The New Mexico Statutes offer many legal protections and potential defenses to homeowners facing attempts by their lenders to foreclose on their properties.
Pursuant to recent amendments to New Mexico law, homeowners with "high cost" loans are given the protection of additional notice requirements, and lenders who gave such loans are limited to the judicial (as opposed to nonjudicial) foreclosure process.
The first question that homeowner needs to answer in ascertaining their rights under the statute is whether their loan qualified as a "high-cost" loan. Under the Section 55-21A-3A(1)(H) of the New Mexico Statutes, a "high-cost" home loan is defined as:
H. "high-cost home loan" means a home loan in which:
(1) the contract rate exceeds the rates threshold; or
(2) the total points and fees exceed the total points and fees threshold;
The rate threshold is defined as
(1) for a first lien mortgage home loan, an interest rate equal to seven percentage points over the weekly average yield on comparable United States treasury securities on the fifteenth day of the month immediately preceding the month in
which the loan is made; and
(2) for a subordinate mortgage lien, an interest rate equal to nine percentage points over the weekly average yield on comparable United States treasury securities on the fifteenth day of the month immediately preceding the month in which the loan is made;
The points and fees threshold is defined as:
(1) for a home loan in which the total principal loan amount is twenty thousand dollars ($20,000) or more, an amount equal to five percent of the total principal loan amount; and
(2) for a home loan in which the total principal loan amount is less than twenty thousand dollars ($20,000), an amount equal to the lesser of one thousand dollars ($1,000) or eight percent of the total principal loan amount.
If a homeowner's loan qualifies as "high-cost", they are entitled to substantial protections, including notice requirements and limitations on the types of foreclosure processes that a loan servicer may initiate. These protections are set forth in Section 58-21A-6 of the New Mexico Statutes, which states:
A. Before an action is filed to foreclose or collect money due pursuant to a home loan or before other action is taken to seize or transfer ownership of property subject to a home loan, the creditor or creditor's assignee of the loan shall deliver to the borrower a notice of the right to cure the default informing the borrower of:
(1) the nature of the default;
(2) the borrower's right to cure the default by paying the sum of money required, provided that a creditor or assignee shall accept any partial payment made or tendered in response to the notice. If the amount necessary to cure the default
will change within thirty days of the notice, due to the application of a daily interest rate or the addition of late fees, as allowed by the Home Loan Protection Act, the notice shall give sufficient information to enable the borrower to calculate the amount at any point within the thirty-day period;
(3) the date by which the borrower may cure the default to avoid a court action, acceleration and initiation of foreclosure or other action to seize the property, which date shall not be less than thirty days after the date the notice is delivered, and the name and address and telephone number of a person to whom the payment or tender shall be made;
(4) that if the borrower does not cure the default by the date specified, the creditor or assignee may file an action for money due or take steps to terminate the borrower's ownership in the property by requiring payment in full of the
home loan and commencing a foreclosure proceeding or other action to seize the property; and
(5) the name and address and the telephone number of a person whom the borrower may contact if the borrower disagrees with the assertion that a default has occurred or the correctness of the calculation of the amount required to
cure the default.
B. If a creditor or assignee asserts that grounds for acceleration exist and requires the payment in full of all sums secured by the home loan, the borrower, or anyone authorized to act on the borrower's behalf, may, at any time
prior to the time title is transferred by means of foreclosure, by judicial proceeding and sale or otherwise, cure the default, and reinstate the home loan. Cure of the default shall reinstate the borrower to the same position as if the default had not occurred and shall nullify, as of the date of the cure, an acceleration of any obligation under the home loan arising from the default.
C. To cure a default under this section, a borrower shall not be required to pay any charge, fee or penalty attributable to the exercise of the right to cure a default, other than the fees specifically allowed by this subsection. The borrower shall not be liable for any attorney fees relating to the default that are incurred by the creditor or assignee prior to or during the thirty-day period set forth in Subsection A of this section, nor for any such fees in excess of one hundred dollars ($100) that are incurred by the creditor or assignee after the expiration of the thirty-day period but prior to the time the creditor or assignee files a foreclosure or other judicial action or takes other action to seize or transfer ownership of the real estate. After the creditor or assignee files a foreclosure or other judicial action or takes other action to seize or transfer ownership of the real estate, the borrower shall only be liable for attorney fees that are reasonable and actually incurred by the creditor or assignee, based on a reasonable hourly rate and a reasonable number of hours.
D. If a default is cured prior to the initiation of any action to foreclose or to seize the residence, the creditor or assignee shall not institute a proceeding or other action for that default. If a default is cured after the initiation of any action, the creditor or assignee shall take such steps as are necessary to terminate the action.
E. A creditor or a creditor's assignee of a home loan that has the legal right to foreclose shall, in a foreclosure, use the judicial foreclosure procedures provided by law. In such a proceeding, the borrower may assert the nonexistence of a
default and any other claim or defense to acceleration and foreclosure, including any based on a violation of the Home Loan Protection Act, though no such claim or defense shall be deemed a compulsory counterclaim.
F. The provisions of this section apply only to home loans that were high-cost home loans at the time of origination.
History: Laws 2003, ch. 436, § 6.
New Mexico homeowners with high-cost loans who are facing foreclosure may take advantage of the legal rights given to them by the recent amendments by downloading and filing with their local court a simple form - an Answer to Foreclosure Complaint.
Marc Rapaport is the founding Member of Rapaport Law Firm, PLLC, a full service law firm in New York City. Mr. Rapaport has handled foreclosure litigation since 1995. He also handles New York employment discrimination matters and commercial litigation cases.