SPONSOR:	Sen. DeLuca & Rep. Brady;
	Sens. Blevins, Ennis, Hall-Long, Henry, Katz, McDowell, Venables; Reps. Gilligan, Hocker, Keeley, Kowalko, Manolakos, Mitchell, Oberle, Viola

DELAWARE STATE SENATE

145th GENERAL ASSEMBLY

SENATE BILL NO. 40

AN ACT TO AMEND TITLE 25 OF THE DELAWARE CODE RELATING TO REAL PROPERTY AND MORTGAGES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1.  Amend Chapter 21, Title 25 of the Delaware Code by adding a new §2124 as follows:

“§2124.  Notice to homeowner of change in interest rate on mortgage loan.

(a) As used in this section,

(1) ‘Homeowner’ means an individual or individuals holding record title to real property used as the individual’s or individuals’ principal place of residence.

(2) ‘Residence’ means residential real property consisting of not more than four single family dwelling units, at least one of which is occupied by the owner or the owners as the principal place of residence.

(b) The holder of a mortgage on a residence must give a homeowner six months prior written notice of a change in the interest rate on a mortgage on the homeowner’s residence. The notice required by this section must be sent by both certified mail, return receipt requested, and first class mail.  The notice must state in plain language (i) the current interest rate on the mortgage, (ii) how the new interest rate on the mortgage will be calculated, (iii) and the date the new interest rate will go into effect.  The notice must also contain good faith estimates of the interest rate at the time the change will go into effect and the amount of the new monthly payment for principal and interest on the mortgage.  The good faith estimates may be based upon market interest rates and other information available at the time the written notice is mailed.  Unless the written notice is mailed as required by this section, the interest rate on the mortgage cannot be changed to a higher rate until such notice is provided, and the lender may not recover from the homeowner any sums that would have been owed if the lender complied with this section.

(c) This section shall not apply to the following regulated entities, including their subsidiaries affiliates and employees: banking organizations, bank holding, companies, national banks, federal savings banks, or any bank, trust company, savings bank, or savings and loan association organization organized under the laws of the United States or any state.”

SYNOPSIS

This act requires certain mortgage lenders to provide a homeowner with six months written notice of a change in the interest rate on a mortgage on the homeowner’s principal residence. This act exempts state and federally chartered banks, their affiliates, and subsidiaries, as they are already subject to significant regulation of their mortgage practices.

Author: Senator DeLuca