Editor’s Note: This is the first in a two-part series on House Bill 1053. Look for a story on the reaction from title companies, realtors and the manufactured homes industry later this week.
The Arkansas Circuit Clerks Association is pursuing a bill in the Arkansas House of Representatives that would make it easier for Arkansas residents to keep track of their mortgage.
House Bill 1053 adds language to Arkansas Code 18-40-101 that would require circuit clerks to record and report all mortgage assignments and mortgage releases.
Rhonda Wharton, president of the Arkansas Circuit Clerk Association, said the association’s reasons for the changes are not financial, although they have been accused of that, she said.
"It’s nothing to make more money for the county or anything like that," she said.
Last legislative session, House Bill 1844 was introduced — a bill that tried to do away with nonjudicial or statutory foreclosures, which is when a notice is ordered and posted in the courthouse and on a website to notify the homeowner.
During last year’s hearing on nonjudicial foreclosures four to five people testified about their experience.
"A couple were veterans," Wharton said. "They were receiving benefits. They had them direct deposited and were having their loan payments drafted from their checking accounts."
Typically, homeowners get a loan from their local bank. As soon as a mortgage is assigned, it is then reassigned to a larger entity like Wells Fargo.
Theses veterans’ mortgages had been assigned multiple times.
The majority of mortgages go into the Mortgage Electronic Registration System or MERS, a national electronic registry system that tracks mortgage assignments.
It is difficult to get through all the red tape at MERS to find out who is holding your mortgage at any given time, Wharton said.
"You can’t just call up your bank and say who has my mortgage right now," she said. "It gets bunglesome and convoluted."
Since the veterans’ mortgages had been assigned multiple times, their payments were going through multiple channels and were getting to the mortgage holder late.
So a nonjudicial foreclosure was filed, and their only option to stop it was to file for bankruptcy.
They were calling their bank who was saying we don’t have it any more, but by the time they found out who had it, it was too late and their house was being taken from them and they were filling for bankruptcy, Wharton said.
"It was horrible — it just broke my heart to sit in there and listen to those people have to talk about that," she said.
People have a right to know where their mortgage is, Wharton said.
"That’s the main reason we want the assignments recorded in the county," she said. "It makes it easier for people to find out who has their mortgage."
The bill adds language that classifies a mortgage and mortgage assignment as a lien on the property and classifies that filing as notice of the existence of the mortgage.
The bill adds Section 4, which adds language that says it is the duty of the mortgage holder to provide a document for recording that shows the mortgage has been paid off.
In Section 5, the bill adds mortgage assignments to the list of documents that are recorded for a fee of $15 for one, single-side page and $5 for each additional page. Paragraph B adds an additional $100 fee for recording mortgage assignments and mortgage releases 90 days after execution.
"That’s the penalty we’ve added for the mortgage holder not reporting the mortgage releases," Wharton said.
Wharton personally experienced a struggle when it came to receiving a mortgage release on her first home loan.
She paid it off, but couldn’t get a release until 15 years later when she tried to get a home improvement loan with another bank.
"It can affect your credit or it can affect you getting a new loan," she said. "It’s a big life event and you want it to show that it’s paid."
Rep. Charlene Fite (R-80) and Sen. Terry Rice (R-9) are sponsoring the bill. The bill is anticipated to be seen by the Insurance & Commerce Committee this week.
"We’re doing this for the benefit of our residents and our property owners," Wharton said. "We want them to be able to access their record easily and conveniently."
The Arkansas Circuit Clerks Association is gathering true-life stories from Arkansas residents who have had trouble with their mortgage assignments not being recorded or not getting mortgage releases.
Those who have experienced this can call the Faulkner County Circuit Clerks Office at 501-450-4911, leave your name and phone number and someone will get in touch with you.
(Staff writer Michelle Corbet can be reached by email at email@example.com or by phone at 505-1212. Send us your news at www.thecabin.net/submit)