Compliance Calendar for August 2018

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Charge-off recommendations

Effective: August 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Bulletin 2018-2 →
Tags: Foreclosure, Claims Processing

Effective August 1, 2018; however, Servicers may implement earlier if they are able to do so

  • Specifying the situations in which, rather than proceeding with foreclosure, a Servicer is required to recommend a charge-off to Freddie Mac
  • Updating lien release requirements when Freddie Mac approves a charge-off request; and
  • Enhancing the Glossary definition of the term “Risk of Property Ownership”

Conversion of Construction-to-Permanent Financing: Single-Closing Transactions

Effective: August 1, 2018
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2018-03 →
Tag: Underwriting
  • Clarifies when a single-closing construction-to-permanent transaction is processed as a purchase or a refinance based on the timing of lot ownership. 
  • The transaction type will be based on lot ownership at the time of “the first advance of interim construction financing”

Minnesota Enacts Legislation to Adopt MLO Uniform State Test

Effective: August 1, 2018
Industry: Mortgage Lending
Source: Minnesota   MBA Newslink →
Tags: Minnesota, Licensing
  • Adoption of the Nationwide Multistate Licensing System Uniform State Test for state-licensed mortgage loan originators 
  • Adds one hour to the state's MLO continuing education requirements that must focus on state laws and regulations

(https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF3158&ssn=0&y=2017)

Minnesota Modifies Provisions Regarding MLO Licensing Requirements

Effective: August 1, 2018
Industry: Consumer Lending, Mortgage Lending
Source: Minnesota   Bankers Advisory →
Tags: Minnesota, Licensing

The state of Minnesota modified its provisions relating to mortgage loan originator continuing education requirements. These provisions are effective on August 1, 2018.

The amendment provides that in order to meet the written test requirement, an individual shall pass a qualified written test developed by the Nationwide Multistate Licensing System and Registry (NMLSR), designated as the NMLSR’s National Test Component with Uniform State Content for Mortgage Loan Originator Licensing, and administered by a test provider approved by NMLSR based upon reasonable standards.

The amendment further stipulates that in order to meet the annual continuing education requirements, a licensed mortgage loan originator shall complete at least eight hours of education that includes one hour of Minnesota state law and rules.

Lastly, the amendment provides that the revisor of statutes shall change the term “Nationwide Mortgage Licensing System and Registry” or similar term to “Nationwide Multistate Licensing System and Registry” wherever the term appears in Minnesota Statutes, chapter 58A.

Lousiana Privileges, Liens and Mortgages

Effective: August 1, 2018
Industry: Mortgage Servicing
Source: Louisiana   LA House Bill 172 →
Tags: Louisiana, Partial Releases, Foreclosure

To amend and reenact Code of Civil Procedure Article 2376 and to enact R.S. 13:4368, relative to the cancellation of privileges, liens, and mortgages. 

  • To provide for the cancellation or partial release of inferior privileges, liens, and mortgages on property sold at sheriff's sale; 
  • to provide for the procedures for cancelling or partially releasing inferior privileges, liens, and mortgages; 
  • to provide for the required information for the filing of an affidavit; 
  • to provide the duties, effect, and liability for the filing of an affidavit; 
  • to provide for exceptions; and 
  • to provide for related matters. 

Reimbursement of Escrow Advances and SCRA Reporting

Effective: August 1, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2018-04 →
Tags: SCRA, Escrow-Impounds

Reimbursement of Escrow Advances

To improve our servicers’ experience and reduce complexities in the expense reimbursement process, we are clarifying the policy for reimbursing escrow advances. Fannie Mae will reimburse real estate taxes and flood and property insurance premiums that the servicer advances to protect our interest in the property when funds in the escrow account are not sufficient to cover these payments. This will also apply to non-escrowed mortgage loans. These advances will be eligible for reimbursement without regard to when it was paid in conjunction with the last paid installment date. Such escrow advances are reimbursable even if the expenses were incurred prior to the mortgage loan becoming delinquent.

However, for the servicer to request reimbursement for these expenses, the mortgage loan must have subsequently become delinquent. Also, we no longer bill servicers for unearned property or flood insurance premium refunds owed to Fannie Mae, and therefore we are removing any reference to this billing process from the Guide.

Please refer to the Announcement for updated Guide topics. 

SCRA Reporting

We are clarifying the requirement in F-1-22, Processing Military Indulgence regarding when servicers must notify us that it has placed a mortgage loan under military indulgence. Currently, we require the servicer to notify us using the Servicemembers Civil Relief Act (SCRA) Reporting and Disbursement Request Form (Form 1022) for any portfolio or pooled from portfolio mortgage loan when it places a mortgage loan under military indulgence. We are amending this requirement to clarify that the servicer must only submit Form 1022 to Fannie Mae when it

  • reduces the servicemember's interest rate;
  • puts other forms of military indulgence into effect that changes the servicemember’s payment;
  • changes the servicemember's payment, if the interest subsidy amortization method is used; or
  • changes the interest rate back to its pre-military interest rate (or the applicable adjusted rate, for an ARM).

CSBS Announces National SAFE MLO Test with Uniform State Content

Effective: August 1, 2018
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Other   CSBS Alert →
Tag: Licensing

The Conference of State Bank Supervisors (CSBS) announced today that all states and U.S. territories now use a single, common exam to assess mortgage loan originators (MLOs), simplifying the licensing process for MLOs and streamlining supervision of the mortgage industry.

Removal of the FHA Inspector Roster

Effective: August 2, 2018
Industry: Mortgage Lending
Source: FHA   Final Rule →
Tag: Property - Appraisal

1. In § 200.145, add paragraph (c) to read as follows:

(c) For all new construction as well as structural repairs and/or renovations of existing properties, to the extent that an inspection is required to determine if construction quality of a one- to four-unit property is acceptable as security for an FHA-insured loan, the following requirements apply:

(1)(i) In areas where local jurisdictions provide building code enforcement and the requisite documentation, the lender shall provide a copy of:

(A) The building permit, or its equivalent, and a copy of the certificate of occupancy, or its equivalent; or

(B) A satisfactory inspection notice for work completed, or its equivalent.

(ii) The documentation provided under paragraph (c)(1)(i) of this section shall be considered satisfactory evidence of completion of the work.

(2) In jurisdictions that do not provide building code enforcement and requisite documentation, three inspections are required for new construction. For existing construction, only one inspection and certification of work completed for structural repairs and renovations is required. For both new and existing construction, the lender shall, in order to ensure compliance with FHA requirements:

(i) Select a Residential Combination Inspector (or its successor designation) or a Combination Inspector (or its successor designation) certified by the International Code Council (or its successor organization) who is licensed or certified as a home inspector in accordance with the applicable State and local requirements governing the licensing or certification of those jurisdictions that license or certify such inspectors in the respective jurisdiction. The lender shall provide a certification from such inspector that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.

(ii) In the absence of such Residential Combination Inspector and Combination Inspector, the lender shall obtain an inspection performed by a third party, who is a registered architect, a professional engineer, or a trades person or contractor, and who has met the licensing and bonding requirements of the State in which the property is located. The lender shall provide a certification from such inspector that the inspector is licensed and bonded under applicable State law, and that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.

2.  “FHA Inspector Roster” and §§ 200.170 through 200.172 is removed.

Illinois Notice of Sale - Judicial Foreclosure

Effective: August 3, 2018
Industry: Mortgage Servicing
Source: Illinois   ​Illinois House Bill 5176​ →
Tags: Illinois, Foreclosure
  • Provides that a purchaser of a property shall publish a notice in a newspaper published in that municipality or, if the property is not in a municipality or no newspaper is published in the municipality, then the purchaser shall publish a notice in a newspaper in the county (regardless of the property being located in a municipality in a county with less than 3,000,000 inhabitants). 

New Hampshire Licensing Provisions

Effective: August 7, 2018
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: New Hampshire   Bankers Advisory Alert →
Tags: New Hampshire, Licensing
  • Certain individuals who are not regularly engaged in business as mortgage bankers, mortgage brokers, mortgage servicers, and mortgage originators in a commercial context are exempt from regulation. 
  • There is now a rebuttable presumption that an individual is not engaged in the business of a mortgage banker, broker, servicer, or originator if he or she is involved in three or fewer loans in a consecutive 12-month period.

New Hampshire Banking and Consumer Credit Provisions

Effective: August 7, 2018
Industry: Consumer Lending
Source: New Hampshire   Bankers Advisory Alert →
Tags: New Hampshire, Banking
  • The banking department may review advertisements of motor vehicles within three years of the date the advertisement is advertised.
  • The previously enforced requirement that a payday loan payment book provided to a borrower contain an interest calculation has been eliminated.

FNMA SEL-2018-06 - Market Conditions Addendum (Form 1004MC)

Effective: August 7, 2018
Industry: Mortgage Lending
Source: Fannie Mae   FNMA SEL-2018-06 →
Tag: Property - Appraisal

The Form 1004MC was introduced in response to the 2008 housing crisis to provide a standardized mechanism for appraisers to analyze and report changes in market conditions. This enabled lenders to make prudent lending decisions in appreciating, stable, or declining markets. Collateral Underwriter® (CU™) now provides robust market trend information for lenders and Fannie Mae, enabling measurement and management of market risks in a more rigorous way.

With this Guide update, we removed the requirement for the Form 1004MC. This will simplify reporting for appraisers and review for lenders

NO T E : Appraisers remain responsible for analyzing market conditions and accurately reporting them in the Neighborhood section of our appraisal forms.

Effective Date
Lenders can take advantage of this change immediately. The requirement for the 1004MC will be removed from Desktop Underwriter® (DU®) in a future release. Until that time, lenders may disregard the DU message.

FNMA SEL-2018-06 - Disbursement of HomeStyle Renovation Funds

Effective: August 7, 2018
Industry: Mortgage Lending
Source: Fannie Mae   FNMA SEL-2018-06 →
Tag: Closing

We are clarifying the following policies related to the process of disbursing renovation funds:

  • Renovation funds may be disbursed using wire transfers as long as the lender has obtained written consent to release funds. Lenders continue to have the option to disburse renovation funds using a check jointly issued to the borrower and the contractor.
  • All mechanics liens must be cleared or waived prior to the final disbursement at the completion of the renovation project. We do not require lenders to obtain lien waivers at each disbursement. This clarification aligns the timing of clearance of mechanics liens in the Selling Guide with the requirements in the Servicing Guide.
Effective Date
Lenders can take advantage of these clarifications immediately. 

Colorado Provisions Regarding Foreclosure Sales

Effective: August 8, 2018
Industry: Mortgage Servicing
Source: Colorado   CO HB18-1254 →
Tags: Colorado, Foreclosure

The bill modifies and clarifies certain aspects of the foreclosure process on property encumbered by a deed of trust as follows:

  • Eliminates the authority of the attorney for a holder of an evidence of debt (holder) to specify the newspaper used to publish foreclosure notices;
  • Allows an amended combined notice to be omitted in a specified circumstances when the notice is provided by the sheriff or public trustee conducting the foreclosure (officer);
  • Modifies the amount of the deposit required for the fees and costs of the public trustee;
  • Omits a statement notifying borrowers of their ability to file a complaint if they believe a lender or servicer has violated certain requirements from the portions of a combined notice that must be published;
  • Makes changes to the bid form used by holders;
  • Clarifies the amount to be paid to the officer if the holder bids an amount that exceeds the amount due to the holder;
  • Prorates the amount of insurance premiums that may be claimed as costs;
  • Further specifies and modifies the procedures for restarting a foreclosure proceeding when a property is subject to a federal bankruptcy case or if a sale has been enjoined or set aside by a court;
  • Specifies the interest and other amounts that may be charged by the holder of a certificate of purchase when property is redeemed; and
  • Clarifies the procedure for junior subsequent lienors to redeem a property.

Colorado MLO Licensing

Effective: August 8, 2018
Industry: Mortgage Lending
Source: Colorado   CO House Bill 1174 →
Tags: Colorado, Licensing

Concerning the continuation under the sunset law of the board of mortgage loan originators, and, in connection therewith, adopting the legislative recommendations of the department of regulatory agencies as contained in the department's sunset report.

Details TBD

FNMA SEL-2018-06 - Miscellaneous Selling Guide Updates

Effective: August 8, 2018
Industry: Mortgage Lending
Source: Fannie Mae   FNMA SEL-2018-06 →
Tag: Certification, Endorsement, and Delivery

Consolidation of Data Quality and Integrity and Mortgage Fraud
As part of our ongoing efforts to consolidate Part A of our Selling and Servicing Guides, this month we are simplifying Selling Guide content related to data quality and integrity and the prevention, detection, and reporting of mortgage fraud.  There have been no policy changes as a result of this effort, however content has been significantly streamlined to retain substantive requirements only and eliminate unnecessary explanations and examples.

Some items to note are as follows:

  • Policy related to the reporting of gross monthly rent has been moved from A3-4-02, Data Quality and Integrity to B3-3.1-08, Rental Income, where it is better suited.
  • Duplicative policy pertaining to the quality of information on the Residential Loan Application (Form 1003) has been removed from A3-4-02, Data Quality and Integrity as it is already located in B1-1-01, Contents of the Application Package.
  • Similarly, content duplicative of the requirements for life-of-loan representations and warranties have been removed to eliminate redundancy. 

Miscellaneous Selling Guide Updates

B3-2-01, General Information on DU: The DU loan casefile archival policy is being extended from 270 days (9 months) to 28 months from the date the loan casefile was last updated to determine if the loan casefile should be archived. We will no longer use the date the loan casefile was created to determine when it should be archived. We will still continue to retire the oldest version of DU when a new version of DU is activated. This update is effective immediately.

As a follow-up to the June Selling Guide update, we have made changes and clarifications to the following topics:

  • B4-2.1-01, General Information on Project Standards – updated the name and description of Special Feature Code 588 Detached Condo Unit to clarify it applies to detached units in attached or detached condo projects. The Special Feature Codes list has also been updated accordingly.
  • B5-2-03, Manufactured Housing Underwriting Requirements – clarified MH Advantage down payment requirements for loans with LTV ratios of 95.01 – 97% to align with the existing policy that applies when there are funds from a gift, grant, or employer.
  • B7-1-02, Mortgage Insurance Coverage Requirements – changed the layout of the table to clarify the MH Advantage mortgage insurance requirements.  

Illinois Mortgage Loan Advertisements

Effective: August 10, 2018
Industry: Mortgage Lending
Source: Illinois   Illinois Senate Bill 2615 →
Tags: Illinois, Advertisements, Marketing

  • Provides that mortgage loan advertisements must reference the Nationwide Multistate Licensing System and Registry's Consumer Access website, except where exempted by the Secretary of Financial and Professional Regulation. 
  • Provides that a licensee shall not advertise its services in Illinois in any media, whether print or electronic, without including its unique identifier. 
  • Replaces "Commissioner" with "Secretary" in order to update references to the Secretary of Financial and Professional Regulation. 
  • Makes other changes. 

Freddie Mac Bulletin 2018-6 Intra-Servicer Portfolio Moves

Effective: August 13, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Bulletin 2018-6 →
Tag: Servicing Transfers

Guide Bulletin 2018-11 announced that updates to the Service Loans application for these changes that were scheduled to be made on July 23, 2018 have been postponed and will now be implemented on August 13, 2018.

We are introducing a new process to facilitate requests by Servicers that wish to move the Servicing related to specific Mortgages from one of their Seller/Servicer numbers to another of their Seller/Servicer numbers (“IntraServicer Portfolio Move”). Servicers must make requests for Intra-Servicer Portfolio Moves via Form 982 until July 23, 2018, when the Service Loans application is updated to automate the process.

Requests via Form 982

Prior to July 23, 2018, Servicers must submit an Intra-Servicer Portfolio Move request for Servicing of Single-Family Mortgages and a list of such Mortgages via the Service Loans application, and obtain Freddie Mac’s prior approval by undertaking the following steps:

  • At least 30 days, but not more than 60 days, prior to the requested effective date of change, submit a complete and fully executed Form 982 to TOS@freddiemac.com; and
  •  Submit the list of Mortgages related to the Intra-Servicer Portfolio Move request to Freddie Mac via the Service Loans application

Upon receipt of Form 982 and the list of related Mortgages, Freddie Mac will review the list to ensure that the Servicing of such Mortgages may be reallocated to the proposed Seller/Servicer number. Upon Freddie Mac’s approval, the Seller/Servicer number associated with Mortgages will change as of the Servicer’s requested effective date of change; however, there will be no change to the rights, liabilities and obligations the Servicer owes towards Freddie Mac under the Purchase Documents.

Servicers are reminded that they must ensure that Principal and Interest Payments and Escrow Funds received from Mortgages included on Form 982 are deposited in the Custodial Account associated with the new Seller/Servicer number. In addition, the Servicer must inform its Document Custodian of the new Seller/Servicer number.

Form 982 is included as Attachment A to this Bulletin as it is in effect until July 23, 2018.
Guide impacts: Section 7101.2 and Form 982 

Requests via the Service Loans application

On and after July 23, 2018, Servicers must submit an Intra-Servicer Portfolio Move request for Servicing of Single-Family Mortgages and a list of such Mortgages via the Service Loans application, and obtain Freddie Mac’s prior approval by undertaking the following steps:

  • At least 30 days, but not more than 60 days, prior to the requested effective date of change, log into Service Loans application, go to the “Manage Portfolio” tab, select “Create New Request” and then select “Intra-Servicer Portfolio Move Request”
  •  Complete all questions designated to be completed by the Transferor Servicer
  •  Submit the list of Mortgages related to the change in Seller/Servicer number; and
  •  Sign the Intra-Servicer Portfolio Move Request to acknowledge the terms and conditions associated with the change in Seller/Servicer number

Guide impacts: Section 7101.2 and Forms 902 and 902SA 

Moratorium on Intra-Servicer Portfolio Moves from July 9, 2018 through July 20, 2018

Similarly to the transition for processing Subsequent Transfers of Servicing via the Service Loans application, to facilitate the transition of Intra-Servicer Portfolio Move requests via the Service Loans application, we will implement a temporary moratorium on Intra-Servicer Portfolio Moves from July 9, 2018 through July 20, 2018. During this period, Servicers will not be able to submit new requests or make modifications to existing requests. All Intra-Servicer Portfolio Move requests submitted prior to July 9, 2018 will be reviewed and, if applicable, approved no later than 2:00 p.m. Eastern time on July 20, 2018. On and after July 23, 2018, subject to obtaining Freddie Mac’s prior written approval, Servicers must submit all new Intra-Servicer Portfolio Move requests and make modifications to existing requests electronically through the “Manage Portfolio” tab in the Service Loans application.


Maryland Notary Public Fees

Effective: August 13, 2018
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Maryland   Bankers Advisory Alert →
Tag: Notary
  • Previously notary publics could charge a fee of 31 cents for mileage reimbursement if they were required to travel to perform their notary duty. 
  • The new amendment allows a notary public to charge a rate indexed to the prevailing rate for mileage as established by the Internal Revenue Service for business travel. 
  • This fee is allowed only if the notary is required to travel to perform the notarial act. 
  • The new fees take effect August 13, 2018.

Illinois Licensing Requirements under RMLA

Effective: August 14, 2018
Industry: Consumer Lending, Mortgage Lending
Source: Illinois   Illinois House Bill 4404 →
Tag: Licensing
  • Provides that "soliciting, processing, placing, or negotiating a residential mortgage loan" excludes independent loan processing as permitted by the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

Fannie Mae Servicer Responsibilities for Urgent Property Conditions

Effective: August 15, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2018-05 →
Tag: Property Preservation
  • We have updated D2-2-10, Requirements for Performing Property Inspections clarifying the servicer's responsibilities for addressing urgent property conditions when the borrower refuses to make emergency repairs
  • The Property Preservation Matrix and Reference Guide has been updated to provide servicers with more specific and detailed procedures for inspecting and preserving properties that have been impacted by a disaster event; miscellaneous updates have been included as well to provide clearer guidance for inspecting and preserving properties

FHA Updated Loss Mitigation for Puerto Rico and the U.S. Virgin Islands

Effective: August 16, 2018
Industry: Mortgage Servicing
Source: FHA   Mortgagee Letter 2018-05 →
Tags: Loss Mitigation, Disaster

Updated Loss Mitigation for mortgagees servicing mortgage loans for borrowers with FHA-insured mortgages whose property and/or place of employment is located in the Presidentially-Declared Major Disaster Areas (PDMDAs) of Puerto Rico Hurricane Maria DR-4339 or Virgin Islands Hurricane Maria DR-4340 and Disaster Foreclosure Moratorium for certain FHA-insured mortgages secured by properties located in areas of Puerto Rico and the U.S. Virgin Islands that the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) has declared to be eligible for Individual Assistance (Affected Counties) as a result of Hurricane Maria (Puerto Rico Hurricane Maria DR-4339 and Virgin Islands Hurricane Maria DR-4340). 

  • HUD is providing a 30-day foreclosure moratorium only for certain eligible FHA-insured mortgages secured by properties located in areas described above. [See ML for complete requirements]

Mortgagees may no longer offer the Loss Mitigation options in this Mortgagee Letter to borrowers on or after May 1, 2019, which is the Sunset Date for the Mortgagee Letter. 

FHA Extension of HECM Foreclosure Timelines for Puerto Rico and the U.S. Virgin Islands

Effective: August 17, 2018
Industry: Mortgage Servicing
Source: FHA   FHA INFO #18-35 →
Tags: Foreclosure, Disaster
  • Extends foreclosure timelines through September 15, 2018, for Home Equity Conversion Mortgages (HECM) on impacted properties in those Presidentially-Declared Major Disaster Areas (PDMDAs) declared eligible for Individual Assistance by the Federal Emergency Management Agency (FEMA) for Puerto Rico’s Hurricane Maria (FEMA-DR-4339) and U.S. Virgin Islands’ Hurricane Maria (FEMA-DR-4340).
  • Applies to both the initiation of foreclosures and foreclosures already in process on HECMs that become due and payable for reasons other than the death of the last surviving borrower and eligible non-borrowing spouse.

Freddie Mac Bulletin 2018-10 Maximum Number of Financed Properties

Effective: August 20, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Maximum Number of Financed Properties →
Tags: Underwriting, Credit - Liabilities

MAXIMUM NUMBER OF FINANCED PROPERTIES

Effective August 20, 2018

For second home and Investment Property Mortgages, we currently limit the number of 1- to 4-unit financed properties that a Borrower individually is, and all Borrowers collectively are, obligated on to six (including the subject property and the Borrower’s Primary Residence).

In response to Seller requests, we are increasing the maximum number of financed properties permitted to 10 provided that, when the number of financed properties is greater than six:

  • The Mortgage must:
    • Be a Loan Product Advisor Mortgage with a Risk Class of Accept
    • Have a minimum Indicator Score of 720
  • The Seller must verify reserves of eight months of the monthly payment (as described in Section 5501.2(a)) on each additional second home and/or 1- to 4-unit Investment Property that is financed and on which the Borrower is obligated.

Loan Product Advisor will be updated by August 20, 2018 to reflect this change.

Guide impacts: Sections 4201.15, 4201.16 and 5501.2 

Clarifies Process for Correcting Nonmaterial and Descriptive Errors in Recorded Instruments of Title

Effective: August 31, 2018
Industry: Mortgage Lending
Source: North Carolina   NC House Bill 584 →
Tags: North Carolina, Loan Documents, Closing

Effective August 31, 2018; applies to curative affidavits filed on or after that date.

  • Notice of a nonmaterial typographical or other minor error in a deed or other recorded instrument may now be given by recording a corrective notice affidavit. 
  • Obvious description errors in a recorded instrument affecting title to real property may now be cured by recording a curative affidavit with the register of deeds in every county where the real property is situated.
  • The act provides a recommended form for the curative affidavit, and specifies that “no particular phrasing is required for the curative affidavit.”
  • An instrument conveying or purporting to convey an interest in real property that contains a defect, irregularity, or omission shall be deemed effective to vest title as stated therein and to the same extent as though the instrument had not contained the material defect, irregularity, or omission, if both of the following conditions are met:
    • The material defect, irregularity, or omission is not corrected within seven years after the instrument was recorded.
    • The instrument is recorded by the register of deeds in the county or counties where the property is situated.