New Mexico Statutes 48-7-15. Purpose [of “due-on-sale” law]
A. The legislature finds that the congress of the United States by an act entitled the Garn – St. Germain Depository Institutions Act of 1982 has preempted New Mexico law restricting the enforcement of due-on-sale clauses, except as provided in section 341(c)(1) of that act as to loans made or assumed during the period March 15, 1979 through October 15, 1982. For real property loans made by lenders subject to state regulation, made or assumed during that period of time, the legislature may provide for restrictions on the enforcement of due-on-sale clauses. It is the intent of the legislature by this act N.M. Stat. Ann. § 48-7-15 to 48-7-24 to provide legislation regulating due-on-sale clauses in contracts either made or assumed from March 15, 1979 through October 15, 1982.
Terms Used In New Mexico Statutes 48-7-15
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
B. The legislature further finds that the Garn – St. Germain Depository Institutions Act of 1982 gives the legislature the authority, during a three-year period commencing on October 15, 1982, to act regarding state restrictions on due-on-sale clauses contained in real property loans, which loans were made by lenders subject to state regulations. It is the intent of the legislature to affect by legislation such loans made or assumed between March 15, 1979 and October 15, 1982. Federally regulated federal savings and loan associations are the only lenders that are immune from state regulation of due-on-sale clauses. If the legislature fails to act during this three-year period, then due-on-sale clauses on any loan made by any lender may be escalated to any rate the lender desires upon assumption by another party.
C. The legislature finds that:
(1) the federally chartered savings and loan associations being permitted to enforce due-on-sale clauses and state chartered savings and loan associations being restricted in doing so creates a competitive advantage for federally chartered associations. This advantage will lead to a continued weakening of state chartered associations;
(2) a blended rate, as contained in this act, for real property loans which are assumed is the best approach for both the consumer and the lender. The consumer is assured of a predictable, fair interest rate and the lender a fair rate of return more reflective of its cost of money; and
(3) continuation of the current prohibition on enforcement of due-on-sale clauses will discourage investors from investing through mortgage bankers in New Mexico real property loans; whereas, a blended rate on assumptions will permit the sale of New Mexico real property loans and thereby attract additional capital to New Mexico.