AB1100: Bill Text

2005 - 2006 LEGISLATURE

2005 Assembly BILL 1100

March 9, 2006 - Introduced by Representative Cullen, cosponsored by Senator Risser. Referred to Committee on Financial Institutions.

AB1100,1,3 An Act to repeal 706.05 (8) to (10) (c); to renumber 706.05 (10) (d); and to create 706.054 of the statutes; relating to: the Uniform Residential Mortgage Satisfaction Act.

Analysis by the Legislative Reference Bureau

Under current law, generally a mortgage-holder (mortgagee) must execute and record a full satisfaction of a mortgage within 30 days after the date on which the mortgagor completes full performance of the terms of the mortgage. A mortgagee must record a mortgage satisfaction within seven days after the mortgagor completes full performance and the mortgagee receives by certified mail a written request from the mortgagor for a full satisfaction. A mortgagee who fails to respond to this written request is liable to the mortgagor for damages of $100 for each day that the violation remains uncorrected, up to a total of $2,000, plus actual damages resulting from the violation.

This bill repeals these provisions and replaces them with the Uniform Residential Mortgage Satisfaction Act (URMSA), whose most significant provisions include the following:

1) A requirement that once the mortgagee has received full payment of a mortgage loan, the mortgagor has 30 days to prepare and submit for recording a satisfaction document. No notification to the mortgagee is necessary to trigger this 30-day period. If the mortgagee fails to submit the satisfaction document within this period, the mortgagee is generally liable for any actual damages proximately caused by its failure. URMSA also specifies the minimal amount of information necessary for a satisfaction to be recorded.

2) URMSA imposes an affirmative duty on a mortgagee to provide a payoff statement within 10 days of a proper request, specifies the minimal content for a payoff-statement, and clarifies the persons that may request a payoff statement. URMSA also provides that a mortgagee that issues a payoff statement that contains an erroneous payoff amount may not enforce a mortgage against a person who has reasonably and detrimentally relied upon the erroneous payoff amount.

3) URMSA allows a satisfaction agent to prepare and record on behalf of the mortgagor an affidavit of satisfaction for a residential mortgage but only after first giving notice to the mortgagee and giving the mortgagee 30 days to record a satisfaction or object that the secured obligation remains unsatisfied. If the mortgagee raises a timely objection, this option is not available, but if the mortgagee fails to raise a timely objection, the satisfaction agent may generally record an affidavit of satisfaction, which constitutes a satisfaction of the mortgage.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB1100, s. 1 Section 1. 706.05 (8) to (10) (c) of the statutes are repealed.

AB1100, s. 2 Section 2. 706.05 (10) (d) of the statutes is renumbered 706.05 (10m).

AB1100, s. 3 Section 3. 706.054 of the statutes is created to read:

AB1100,2,5 706.054 Uniform Residential Mortgage Satisfaction Act. (1) Definitions. In this section:

AB1100,2,10 (a) "Address for giving a notification" means, for the purpose of a particular type of notification, the most recent address provided in a document by the intended recipient of the notification to the person giving the notification, unless the person giving the notification knows of a more accurate address, in which case the term means that address.

AB1100,2,11 (b) "Day" means calendar day.

AB1100,2,13 (c) "Document" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

AB1100,2,15 (d) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

AB1100,3,3 (e) "Entitled person" means a person liable for payment or performance of the obligation secured by the real property described in a security instrument, or the landowner.

AB1100,3,5 (f) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

AB1100,3,8 (g) "Landowner" means a person that, before foreclosure, has the right of redemption in the real property described in a security instrument. The term does not include a person that holds only a lien on the real property.

AB1100,3,10 (h) "Notification" means a document containing information required under this section and signed by the person required to provide the information.

AB1100,3,11 (i) "Payoff amount" means the sum necessary to satisfy a secured obligation.

AB1100,3,13 (j) "Payoff statement" means a document containing the information specified in sub. (4) (d).

AB1100,3,15 (k) "Recording data" means the volume and page that indicate where a document is recorded in the office of the register of deeds.

AB1100,3,18 (L) "Residential real property" means real property located in this state which is used primarily for personal, family, or household purposes and is improved by one to 4 dwelling units.

AB1100,3,20 (m) "Satisfaction agent" means a title insurance company or an attorney who is licensed to practice in this state and in good standing.

AB1100,3,25 (n) "Secured creditor" means a person that holds or is the beneficiary of a security interest or that is authorized both to receive payments on behalf of a person that holds a security interest and to record a satisfaction of the security instrument upon receiving full performance of the secured obligation. The term does not include a trustee under a security instrument.

AB1100,4,2 (o) "Secured obligation" means an obligation the payment or performance of which is secured by a security interest.

AB1100,4,6 (p) "Security instrument" means an agreement, however denominated, that creates or provides for an interest in residential real property to secure payment or performance of an obligation, whether or not it also creates or provides for a lien on personal property.

AB1100,4,8 (q) "Security interest" means an interest in residential real property created by a security instrument.

AB1100,4,11 (r) "Sign" means, with present intent to authenticate or adopt a document, to execute or adopt a tangible symbol or to attach to or logically associate with the document an electronic sound, symbol, or process.

AB1100,4,14 (s) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

AB1100,4,17 (t) "Submit for recording" means to deliver, with required fees and taxes, a document sufficient to be recorded under this section, to the appropriate office of the register of deeds.

AB1100,4,19 (2) Notification; manner of giving and effective date. (a) A person gives a notification by doing any of the following:

AB1100,4,22 1. Depositing it with the United States Postal Service with 1st class postage paid or with a commercially reasonable delivery service with cost of delivery provided, properly addressed to the recipient's address for giving a notification.

AB1100,4,25 2. Sending it by facsimile transmission, electronic mail, or other electronic transmission to the recipient's address for giving a notification, but only if the recipient agreed to receive notification in that manner.

AB1100,5,2 3. Causing it to be received at the address for giving a notification within the time that it would have been received if given pursuant to subd. 1.

AB1100,5,3 (b) A notification is effective:

AB1100,5,5 1. The day after it is deposited with a commercially reasonable delivery service for overnight delivery.

AB1100,5,8 2. Three days after it is deposited with the United States Postal Service, 1st class mail with postage prepaid, or with a commercially reasonable delivery service for delivery other than by overnight delivery.

AB1100,5,9 3. The day it is given, if given pursuant to par. (a) 2.

AB1100,5,11 4. The day it is received, if given by a method other than as provided in par. (a) 1. or 2.

AB1100,5,16 (c) If this section or a notification given pursuant to this section requires performance on or by a certain day and that day is a Saturday, Sunday, or legal holiday under the laws of this state or the United States, the performance is sufficient if performed on the next day that is not a Saturday, Sunday, or legal holiday.

AB1100,5,21 (3) Document of rescission; effect; liability for wrongful recording. (a) In this subsection, "document of rescission" means a document stating that an identified satisfaction or affidavit of satisfaction of a security instrument was recorded erroneously, the secured obligation remains unsatisfied, and the security instrument remains in force.

AB1100,5,25 (b) If a person records a satisfaction or affidavit of satisfaction of a security instrument in error, the person may execute and record a document of rescission. Upon recording, the document rescinds an erroneously recorded satisfaction or affidavit.

AB1100,6,2 (c) A recorded document of rescission has no effect on the rights of any of the following:

AB1100,6,5 1. A person that acquired an interest in the real property described in a security instrument after the recording of the satisfaction or affidavit of satisfaction of the security instrument and before the recording of the document of rescission.

AB1100,6,7 2. A person that would otherwise have priority over or take free of the lien created by the security instrument under this chapter.

AB1100,6,10 (d) A person that erroneously or wrongfully records a document of rescission is liable to any person injured thereby for the actual damages caused by the recording and reasonable attorney's fees and costs.

AB1100,6,15 (4) Payoff statement; request and content. (a) An entitled person, or an agent authorized by an entitled person to request a payoff statement, may give to the secured creditor a notification requesting a payoff statement for a specified payoff date not more than 30 days after the notification is given. The notification must contain all of the following:

AB1100,6,16 1. The entitled person's name.

AB1100,6,19 2. If given by a person other than an entitled person, the name of the person giving the notification and a statement that the person is an authorized agent of the entitled person.

AB1100,6,21 3. A direction whether the statement is to be sent to the entitled person or that person's authorized agent.

AB1100,6,22 4. The address to which the creditor must send the statement.

AB1100,6,24 5. Sufficient information to enable the creditor to identify the secured obligation and the real property encumbered by the security interest.

AB1100,7,4 (b) If a notification under par. (a) directs the secured creditor to send the payoff statement to a person identified as an authorized agent of the entitled person, the secured creditor shall send the statement to the agent, unless the secured creditor knows that the entitled person has not authorized the request.

AB1100,7,13 (c) Within 10 days after the effective date of a notification that complies with par. (a), the secured creditor shall issue a payoff statement and send it as directed under sub. (2) (a). A secured creditor that sends a payoff statement to the entitled person or the authorized agent may not claim that the notification did not satisfy par. (a). If the person to whom the notification is given once held an interest in the secured obligation but has since assigned that interest, the person need not send a payoff statement but shall give a notification of the assignment to the person to whom the payoff statement otherwise would have been sent, providing the name and address of the assignee.

AB1100,7,14 (d) A payoff statement must contain all of the following:

AB1100,7,17 1. The date on which it was prepared and the payoff amount as of that date, including the amount by type of each fee, charge, or other sum included within the payoff amount.

AB1100,7,19 2. The information reasonably necessary to calculate the payoff amount as of the requested payoff date, including the per diem interest amount.

AB1100,7,21 3. The payment cutoff time, if any, the address or place where payment must be made, and any limitation as to the authorized method of payment.

AB1100,7,23 (e) A payoff statement may contain the amount of any fees authorized under this section not included in the payoff amount.

AB1100,8,4 (f) A secured creditor may not qualify a payoff amount or state that it is subject to change before the payoff date unless the payoff statement provides information sufficient to permit the entitled person or the person's authorized agent to request an updated payoff amount at no charge and to obtain that updated payoff amount during the secured creditor's normal business hours on the payoff date or the immediately preceding business day.

AB1100,8,9 (g) A secured creditor must provide upon request one payoff statement without charge during any 6-month period. A secured creditor may charge a fee not more than $25 for each additional payoff statement requested during that 6-month period. However, a secured creditor may not charge a fee for providing an updated payoff amount under par. (f) or a corrected payoff statement under sub. (5) (a).

AB1100,8,13 (h) Unless the security instrument provides otherwise, a secured creditor is not required to send a payoff statement by means other than 1st class mail. If the creditor agrees to send a statement by another means, it may charge a reasonable fee for complying with the requested manner of delivery.

AB1100,8,20 (i) Except as otherwise provided in sub. (8), if a secured creditor to which a notification has been given pursuant to par. (a) does not send a timely payoff statement that substantially complies with par. (d), the creditor is liable to the entitled person for any actual damages caused by the failure plus $500, but not punitive damages. A creditor that does not pay the damages provided in this subsection within 30 days after receipt of a notification demanding payment may also be liable for reasonable attorney's fees and costs.

AB1100,9,2 (5) Understated payoff statement; correction; effect. (a) If a secured creditor determines that the payoff amount it provided in a payoff statement was understated, the creditor may send a corrected payoff statement. If the entitled person or the person's authorized agent receives and has a reasonable opportunity to act upon a corrected payoff statement before making payment, the corrected statement supersedes an earlier statement.

AB1100,9,5 (b) A secured creditor that sends a payoff statement containing an understated payoff amount may not deny the accuracy of the payoff amount as against any person that reasonably and detrimentally relies upon the understated payoff amount.

AB1100,9,9 (c) This section does not affect the right of a secured creditor to recover any sum that it did not include in a payoff amount from any person liable for payment of the secured obligation or limit any claim or defense that a person liable for payment of a secured obligation may have under law other than this section.

AB1100,9,17 (6) Secured creditor to submit satisfaction for recording; liability for failure. (a) A secured creditor shall submit for recording a satisfaction of a security instrument within 30 days after the creditor receives full payment or performance of the secured obligation. If a security instrument secures a line of credit or future advances, the secured obligation is fully performed only if, in addition to full payment, the secured creditor has received a notification requesting the creditor to terminate the line of credit or containing a statement sufficient to terminate the effectiveness of the provision for future advances in the security instrument.

AB1100,9,21 (b) Except as otherwise provided in sub. (8), a secured creditor that is required to submit a satisfaction of a security instrument for recording and does not do so by the end of the period specified in par. (a) is liable to the landowner for any actual damages caused by the failure, but not punitive damages.

AB1100,9,25 (c) Except as otherwise provided in par. (d) and in sub. (8), a secured creditor that is required to submit a satisfaction of a security instrument for recording and does not do so by the end of the period specified in par. (a) is also liable to the landowner for $500 and any reasonable attorney's fees and court costs incurred if, after the expiration of the period specified in par. (a), the landowner gives the creditor a notification, by any method authorized under sub. (2) that provides proof of receipt, demanding that the creditor submit a satisfaction for recording and the creditor does not submit a satisfaction for recording within 30 days after receipt of the notification.

AB1100,10,7 (d) Paragraph (c) does not apply if the secured creditor received full payment or performance of the secured obligation before the effective date of this section .... [revisor inserts date].

AB1100,10,9 (7) Form and effect of satisfaction. (a) A document is a satisfaction of a security instrument if all of the following are true:

AB1100,10,12 1. It identifies the security instrument, the original parties to the security instrument, the recording data for the security instrument, and the office in which the security instrument is recorded.

AB1100,10,13 2. It states that the person signing the satisfaction is the secured creditor.

AB1100,10,16 3. It contains a legal description of the real property identified in the security instrument, but only if a legal description is necessary for a satisfaction to be properly indexed.

AB1100,10,18 4. It contains language terminating the effectiveness of the security instrument.

AB1100,10,20 5. It is signed by the secured creditor and authenticated as required by s. 706.06 or 706.07 for a conveyance of an interest in real property.