Next up: #HB1396--homestead rights

HB 1396, restoring and reinforcing the exemptions from levy, sale on execution, and liability to be encumbered or taken for the payment of debts of the homestead right.  MAJORITY:  INEXPEDIENT TO LEGISLATE.  MINORITY:  OUGHT TO PASS.

Rep. Robert H Rowe for the Majority of  Judiciary:  This House bill was killed by the Senate in 2011; the sponsor resubmitted the bill in 2012. The bill relates to citizens’ residential homestead right and the result of one decision by the New Hampshire Supreme Court.  Homestead is a right each homeowner has in his/her owned real estate.  The right goes back hundreds of years and without any controversy until the attorney for one party lost the appeal as a result fraud perpetrated on the mortgaging bank.  Homestead is the legislated dollar amount that creditors cannot take from property owners by suit or bankruptcy.  The facts in the subject case that motivated this bill are as follows.  A man and woman in a relationship mortgaged their homestead to a bank, and, as normal, waved their homestead rights. The owners separated.  One party took out a new mortgage and had a friend come to the closing and forge the signature of the other owner.  Criminal fraud was committed against the bank.  The bank foreclosed on the second mortgage and did not allow the remaining owner the homestead interest. The sponsor, who was the remaining owner’s attorney argued that since she did not sign the new mortgage and wave her homestead interest that she should retain her homestead interest.  The court saw that she had waved her right in the first mortgage and sided with the mortgaging bank.  A total change in this historic right is unnecessary based on one court case alone, where fraud on the bank was an issue.  The committee believes that the passage of this bill might have a negative impact on future lending practices that would result in all citizens suffering. Vote 9-6.      

 

Rep. Gregory M. Sorg for the Minority of  Judiciary:  This is the exact same bill that last year, as HB 305, was approved by the Judiciary Committee 16-0 and passed by the full House on the consent calendar, but which ultimately died in the Senate. It would amend the homestead law, RSA Chapter 480, in order to change a rule established in the 2007 case of Chase v. Ameriquest Mortgage Co., 155 N.H. 19. Until Chase, it had been widely understood that a person’s statutory homestead interest (currently $100,000) was exempt both from levy or sale on execution and from liability to be encumbered or taken for the payment of debts, unless encumbered in strict compliance with one of the four specific exceptions of RSA 480:4. In Chase, however, the Supreme Court used the doctrine of equitable subrogation, to the extent of the amount of the new mortgage-secured loan that was used to pay off the old one, it recognized an equitable lien on Mrs. Chase’s statutory $100,000 homestead exemption in favor of the foreclosing mortgage lender, even though her signature on the mortgage being foreclosed had been forged. This bill would clarify that the homestead law excepts homesteads from applicability of the common law doctrines of equitable subrogation and unjust enrichment; that the right of creditors to be secured is subordinated to the broader social benefit of preventing destitution and homelessness of mothers and children; and that the purpose of the homestead exemption is to safeguard to debtors and their families the shelter of the homestead roof.