[00:00:00] BOCU AI Voice: Welcome to Banking on Credit Unions, your leading law podcast dedicated to credit union matters. Hosted by Jim Sorenson from the elite team at SVL Law, where they specialize in collections, bankruptcy, and foreclosure law designed for credit unions. From landmark cases to innovative legal strategies, Banking on Credit Unions podcast is here to shine a light on the legal pathways impacting your credit union.
[00:00:21] If you want to uncover legal insights designed just for you, listen and join the conversation. Let’s get started.
[00:00:40] Jim: I wanna welcome everyone to the Banking and Law Podcast. My name is Jim Sorenson and I’m the host today. And joining me today is Steve. Steve, I wanna welcome you to the podcast.
[00:00:50] Steve: Great to be here. I appreciate you having me. I am Steve Orsillo or one of the fellow partners here at Sorn Van Lubin work in the foreclosure area.
[00:00:57] Kind of head that up, but work in other practice [00:01:00] areas as well. But always great to be here with you.
[00:01:03] Jim: Good to have you, Steve. And so today we’re going to be talking about a legal update really talking about some new laws in Florida and new laws that impact our clients, our credit unions. And it seems like this year there’s more laws to talk about than most years.
[00:01:22] Steve: There’s one or two most years with this year. There’s a handful with some of the real property stuff they did. So kind of some interesting stuff, but yeah.
[00:01:29] Jim: So we’re going to start let’s talk about the real property impacts and the laws that have been impacted by this legislative session.
[00:01:38] I guess I should point out that the Florida legislature did pass a lot of laws this year. Some of that has to do with the fact that our governor is running for president. And he had certain things he wanted to get past. And we’ll talk about 1 of those in a little bit. But these 1st, couple are probably not.
[00:01:57] We’re not probably necessarily high on his agenda [00:02:00] from a presidential standpoint, but they still impact our clients and still have impacts on the way we do business or our clients will do business in the States.
[00:02:08] So the 1st law, I think we’re going to talk about is the law involving payoff letters. So why don’t you tell us about that?
[00:02:16] Steve: Yeah, so what the legislature did is they kind of made some changes to Florida Statute 701. 041. This addresses payoff letters, sometimes also referred to as estoppel letters. But in this, when we’re talking about these changes in this law, we’re talking about mortgages and liens on real property.
[00:02:33] So your payoff request on a car loan or credit card, we’re not talking about that here. We’re talking about, you know, mortgages and real property judgment liens. And it made some changes. One of the big changes was it reduced the time frame within which you have to comply with a payoff request. So if the borrower or a title company, whatever, reaches out and asks for a payoff, you used to have 14 days within which to gather that information and convey it back.
[00:02:55] And all you had to really do was tell them this is the total balance due per diem and provide them that. [00:03:00] But now you have 10 days, so we’re down from 14 to 10 to provide you know, that payoff letter. And you got to provide an itemized, detailed payoff letter. Break down on everything out, a daily per diem, and send all that to the requesting party within 10 days.
[00:03:13] And you also have to notify the bar, which is a new wrinkle as well. So, you know, if a request comes in from a title company, a closing agent saying, Hey, we got a closing set for end of the month, give me a payoff as of that date. One, they need to be including authorization to receive that information, right.
[00:03:27] Some sort of third party authorization signed by the bar, authorizing them to give that information to the title agent. But also they have, we, or the credit union, or our office, if we’re helping with the payoff. We also have to send that to the bar, which is a new wrinkle in the law as well.
[00:03:40] So, yeah, some important things, kind of, to make sure you’re updating your processes and systems to comply with those laws.
[00:03:47] Jim: And you mentioned it briefly but I want to talk about it a little bit because I think this is important. This would apply to final judgments as well.
[00:03:57] Steve: I think if you’ve got a judgment lien on real property out [00:04:00] certified properly recorded, all that stuff, and they reach out for a requested pay off on that, I would treat that the same as a request for a mortgage pay off.
[00:04:06] Jim: Yeah, and I think, you know, where credit unions get in trouble, and we’ve talked about this before, is you know, a lot of times their records on old judgments are not great. And the problem is a judgment, you know, is good in Florida for 20 years. The problem in this case, I say that’s a good thing.
[00:04:24] Most states it’s not 20 years, so from a creditor perspective, 20 years is great. But if you get contacted by if one of our clients gets contacted by a title company handling a closing and says, Hey, there’s a judgment out there from 2010 we need a payoff on. You know, the credit union only has 10 days to get that done. And if their records aren’t good, that could be problematic.
[00:04:50] Steve: Yeah, it could be. Trying to search back and see, did we ever get payments on the judgment? Is the balance, you know, in some cases, maybe we got a payment. So the balance on the judgment, we got to figure out the interest [00:05:00] potentially. But if you got payments, trying to find those records, that could be difficult or even to find it in the system at that point may be a challenge.
[00:05:06] Jim: Yeah, and I don’t want to spend a lot of time here on this topic. You know, it’s something that people who have heard me speak and have read some of my writings will know that I’m a big. Proponent of having a good process in place to manage judgments.
[00:05:21] This law and this change is just 1 more reason for that. So, what about there was also a change in the law regarding satisfying mortgages as well. So, kind of going along with the payoff that if the payoff results in a satisfied the mortgage. What’s the new law say there?
[00:05:40] Steve: Yeah, you gotta turn around and satisfy that in a timely manner as well. And I think the big thing is to do that. You know, could open you up to liability and potentially the other side seeking attorney’s fees. If you’re not satisfying that within the time frame required by the statute. And like you’re saying with judgments, you know, that’s going to be important to turn around and satisfy that judgment.
[00:05:57] And if you got an old judgment, you know, [00:06:00] you want to make sure you get that taken care of. So that certainly could be a concern because you don’t want to, you want to get the money in and satisfy, you know, your debt and be done.
[00:06:09] Jim: So, talking about these two laws, when does the payoff letter law take effect? Or when did it take effect?
[00:06:16] Steve: This took effect October 1, so this is in place now. So everyone hopefully, you know, has seen, obviously we’ve sent some stuff out about it. Hopefully everyone is signed up to receive that stuff. If you’re not, obviously you want to get on our mailing list so you can get that.
[00:06:29] But, yeah, everyone should have that in place at this point and be operating on it.
[00:06:33] Jim: Is the same effective date for the change with satisfying mortgages in the law? Is that also October 1? So, these are changes that people want to if you’ve not already addressed them, you need to address them now.
[00:06:48] So, what about there was an, there was another change in the law dealing with collateral protection insurance, or what we call CPI. What is that about?
[00:06:56] Steve: Yeah, so they added a whole new statute in there to deal [00:07:00] with collateral protection insurance. I don’t think one had existed before on that particular subject or that specific subject.
[00:07:06] So that’s now codified in Florida law. And this is applying to mortgage loans, real property. So this isn’t CPI on a car that the member’s not carrying insurance. We’re talking strictly about mortgages and real property. Under this new law, you have to make sure that if you add CPI you’re doing so only when their CPI or their, the homeowner policy is lapsed and you need to make sure you have coverage, you’re adding CPI only at that point and then you’re sending a copy of the CPI policy or certificate of insurance has to go to the borrower.
[00:07:34] You gotta make sure you’re sending that out if you’re not already doing that. And then there’s some other provisions in there as well regarding you know, if a claim happens, you’re only entitled to what is necessary to satisfy your balance in the excess if there is some obviously goes on to the borrower.
[00:07:47] Jim: So, I’m sure that our clients have probably been notified by their CPI vendors, but if you haven’t, you know, you probably want to get with your CPI vendors. Make sure that [00:08:00] they’re aware of this change in Florida law. And again, this is only on real property loans, so this is not on auto loans.
[00:08:07] And for those who may be listening to this podcast, who aren’t familiar with when we say CPI or collateral protection insurance, I did want to explain that briefly just so someone listening to this is aware of what we’re talking about. Collateral protection insurance is simply the insurance that a lender is able to place on a loan on a collateral if the borrower doesn’t maintain the insurance, usually in the loan documents, whether we’re talking about a mortgage loan document or an auto loan document, there is a condition or a covenant in that loan document that requires the borrower maintain insurance.
[00:08:44] And that covenant provides that if the borrower doesn’t main insurance, maintain insurance on the collateral, then the lender can purchase insurance. And so this law is just dealing with some aspects of that when the lender purchases insurance on [00:09:00] the mortgage property. What, how that insurance works, what notice has to go to the borrower what rights the borrower has in that insurance.
[00:09:08] And then this law is just like Steve said, this is an area that the legislature had not addressed before. And so Florida has now put a law on the books. In my experience, from what I understand, most states have a law like this on the books. So this isn’t necessarily unique to Florida, but it is something new to Florida.
[00:09:28] Steve: I think certainly given the concern with obviously CPI, it’s going to be significantly more expensive than if the homeowner went out and just got a policy with State Farm or whatever. And so, legislatures are heavily concerned with, you know, consumers in that sense, and so they wanted to get this law out there to make sure they’re fully protected, so.
[00:09:44] Jim: And I think it’s consistent with Florida’s overall protection of consumers when it comes to their homestead, especially. I mean, you know, Florida is well known for its homestead exemptions and so this just seems to be in that same vein. I don’t think this law is a big law or [00:10:00] hard law to comply with, but.
[00:10:02] You got to be aware of it. You got to comply with it. So, you know, there was also some changes dealing with real property fraud. And this seems to be a real concern now with the legislature and the governor’s office. And I’ve even seen some stuff put out by the attorney general and maybe some other agencies in the state of Florida. I’ve seen CFPB touch on this. So what was done regarding real property fraud?
[00:10:28] Steve: So they passed a series of laws different laws addressing real property fraud. One of them dealt with witnesses on documents that are acting you know, some sort of conveyance. You know, they have to be signed by two witnesses.
[00:10:40] Now you would print your, the witness would sign, they would print their name underneath legibly so you could see who that witness was. But now you also have to put your address on there as well, your mailing address. So you’ve got to provide, I guess, more information to validate that these witnesses are, you know, real people or.
[00:10:54] And not just, you know, some fictitious individual at all in an effort to, you know, fraudulently convey property. So that [00:11:00] was one kind of significant change. You know, may not be much of an impact on credit unions, but certainly something to keep an eye out. Because you want to make sure, obviously, that the deeds that are coming along are proper.
[00:11:09] So that you don’t run into some sort of a title issue down the road. That was one. Another one as well dealt with and I think this one’s kind of interesting. They did one that dealt with a property registry system. So every clerk, 67 clerks in Florida, every one of them has to develop a system, to basically provide a free notification system to anyone that owns real property.
[00:11:29] So if you own real property in Orange County, for example, you can sign up for this service. And if anyone records a lien against your property within 24 hours, you will receive notification to your phone or wherever you want to receive it that basically tells, hey, this lien’s been put on your house.
[00:11:44] So kind of an interesting thing. Notification that if someone’s out there trying to fraudulently do a conveyance at your house, right? And give it to somebody else, or put, you know, fraudulent mortgages or something out there, which has happened, maybe not all the time, but that was kind of another interesting one out there as well [00:12:00] that they did, and they did a few others as well, one addressing quick claim deeds in terms of providing a uniform quick claim deed form you know, obviously your lawyer or closing agent obviously is going to need to be familiar with that one.
[00:12:11] To make sure they’re complying there as well. And then a pilot program down in Lee County that they’re going to do, I think, through maybe through next year, maybe into 2025, that if you go to record any sort of a document that acts as a conveyance, a deed that’s going to transfer title to property, you have to present a government issued ID now to get that document recorded.
[00:12:30] And they can refuse to record if you don’t provide a government issued ID as well. So all different things to obviously deal with the real property fraud they’re concerned about with foreign interests or maybe even, you know, domestic basic interest as well.
[00:12:41] Jim: So when do these real property fraud laws take effect?
[00:12:46] Steve: They’ve all taken effect. You know, the pilot program in Lee County, like I said, that’s going into effect and they’ll run that. I think through 2025, they’ll report their findings back to the governor and the heads of the legislature to determine if they want to make this a permanent thing.
[00:12:59] The pilot [00:13:00] program think they have into 2024 to get that up and running. So depending on, you know, what county you’re in, or your members in you know, that may be popping up sooner rather than later in some other counties. And then the other ones, you know, they’ve already gotten into effect either July 1, a lot of laws going to effect or October 1, some laws going to effect as well.
[00:13:17] Jim: Yeah, these changes are some significant changes in the way things are done and have been done in Florida. I remember my mentor Palmer Williams telling me, you know, hey, it’s not a clerk’s job to decide whether something should be recorded in a public record. If you show up with a document that is of the type to be recorded in a public record, the clerk should take it.
[00:13:37] If you pay the fee and that seems to be changing and unfortunately, it’s probably a good thing that it is changing. Some of the fraud out there that people are talking about. I don’t think. This fraud is as widespread as other frauds but it seems to be a growing fraud and you hear some of these companies out there like title lock and some of these others where you can pay for some sort [00:14:00] of commercial subscription texture title to your property, the legislature is really trying to get ahead of it.
[00:14:06] And it’ll be interesting to see how this pilot program. Happens in Lee County. You know, I was curious why Lee County for those who aren’t familiar, Lee County is down in the Fort Myers area, kind of retirees and that may be as worried that you have retirees who are being taken advantage of.
[00:14:26] I don’t know. I thought that was interesting. Don’t we don’t do a lot of work down in that area. So, not as familiar with the court down there and the clerk but it’ll be interesting to see how these laws take effect and what effect they have. But I think overall, these are good changes in the law and they aren’t gonna be owned, you know, hard to comply with.
[00:14:46] They’re just, you got to be aware of them and they’re, they do require some changes. I think the one with the witnesses on the deed are on deeds and other documents. Having the witnesses address listed is a new thing [00:15:00] where you’re going to see some lawyers and some practitioners maybe get caught off guard or forget about that.
[00:15:06] It was just like when a couple of years ago, the notary requirement changed and we would see lawyers and notaries using the old form and, you know, so many times I’ve reviewed powers of attorney and I’m like, it’s not valid. Your notarization doesn’t comply with Florida law and they get mad.
[00:15:24] It’s going to be the same thing here with, you know, you didn’t have a proper witness on this document because you didn’t. And so you got to go back and deal with that after the fact.
[00:15:33] Steve: It’s certainly some interesting changes, but I think the good thing is, none of this hopefully is too burdensome on the financial institutions and the credit unions.
[00:15:41] You know, the payoff letters, I think, for the most part, systems generally generate the information that you’re required to produce now anyway. So just making sure that you’ve got a system in place to turn this stuff around. Within 10 days, 4 less days, but with this digital age, you know, that was kind of the legislature’s thing.
[00:15:56] We’re in the digital age and we’re really doing snail mail where things are going to [00:16:00] take time to get, you know, everything’s an email away these days.
[00:16:03] Jim: Yeah, it is. So, you know, the last law we want to talk about and this is definitely the controversial law in this whole discussion and there’s a lot of parts to it that we don’t need to focus on because it’s outside of our focus and representing credit unions.
[00:16:21] But in order to understand this law you kind of have to understand the background and you know, this is a law that. It took effect on July 1st of 2023 and this is really the what’s been referred to. It’s house bill number 3, and it’s the comprehensive anti-ESG bill. So, you know, and people listening to this, if you may be familiar with that term, you may not.
[00:16:49] But this is a bill that restricts the consideration of environmental, social and governance factors. That’s the ESGNS and it’s [00:17:00] a part of a this law in Florida, which is one of these laws that the governor was trumpeting and probably will point to in his presidential campaign.
[00:17:08] Maybe he already has. I don’t know. But it’s, it came out of a 19 state alliance to push back on President’s Biden’s ESG agenda and you know, in the Southeast and our immediate region, Alabama, South Carolina, North Carolina, Tennessee have all enacted anti-ESG laws. Georgia has not yet. I don’t know if they are but Florida probably went the furthest in their ESG and the question here is okay.
[00:17:40] Well, how does this impact our clients? And what it does is it amends. Chapter 655 of the Florida statutes. So chapter 655 is the statute or the chapter in the Florida statutes that deals with [00:18:00] financial institutions. So this would be credit unions, banks, savings and loans.
[00:18:06] And what it does is it requires, institutions not to engage in unsafe and unsound practices and one unsafe and unsound practice that’s now been defined in the statute is making determinations based upon an ESG criteria. So the idea here is what the legislature was trying to aim at was using certain factors in denying banking services to members of society and, of course, this comes out of if you followed world news.
[00:18:43] You know, in China, there’s this social credit system that’s been described where the Chinese government is basically making it such that if you’re, if you disagree with the government, they can cut you out of banking. They can cut you out of being able to buy [00:19:00] groceries and there’s some fear that sort of system is going to be put in place in the United States.
[00:19:05] I’m not saying it is. I’m not, you know, that’s some of the fear behind this bill. And then, you know, we also saw in Canada where during the whole COVID situation, the government used the banking system to Punish protesters, people who were protesting lockdowns during the pandemic or protesting requirements of immunization.
[00:19:28] And those protesters were locked out of banking. And whether you think that’s a good thing or a bad thing, the legislature said, no we shouldn’t have that happen. And so it comes into play here. And so, what it bans is using factors that are defined as social credit scores from being used in the banking decision.
[00:19:51] So, whether to grant a loan, or whether deny banking services, and these factors include everything from political. Opinions, speech, and [00:20:00] affiliations to religious beliefs, exercise of religious beliefs, ownership of firearms engagement in the lawful manufacture, distribution, sale, or purchase of firearms or ammunition.
[00:20:12] Engagement in the exploration, production, transportation, sale, or anything to do really with fossil fuel energy or timber mining or agriculture. If you support federal or state efforts to combat illegal immigration or drug trafficking or human trafficking, engagement in representing or advocating for any of these things above.
[00:20:36] So, even if you’re a lobbyist for the oil and gas industry, or a lobbyist for the firearm industry that can’t be used against you. And so, the idea here is that you can’t use those determinations in making a decision about banking. You can’t say, oh, well, this person belongs to this religion or this political party, and therefore we’re going to [00:21:00] deny them banking or services.
[00:21:03] And so that’s really what this law is about, and for the most part, for our clients. This isn’t a big deal, but there is, I see 2, there is where I see 2 concerns and I want to point this out. And we’ve talked about this recently in a lunch and learn we did with our clients. And I’m sure we’ll talk about it again, but.
[00:21:29] You know, credit unions being unique and credit unions being a cooperative, credit unions have the ability, especially if you’re a state chartered credit union in Florida, you have the ability to not only deny services, but terminate membership and the Florida statute on this prior to this change in the law was very broad.
[00:21:49] It used to say that you could terminate membership at a credit union if they cause the credit union a loss and for good cause. And we’ve [00:22:00] always interpreted that good cause to be pretty broad. And we’ve used it in situations where you have members who are what I’ll call trouble members.
[00:22:10] Maybe they haven’t caused a loss yet, but they’re just belligerent to the staff. Every interaction with them is them cussing.
[00:22:17] Steve: Being combative.
[00:22:18] Jim: Yeah, exactly. And so, you know, we’ve always taken the position that the credit is well within their rights to terminate their membership and get rid of that member.
[00:22:29] And we had recently with one of our clients where two different members of one of our clients, two different individuals got mad and they verbally threatened to shoot people at the credit union. Now, whether they’re blowing off steam or not, today’s day and age, those things are taken seriously.
[00:22:49] And so you know, my concern is when you, when our clients go to exercise that right of terminating membership, they need to be very careful to document that [00:23:00] in no way are any of these E& E.
[00:23:01] Steve: It’s with their beliefs, it’s with, you know, their behavior and the danger, you know, that it causes.
[00:23:07] Jim: Yep, yep. It can’t be anything to do with their beliefs. So we need to make sure that the staff involved is separating it. You know, I could see a scenario where you have a member come into the branch and start acting out, being belligerent, being combative, and they happen to have a particular shirt on, a particular hat on, for a particular cause. And the credit union terminates services, and now they’re claiming.
[00:23:39] Steve: Targeted my beliefs. It’s not because I came in there and threaten everyone in the branch because I had this hat on. Yep.
[00:23:46] Jim: Yep. You know, and so I think credit unions need to be careful about that. I think they need to be aware. They need to make sure that if they’ve got someone with a shirt on.
[00:23:55] That is maybe, you know, 1 of those [00:24:00] situations where they may feel, that shirt somehow draws them into confrontation. We just need to be careful that we document it clearly. Of course, if there’s cameras in the lobby showing their activity and their actions and they’re out of control, I think that’s good.
[00:24:17] But we need to be careful of that. I think the other issue where this comes into play is the sovereign citizen.
[00:24:24] And, you know. Our favorite, right? The sovereign citizen, and we could talk on this podcast for hours about these individuals. And there’s people allow.
[00:24:34] We say when we’re dealing with people who we identify as a sovereign citizen, there’s 2 types. There’s the people who get caught up into it. They’ve read something on the internet. They’re desperate and they’re grasping at straws and they find this stuff on the internet and they think somehow if they use these magic words, it gets them out of trouble.
[00:24:53] Steve: Special favorites, special words.
[00:24:54] Jim: Yep, yep. You got to cite the UCC one article one [00:25:00] and sign everything without recourse and somehow you get out of all the things you’ve done in life. And then there’s the true believers and you know, I would take the position that these people are not protected by this statute.
[00:25:13] But I don’t know how the courts are going to interpret it. I don’t know how a judge is going to rule on these issues. And again, this law just took effect July 1st. So we’re only a couple of months into this. So we’re just going to have to wait and see. Now the good thing in all of this is this new anti statute does not create a private right of action.
[00:25:40] So the person doesn’t get to sue the credit union under the statute, but they can make a complaint to the attorney general. And then the attorney general could, of course, investigate it and bring action if they think it’s warranted. So that gives me a little bit more confidence that in dealing with sovereign citizens, we’re not going to see [00:26:00] at least the current attorney general in Florida taking up those causes with people who don’t recognize the law and the legal system we operate within.
[00:26:09] But it is something that I think credit unions need to be aware of and so we wanted to go ahead and obviously educate our clients on this law.
[00:26:18] Steve: It’s an interesting one for sure.
[00:26:20] Jim: So, you know, any closing thoughts, Steve, as we close out today’s program, we’ve talked about these legal updates and just, yeah.
[00:26:28] Steve: I mean, there’s, you know, it’s always something every time you turn around, there’s a new law regulation, something coming out.
[00:26:33] We always try to stay on top of them and keep clients informed and so. You know, so you make sure that you go back and if you haven’t already, you know, update your procedures to make sure that you comply with these new laws and, you know, think about how they may apply to your financial institution, credit union, and how you want to implement them going forward. But you know, another interesting legislative session, I’ll say there.
[00:26:51] Jim: Yeah.
[00:26:52] Steve: They only get together for a short period of time. Maybe that’s a secret to producing these kind of, you know, interesting laws that come out every year, these hot [00:27:00] button things. But yeah this session was, nothing short of that.
[00:27:02] So, and you mentioned you know, that we put out our law firm puts out content on this, that we inform our clients and people on our mailing list of these changes. So if someone wants to get on our mailing list, what do they need to do?
[00:27:18] They just need to reach out to us and sign up for the mailings on our website. I believe there, there could be you know, a method to sign up and contact us there. That’s SvlLaw.com, you know, and obviously we put the content on there as well that yes feel quarterly comes out every quarter we’re doing lunch and learns and the podcast and all sorts of great stuff. Yeah, check us out we’re kind of everywhere and everything, you know, we’re trying to new content and new laws and how they apply to you.
[00:27:43] So it’s not necessarily old stale stuff. There’s always, you know, something new coming around the corner. So.
[00:27:49] Jim: Well, thanks, Steve. I appreciate you joining me today on the podcast and I hope everyone out there listening enjoyed what Steve and I had for you today. I know talking about new [00:28:00] laws is not always the most exciting thing, but it is important to understand the laws that impact you and the impact to credit unions.
[00:28:07] So, with that, we’ll go ahead and and say goodbye and we hope you join us next time. On banking on credit unions.
[00:28:16] Narrator: Thanks for joining us this week on Banking on Credit Unions. Make sure to visit our website www.SvlLaw.com/podcast where you can subscribe to the show in iTunes, Spotify or via RSS so you’ll never miss a show. While you’re at it, if you found value in this show, we’d appreciate a rating on iTunes.
[00:28:40] Or if you’d simply tell a friend about the show, that would help us out too. When it comes to credit union law, the Sorensen Van Leeuwen Law Firm has you covered. Reach out to us at SvlLaw.com because every credit union deserves top legal representation. Be sure to tune in [00:29:00] next week for our next episode.
