and appropriate as determined by the Department.