Bill Text: CA AB1602 | 2011-2012 | Regular Session | Amended
Bill Title: Mortgages and deeds of trust: foreclosure.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced - Dead) 2012-04-16 - In committee: Set, first hearing. Hearing canceled at the request of author. [AB1602 Detail]
Download: California-2011-AB1602-Amended.html
BILL NUMBER: AB 1602 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 9, 2012
INTRODUCED BY Assembly Members Eng and Feuer
(Coauthors: Assembly Members Dickinson, Galgiani, and Skinner)
FEBRUARY 6, 2012
An act to add Section 2923.7 amend
Sections 2923.5 and 2924g of, to amend and repeal Section 2924 of,
and to add Sections 2923.6, 2924.9, 2924.10, 2924.11, 2924.12,
2924.13, 2924.14, 2924.15, and 2924.16 to , the
Civil Code, relating to mortgages.
LEGISLATIVE COUNSEL'S DIGEST
AB 1602, as amended, Eng. Mortgages and deeds of trust:
foreclosure.
(1) Existing law, until January 1, 2013, requires a mortgagee,
trustee, beneficiary, or authorized agent to contact the borrower
prior to filing a notice of default to explore options for the
borrower to avoid foreclosure, as specified. Existing law requires a
notice of default to include a declaration stating that the trustee,
beneficiary, or authorized agent has contacted the borrower, or has
tried with due diligence to contact the borrower, or that no contact
was required for a specified reason.
This bill would additionally require the borrower to be provided,
if applicable, with a deadline for the borrower to submit an initial
application for a loan modification. The bill would require the
declaration to also state that the borrower was not a servicemember
or dependent of a servicemember entitled to benefits under the
federal Servicemembers Civil Relief Act, that the mortgagee, trustee,
beneficiary, or authorized agent has possession of the note and
mortgage, or deed of trust, and other specified documents that
evidence the right to foreclose, and has attached copies thereof to
the declaration, as specified, or a separate declaration containing
specified information, if the above described documents cannot be
located. The bill would prescribe procedures and notices that must be
sent by the mortgagee, trustee, beneficiary, or authorized agent if
the notice of default was filed prior to January 1, 2013, and a
notice of rescission was not subsequently recorded. The bill would
prohibit recording a notice of default unless a specified written
notice has been sent at least 14 days before a notice of default is
recorded.
The bill would prohibit a notice of default from being recorded
while a loan modification application is pending, under specified
conditions, and would establish additional procedures to be followed
regarding the loan modification application before a notice of
default could be recorded.
(2) Existing law imposes various requirements that must be
satisfied prior to exercising a power of sale under a mortgage or
deed of trust, including, among other things, recording a notice of
sale.
This bill would impose additional requirements pertaining to
applications for loan modifications that must be satisfied prior to
recording a notice of sale in order to exercise a power of sale. The
bill would require a written notice to the borrower after the
postponement of a foreclosure sale in order to advise the borrower of
any new sale date, time, and location when the new sale date is at
least 10 calendar days after the date of postponement, as specified.
The bill would establish procedures for a loan modification
application process to be used after a notice of sale has been
recorded.
The bill would prohibit a notice of sale from being recorded under
certain conditions, including, among others, if the borrower is in
compliance with a loan modification plan, forbearance, or loan
repayment plan, as specified, or if a short sale or deed-in-lieu of
foreclosure has been approved, as specified. The bill would require
mortgagees, trustees, beneficiaries, or authorized agents to track
and record specified data pertaining to loan modification agreements.
The bill would prohibit the collection of late fees while a loan
modification or short sale is being considered, if certain criteria
are met.
(3) The bill would repeal duplicate provisions of law.
(4) The bill would authorize a borrower to seek an injunction of a
pending trustee's sale if a notice of sale has been recorded and the
borrower reasonably believes that the mortgagee, trustee,
beneficiary, or authorized agent failed to comply with specified
requirements. The bill would authorize the greater of actual damages
or $10,000 in statutory damages if there is a failure to comply with
specified requirements by the mortgagee, trustee, beneficiary, or
authorized agent and the property is sold at a foreclosure sale. The
bill would authorize the greater of treble damages or $50,000 in
statutory damages if the failure to comply is found to be intentional
or reckless or resulted from willful misconduct, as specified.
(5) The bill would establish the Office of Homeowner Protection,
that would have responsibility, among other things, for responding to
inquiries and complaints from individuals regarding foreclosures and
other procedures and requirements as described above, attempting to
seek compliance by mortgagees, trustees, beneficiaries, or authorized
agents regarding foreclosures and other procedures and requirements
as described above, and maintaining an Internet Web site that is
capable of receiving inquiries and complaints from individuals and
that provides information to the public about publicly available
resources intended to help individuals avoid foreclosure. The bill
would express the intent of the Legislature that the office be funded
by payments made available to the Attorney General via the Special
Deposit Fund, created pursuant to specified federal settlement
agreements.
Existing law requires that, upon a breach of an obligation of a
mortgage or transfer of an interest in property, the trustee,
mortgagee, or beneficiary record a notice of default in the office of
the county recorder where the mortgaged or trust property is located
and mail the notice of default to the mortgagor or trustor.
This bill would prohibit a mortgagee, trustee, beneficiary, or
authorized agent from recording a notice of default unless the
mortgagee, trustee, beneficiary, or authorized agent has made
reasonable and good faith efforts to evaluate the borrower for
available loan modification options to avoid foreclosure. The bill
would authorize a borrower to seek to enjoin a foreclosure and to
recover damages and reasonable attorney's fees in the event that the
mortgagee, trustee, beneficiary, or authorized agent fails to comply
with the bill's requirements.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2923.5 of the
Civil Code is amended to read:
2923.5. (a) (1) A mortgagee, trustee, beneficiary, or authorized
agent may not file record a notice of
default pursuant to Section 2924 until 30 days after initial contact
is made as required by paragraph (2) or 30 days after satisfying the
due diligence requirements as described in subdivision (g).
(h) and until the requirements of subdivision (g) have
been met.
(2) A mortgagee, beneficiary, or authorized agent shall contact
the borrower in person or by telephone in order to assess the
borrower's financial situation and explore options for the borrower
to avoid foreclosure. During the initial contact, the mortgagee,
beneficiary, or authorized agent shall advise the borrower that he or
she has the right to request a subsequent meeting and, if requested,
the mortgagee, beneficiary, or authorized agent shall schedule the
meeting to occur within 14 days. The assessment of the borrower's
financial situation and discussion of options may occur during the
first contact, or at the subsequent meeting scheduled for that
purpose. In either case, the borrower shall be provided the toll-free
telephone number made available by the Office of Homeowner
Protection and the United States Department of Housing and
Urban Development (HUD) to find a HUD-certified housing counseling
agency. agency, and, if applicable, a
deadline for the borrower to submit an initial application for a loan
modification. Any meeting may occur telephonically.
(b) A notice of default recorded pursuant to Section 2924 shall
include a declaration of the following:
(b)
(1) A notice of default filed pursuant to
Section 2924 shall include a declaration that That
the mortgagee, beneficiary, or authorized agent has contacted
the borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required pursuant
to subdivision (h). (i).
(2) That the borrower is not a servicemember or the dependent of a
servicemember who is entitled to the benefits of the Servicemembers
Civil Relief Act (50 U.S.C. Appen. Sec. 501 et seq.).
(3) That the mortgagee, beneficiary, or authorized agent has
possession of the note and mortgage or deed of trust and evidence of
its right to foreclose, including documentation of any assignments
and endorsements of the mortgage note or deed of trust. This evidence
must be attached to, or specifically described in, the declaration.
If this proof cannot be located, the mortgagee, trustee, beneficiary,
or authorized agent shall include a separate declaration signed
either by an individual having personal knowledge of the facts stated
within, or by an individual with authority to bind the mortgagee,
trustee, beneficiary, or authorized agent, who certifies that the
declaration is based upon records that were made in the regular
course of business at or near the time of the events recorded,
stating the following:
(A) Facts sufficient to show that the mortgagee, trustee,
beneficiary, or authorized agent has the right to enforce the note.
(B) A statement that the person cannot reasonably obtain
possession of the note, and a description of the reasonable efforts
made to obtain the note.
(C) A description of the terms of the note and any riders attached
thereto, including, at a minimum the following:
(i) The date of execution.
(ii) The parties.
(iii) The principal amount of the loan.
(iv) The amortization period of the loan.
(v) The initial interest rate and, if applicable, the initial date
and the frequency of any adjustments to the interest rate, and the
index and margin used to calculate the interest rate at the time of
any scheduled adjustment.
(vi) The expiration date of any interest-only period, if
applicable.
(c) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment
of this section January 1, 2013, and did not
subsequently file a notice of rescission, then the mortgagee,
trustee, beneficiary, or authorized agent shall, as part of the
notice of sale filed recorded pursuant
to Section 2924f, include a declaration that either:
states the following:
(1) States that That at least 60 days
prior to the borrower was contacted to assess
recording of the borrower's financial
situation and to explore options for notice of sale,
or as soon thereafter as possible, a written communication was sent
to the borrower to avoid foreclosure.
that included all of the following information:
(A) The borrower can still be evaluated for alternatives to
foreclosure.
(B) Whether an application must be submitted by the borrower in
order to be considered for a foreclosure prevention alternative.
(C) The means and process by which a borrower may obtain an
application for a loan modification or any foreclosure prevention
alternative and the deadlines for any submission to be timely
processed.
(2) Lists the The efforts made, if
any, to contact the borrower in the event no contact was made.
(d) A mortgagee's, beneficiary's, or authorized agent's loss
mitigation personnel may participate by telephone during any contact
required by this section.
(e) For purposes of this section, a "borrower" shall include a
mortgagor or trustor.
(f) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other advisor
to discuss with the mortgagee, beneficiary, or authorized agent, on
the borrower's behalf, the borrowers financial situation and options
for the borrower to avoid foreclosure. That contact made at the
direction of the borrower shall satisfy the contact requirements of
paragraph (2) of subdivision (a). Any loan modification or workout
plan offered at the meeting by the mortgagee, beneficiary, or
authorized agent is subject to approval by the borrower.
(g) No notice of default may be recorded unless the mortgagee,
beneficiary, or authorized agent has also sent a separate written
notice to the borrower that includes all of the following at least 14
days before any notice of default is recorded:
(1) A statement setting forth facts supporting the right of the
mortgagee, beneficiary, or authorized agent to foreclose on the
borrower's loan note.
(2) Notification that the borrower may receive, upon written
request to the mortgagee, beneficiary, or authorized agent, or to any
assigned single point of contact, a copy of the borrower's payment
history since the borrower was last less than 60 days past due, a
copy of the borrower's loan note, copies of any assignments of the
note and of the mortgage or deed of trust that would evidence a right
to foreclose on the borrower's property, and, if applicable, the
name of the investor that holds the borrower's loan note.
(3) An itemized plain language account summary setting forth each
of the following items:
(A) The total amount needed to reinstate or bring the account
current, and the amount of the principal obligation under the
mortgage.
(B) The date through which the borrower's obligation is paid.
(C) The date of the last full payment.
(D) The current interest rate in effect for the loan, if the rate
is effective for at least 30 days.
(E) The date on which the interest rate may next reset or adjust,
unless the rate changes more frequently than once every 30 days.
(F) The amount of any prepayment fee to be charged, if any.
(G) A description of any late payment fees.
(H) A telephone number or electronic mail address or the contact
information for any assigned single point of contact that may be used
by the borrower to obtain information regarding the mortgage.
(4) A statement that if the borrower is a servicemember or a
dependent of a servicemember, he or she may be entitled to certain
protections under the Servicemembers Civil Relief Act (50 U.S.C.
Appen. Sec. 501 et seq.) regarding the servicemember's interest rate
and the risk of foreclosure, and counseling for covered
servicemembers that is available at agencies such as Military
OneSource and Armed Forces Legal Assistance.
(5) A statement to the borrower outlining the loss mitigation
efforts that had already been undertaken with respect to the
borrower, and, if no loss mitigation efforts were offered or
undertaken, a statement, if applicable, giving the reason why the
borrower is ineligible for a loan modification or other loss
mitigation options.
(6) The toll-free telephone number made available by the Office of
Homeowner Protection.
(g)
(h) A notice of default may be filed pursuant to
Section 2924 when a mortgagee, beneficiary, or authorized agent has
not contacted a borrower as required by paragraph (2) of subdivision
(a) provided that the requirements under subdivision (g) have
been met and the failure to contact the borrower occurred
despite the due diligence of the mortgagee, beneficiary, or
authorized agent. For purposes of this section, "due diligence" shall
require and mean all of the following:
(1) A mortgagee, beneficiary, or authorized agent shall first
attempt to contact a borrower by sending a first-class letter that
includes the toll-free telephone number made available by HUD to find
a HUD-certified housing counseling agency.
agency, and, if applicable, a deadline for the borrower to submit an
initial application for a loan modification.
(2) (A) After the letter has been sent, the mortgagee,
beneficiary, or authorized agent shall attempt to contact the
borrower by telephone at least three times at different hours and on
different days. Telephone calls shall be made to the primary
telephone number on file.
(B) A mortgagee, beneficiary, or authorized agent may attempt to
contact a borrower using an automated system to dial borrowers,
provided that, if the telephone call is answered, the call is
connected to a live representative of the mortgagee, beneficiary, or
authorized agent.
(C) A mortgagee, beneficiary, or authorized agent satisfies the
telephone contact requirements of this paragraph if it determines,
after attempting contact pursuant to this paragraph, that the
borrower's primary telephone number and secondary telephone number or
numbers on file, if any, have been disconnected.
(3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgagee, beneficiary, or authorized agent shall then send a
certified letter, with return receipt requested.
requested that includes the toll-free telephone number made
available by the Office of Homeowner Protection and HUD to find a
HUD-certified housing counseling agency, and if applicable, a
deadline for the borrower to submit an initial application for a loan
modification.
(4) The mortgagee, beneficiary, or authorized agent shall provide
a means for the borrower to contact it in a timely manner, including
a toll-free telephone number that will provide access to a live
representative during business hours.
(5) The mortgagee, beneficiary, or authorized agent has posted a
prominent link on the homepage of its Internet Web site, if any, to
the following information:
(A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
(B) A list of financial documents borrowers should collect and be
prepared to present to the mortgagee, beneficiary, or authorized
agent when discussing options for avoiding foreclosure.
(C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgagee, beneficiary,
or authorized agent.
(D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
(E) The toll-free telephone number made available by the Office of
Homeowner Protection.
(h)
(i) Subdivisions (a), (c), (g), and
(g) (h) shall not apply if any of the following
occurs:
(1) The borrower has surrendered the property as evidenced by
either a letter confirming the surrender or delivery of the keys to
the property to the mortgagee, trustee, beneficiary, or authorized
agent.
(2) The borrower has contracted with an organization, person, or
entity whose primary business is advising people who have decided to
leave their homes on how to extend the foreclosure process and avoid
their contractual obligations to mortgagees or beneficiaries.
(3) A case has been filed by the borrower under Chapter 7, 11, 12,
or 13 of Title 11 of the United States Code and the bankruptcy court
has not entered an order closing or dismissing the bankruptcy case,
or granting relief from a stay of foreclosure.
(i)
(j) This section shall apply only to mortgages or deeds
of trust recorded from January 1, 2003, to December 31,
2007, inclusive, that are secured by owner-occupied
residential real property containing no more than four dwelling
units. For purposes of this subdivision, "owner-occupied" means that
the residence is the principal residence of the borrower as indicated
to the lender in loan documents.
(j) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
SEC. 2. Section 2923.6 is added to the
Civil Code , to read:
2923.6. (a) The Legislature finds and declares that any duty
servicers may have to maximize net present value under their pooling
and servicing agreements is owed to all parties in a loan pool, or to
all investors under a pooling and servicing agreement, not to any
particular party in the loan pool or investor under a polling and
servicing agreement, and that a servicer acts in the best interests
of all parties to the loan pool or investors in the pooling and
servicing agreement if it agrees to or implements a loan modification
or workout plan for which both of the following apply:
(1) The loan is in payment default, or payment default is
reasonably foreseeable.
(2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
(b) It is the intent of the Legislature that the mortgagee,
beneficiary, or authorized agent offer the borrower a loan
modification or workout plan if the modification or plan is
consistent with its contractual or other authority.
(c) If a borrower submits an application for a loan modification
within 120 days after delinquency and a notice of default has not yet
been recorded, a mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default while the loan
modification application is pending. A mortgagee, trustee,
beneficiary, or authorized agent shall not record a notice of default
until either:
(1) The mortgagee, trustee, beneficiary, or authorized agent makes
a determination that the borrower is not eligible for a loan
modification.
(2) If the borrower does not accept an offered trial or permanent
loan modification or other foreclosure prevention alternative, the
earlier of the date of the borrower's decline of the stated offer or
the borrower's deadline for accepting the offer, which may not be
less than 14 days from the date the borrower was notified of the
offer.
(d) If a borrower accepts an offered trial or permanent loan
modification under this section, a mortgagee, trustee, beneficiary,
or authorized agent shall not record a notice of default until the
borrower fails to timely submit the first payment or until the
borrower otherwise breaches the terms of the offer, whichever event
occurs first.
(e) If the loan modification requested by a borrower under this
section is denied, the mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default until the later of:
(1) Thirty days after the borrower is notified in writing of the
denial.
(2) If the borrower appeals the denial, until the later of 15 days
after the denial of the appeal or 14 days after the loan
modification or other foreclosure prevention alternative is offered
after appeal but declined by the borrower, or, if a trial or
permanent loan modification is offered after appeal, until the
borrower fails to timely submit the first payment or until the
borrower otherwise breaches the terms of the offer, whichever event
occurs first.
SEC. 3. Section 2924 of the Civil Code
, as amended by Section 1 of Chapter 180 of the Statutes
of 2010, is amended to read:
2924. (a) Every transfer of an interest in property, other than
in trust, made only as a security for the performance of another act,
is to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until all of the following
apply:
(1) The trustee, mortgagee, or beneficiary, or any of their
authorized agents shall first file for record, in the office of the
recorder of each county wherein the mortgaged or trust property or
some part or parcel thereof is situated, a notice of default. That
notice of default shall include all of the following:
(A) A statement identifying the mortgage or deed of trust by
stating the name or names of the trustor or trustors and giving the
book and page, or instrument number, if applicable, where the
mortgage or deed of trust is recorded or a description of the
mortgaged or trust property.
(B) A statement that a breach of the obligation for which the
mortgage or transfer in trust is security has occurred.
(C) A statement setting forth the nature of each breach actually
known to the beneficiary and of his or her election to sell or cause
to be sold the property to satisfy that obligation and any other
obligation secured by the deed of trust or mortgage that is in
default.
(D) If the default is curable pursuant to Section 2924c, the
statement specified in paragraph (1) of subdivision (b) of Section
2924c.
(2) Not less than three months shall elapse from the filing of the
notice of default.
(3) Except as provided in paragraph (4), after the lapse of the
three months described in paragraph (2), and the
requirements of Sections 2924.9, 2924.10, and 2924.11 have been met,
the mortgagee, trustee, or other person authorized to take the
sale shall give notice of sale, stating the time and place thereof,
in the manner and for a time not less than that set forth in Section
2924f.
(4) Notwithstanding paragraph (3), the mortgagee, trustee, or
other person authorized to take sale may file
record a notice of sale pursuant to Section 2924f up to five
days before the lapse of the three-month period described in
paragraph (2), provided that the date of sale is no earlier than
three months and 20 days after the filing
recording of the notice of default.
default, and the requirements of Sections 2924.9, 2924.10, and
2924.11 have been met.
(5) Except as provided in subdivisions (c) and (d) of Section
2924g, the trustee, mortgagee, or beneficiary, or any of their
authorized agents shall provide written notice to the borrower within
five calendar days after the postponement of a foreclosure sale and,
if known to the trustee, mortgagee, beneficiary, or any of their
authorized agents at the time of the notice, the new sale date and
time, and, if applicable, any new location, whenever the new sale
date is at least 10 calendar days after the date of postponement.
(b) In performing acts required by this article, the trustee shall
incur no liability for any good faith error resulting from reliance
on information provided in good faith by the beneficiary regarding
the nature and the amount of the default under the secured
obligation, deed of trust, or mortgage. In performing the acts
required by this article, a trustee shall not be subject to Title
1.6c (commencing with Section 1788) of Part 4.
(c) A recital in the deed executed pursuant to the power of sale
of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of default
or the posting of copies of the notice of sale or the publication of
a copy thereof shall constitute prima facie evidence of compliance
with these requirements and conclusive evidence thereof in favor of
bona fide purchasers and encumbrancers for value and without notice.
(d) All of the following shall constitute privileged
communications pursuant to Section 47:
(1) The mailing, publication, and delivery of notices as required
by this section.
(2) Performance of the procedures set forth in this article.
(3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out
the duties described in Sections 729.040, 729.050, and 729.080 of the
Code of Civil Procedure.
(e) There is a rebuttable presumption that the beneficiary
actually knew of all unpaid loan payments on the obligation owed to
the beneficiary and secured by the deed of trust or mortgage subject
to the notice of default. However, the failure to include an actually
known default shall not invalidate the notice of sale and the
beneficiary shall not be precluded from asserting a claim to this
omitted default or defaults in a separate notice of default.
(f) This section shall become operative on January 1, 2011.
SEC. 4. Section 2924 of the Civil Code
, as amended by Section 2 of Chapter 180 of the Statutes
of 2010, is repealed.
2924. (a) Every transfer of an interest in property, other than
in trust, made only as a security for the performance of another act,
is to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until all of the following
apply:
(1) The trustee, mortgagee, or beneficiary, or any of their
authorized agents shall first file for record, in the office of the
recorder of each county wherein the mortgaged or trust property or
some part or parcel thereof is situated, a notice of default. That
notice of default shall include all of the following:
(A) A statement identifying the mortgage or deed of trust by
stating the name or names of the trustor or trustors and giving the
book and page, or instrument number, if applicable, where the
mortgage or deed of trust is recorded or a description of the
mortgaged or trust property.
(B) A statement that a breach of the obligation for which the
mortgage or transfer in trust is security has occurred.
(C) A statement setting forth the nature of each breach actually
known to the beneficiary and of his or her election
to sell or cause to be sold the property to
satisfy that obligation and any other obligation secured by the deed
of trust or mortgage that is in default.
(D) If the default is curable pursuant to Section 2924c, the
statement specified in paragraph (1) of subdivision (b) of Section
2924c.
(2) Not less than three months shall elapse from the filing of the
notice of default.
(3) Except as provided in paragraph (4), after the lapse of the
three months described in paragraph (2), the mortgagee, trustee, or
other person authorized to take the sale shall give notice of sale,
stating the time and place thereof, in the manner and for a time not
less than that set forth in Section 2924f.
(4) Notwithstanding paragraph (3), the mortgagee, trustee, or
other person authorized to take sale may file a notice of sale
pursuant to Section 2924f up to five days before the lapse of the
three-month period described in paragraph (2), provided that the date
of sale is no earlier than three months and 20 days after the filing
of the notice of default.
(b) In performing acts required by this article, the trustee shall
incur no liability for any good faith error resulting from reliance
on information provided in good faith by the beneficiary regarding
the nature and the amount of the default under the secured
obligation, deed of trust, or mortgage. In performing the acts
required by this article, a trustee shall not be subject to Title
1.6c (commencing with Section 1788) of Part 4.
(c) A recital in the deed executed pursuant to the power of sale
of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of default
or the posting of copies of the notice of sale or the publication of
a copy thereof shall constitute prima facie evidence of compliance
with these requirements and conclusive evidence thereof in favor of
bona fide purchasers and encumbrancers for value and without notice.
(d) All of the following shall constitute privileged
communications pursuant to Section 47:
(1) The mailing, publication, and delivery of notices as required
by this section.
(2) Performance of the procedures set forth in this article.
(3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out
the duties described in Sections 729.040, 729.050, and 729.080 of the
Code of Civil Procedure.
(e) There is a rebuttable presumption that the beneficiary
actually knew of all unpaid loan payments on the obligation owed to
the beneficiary and secured by the deed of trust or mortgage subject
to the notice of default. However, the failure to include an actually
known default shall not invalidate the notice of sale and the
beneficiary shall not be precluded from asserting a claim to this
omitted default or defaults in a separate notice of default.
(f) This section shall become operative on January 1, 2011.
SEC. 5. Section 2924.9 is added to the
Civil Code , to read:
2924.9. Within five calendar days after recording a notice of
default pursuant to Section 2924, a trustee, mortgagee, beneficiary,
or authorized agent shall send a written communication to the
borrower that includes all of the following information:
(a) That the borrower can still be evaluated for alternatives to
foreclosure.
(b) Whether an application is required to be submitted by the
borrower in order to be considered for a foreclosure prevention
alternative.
(c) The means and process by which a borrower may obtain an
application for a loan modification or any foreclosure prevention
alternative and the deadlines for any submission to be timely
processed. Any statement of applicable deadlines shall include
information relating to the requirements and procedures set forth in
Sections 2924.10 and 2924.11.
(d) The toll-free telephone number made available by the Office of
Homeowner Protection.
SEC. 6. Section 2924.10 is added to the
Civil Code , to read:
2924.10. (a) If a borrower submits an application for a loan
modification within 60 days after the recording of a notice of
default, a mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of sale while the loan modification application
is pending. Notwithstanding paragraphs (3) and (4) of subdivision (a)
of Section 2924, a mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of sale under this section until
either of the following:
(1) The mortgagee, beneficiary, or authorized agent makes a
determination that the borrower is not eligible for a loan
modification.
(2) If the borrower does not accept an offered loan modification
or other foreclosure prevention alternative, the earlier of the date
of the borrower's decline of the stated offer or the borrower's
deadline for accepting the offer, which may not be less than 14 days
from the date the borrower was notified of the offer.
(b) If a borrower accepts an offered trial or permanent loan
modification, a mortgagee, trustee, beneficiary, or authorized agent
shall not record a notice of sale until the borrower fails to timely
submit the first payment or until the borrower otherwise breaches the
terms of the offer, whichever occurs first.
(c) If the loan modification requested by a borrower under this
section is denied, the mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of sale until the later of either of
the following:
(1) Thirty days after the borrower is notified in writing of the
denial.
(2) If the borrower appeals the denial, until the later of 15 days
after the denial of the appeal or 14 days after the loan
modification or other foreclosure prevention alternative is offered
after appeal but declined by the borrower, or, if a loan modification
is offered after appeal, until the borrower fails to timely submit
the first trial period payment or until the borrower breaches the
trial plan, whichever event occurs first.
(d) This section shall not apply if the mortgage, beneficiary or
authorized agent has previously determined that the borrower is not
eligible for modification of that loan pursuant to Section 2923.6,
unless the borrower's application reflects a material change in the
borrower's financial circumstances since the date of the borrower's
previous application.
SEC. 7. Section 2924.11 is added to the
Civil Code , to read:
2924.11. (a) When a borrower submits an application for a loan
modification less than 15 days before a notice of sale may be
recorded pursuant to Sections 2924 and 2924f, a mortgagee, trustee,
beneficiary, or authorized agent shall not record a notice of sale
while the loan modification application is pending. Notwithstanding
paragraphs (3) and (4) of subdivision (a) of Section 2924, a
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale under this section until either of the following:
(1) The mortgagee, trustee, beneficiary, or authorized agent makes
a determination that the borrower is not eligible for a loan
modification.
(2) The mortgagee, trustee, beneficiary, or authorized agent
notifies the borrower whether it can conduct an expedited review of
the loan modification application or, if not, the reasons it cannot
complete the review of the loan modification application.
(b) If a borrower accepts an offered trial or permanent loan
modification, a mortgagee, trustee, beneficiary, or authorized agent
shall not record a notice of sale until the borrower fails to timely
submit the first payment or until the borrower otherwise breaches the
terms of the offer, whichever occurs first.
(c) This section shall not apply if the mortgagee, beneficiary, or
authorized agent has previously determined that the borrower is not
eligible for modification of that loan pursuant to Section 2923.6 or
Section 2924.10, unless the borrower's application reflects a
material change in the borrower's financial circumstances since the
date of the borrower's previous application.
SEC. 8. Section 2924.12 is added to the
Civil Code , to read:
2924.12. (a) When a borrower submits a loan modification
application or any document in connection with a loan modification
application pursuant to Section 2923.6 or 2924.10, the mortgagee,
trustee, beneficiary, or authorized agent shall do the following:
(1) Provide written acknowledgment of the receipt of the
documentation within three business days of receipt. In its initial
acknowledgment of receipt of the loan modification application, the
mortgagee, trustee, beneficiary, or authorized agent shall include
the following information:
(A) A description of the loan modification process, including an
estimate of when a decision on the loan modification will be made
after a completed application has been submitted by the borrower and
the length of time the borrower will have to consider an offer of a
loan modification or other foreclosure prevention alternative.
(B) Identification of any deadlines, including deadlines to submit
missing documentation, that would affect the processing of a loan
modification application.
(C) Identification of any expiration dates for submitted
documents.
(D) The toll-free telephone number made available by the Office of
Homeowner Protection.
(2) Notify the borrower of any deficiency in the borrower's loan
modification application no later than five business days after
receipt of the submission of documentation.
(b) If a borrower's application for a loan modification is denied,
the borrower shall have 30 days from the date written denial of the
application is sent to the borrower to appeal the denial.
(c) Following the denial of a loan modification application
submitted pursuant to Section 2923.6 or 2924.10, the mortgagee,
trustee, beneficiary, or authorized agent shall send a written
nonapproval notice to the borrower identifying the reasons for denial
and the factual information considered, including the following
information:
(1) The notice shall inform the borrower of the amount of time
from the date of the denial letter he or she has to request an appeal
of the denial of a loan modification, unless the reason stated for
the denial is an ineligible mortgage, an ineligible property, or if
the loan modification offer was not accepted by the borrower or the
request was withdrawn.
(2) If the denial was based on investor disallowance, the
mortgagee, trustee, beneficiary, or authorized agent shall disclose
in the written notice the name of the investor or investment trust,
if applicable, and state the specific reasons for the investor
denial.
(3) If the denial is the result of a net present value
calculation, the mortgagee, trustee, beneficiary, or authorized agent
shall provide in the written notice the monthly gross income and
property value used in the calculation and inform the borrower of his
or her right to request a full appraisal to be conducted of the
property by an independent licensed appraiser, at borrower expense if
the borrower chooses to appeal the denial.
(4) The toll-free telephone number made available by the Office of
Homeowner Protection.
(d) If the mortgagee, trustee, beneficiary, or authorized agent
denies a borrower's appeal, the denial letter shall include a
description of other available loss mitigation, including short sales
and deeds in lieu of foreclosure.
SEC. 9. Section 2924.13 is added to the
Civil Code , to read:
2924.13. (a) A mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of sale under any of the following
circumstances:
(1) The borrower is in compliance with the terms of a trial or
permanent loan modification, forbearance, or repayment plan.
(2) A short sale or deed-in-lieu of foreclosure has been approved
by all parties, including the first lien investor, the junior
lienholder, and the mortgage insurer, as applicable, and proof of
funds or financing has been provided to the mortgagee, trustee,
beneficiary, or authorized agent.
(b) When a borrower accepts an offered loan modification, the
mortgagee, trustee, beneficiary, or authorized agent shall provide
the borrower with a copy of the fully executed loan modification
agreement following receipt of the executed copy from the borrower.
If the modification was not made in writing, the mortgagee, trustee,
beneficiary, or authorized agent shall provide the borrower with a
written summary of its terms as soon as possible following the
approval of the modification.
(c) A mortgagee, trustee, beneficiary, or authorized agent shall
record a recision of a notice of default upon the borrower executing
a permanent loan modification.
(d) The mortgagee, trustee, beneficiary, or authorized agent shall
make publicly available information on its qualification processes,
all required documentation and information necessary for a complete
loan modification application, and key eligibility factors for all
proprietary loan modifications.
(e) The mortgagee, trustee, beneficiary, or authorized agent shall
not charge any application, processing, or other fee for a
proprietary loan modification.
(f) The mortgagee, trustee, beneficiary, or authorized agent shall
track outcomes and maintain records regarding characteristics,
including, but not limited to, debt-to-income ratios of modified
payments and the percentage change in monthly payment amounts, and
performance of proprietary loan modifications. A mortgagee, trustee,
beneficiary, or authorized agent shall provide a description of
modification waterfalls, eligibility criteria, and modification terms
on a publicly available Internet Web site.
(g) The mortgagee, trustee, beneficiary, or authorized agent shall
not collect any late fees for periods during which a complete loan
modification is under consideration or a denial is being appealed,
the borrower is making timely trial or permanent modification
payments, or a short sale offer is being evaluated.
(h) Nothing in this article obviates or supersedes the obligations
of the signatories to the National Mortgage Settlement.
SEC. 10. Section 2924.14 is added to the
Civil Code , to read:
2924.14. (a) A borrower may seek an order in any court having
jurisdiction to enjoin any pending trustee's sale, if a notice of
sale has been recorded and the borrower reasonably believes that the
mortgagee, trustee, beneficiary, or authorized agent failed to comply
with the requirements of Section 2923.5, 2923.6, 2924, 2924.9,
2924.10, 2924.11, 2924.12, 2924.13, or 2924f. Any injunction shall
remain in place until the mortgagee, trustee, beneficiary, or
authorized agent has complied with the requirements of Sections
2923.5, 2923.6, 2924, 2924.9, 2924.10, 2924.11, 2924.12, 2924.13, and
2924f. A borrower who obtains an injunction shall be awarded
reasonable attorneys' fees and costs.
(b) (1) Following a trustee's sale, a borrower may recover the
greater of actual damages or ten thousand dollars ($10,000) plus
reasonable attorney's fees and costs in any court of competent
jurisdiction, if the borrower reasonably believes that the mortgagee,
trustee, beneficiary, or authorized agent failed to comply with the
requirements of Section 2923.5, 2923.6, 2924, 2924.9, 2924.10,
2924.11, 2924.12, 2924.13, or 2924f.
(2) A court may award a borrower the greater of treble actual
damages or statutory damages of fifty thousand dollars ($50,000),
plus reasonable attorney's fees and costs, if it finds that the
violation of Section 2923.5, 2923.6, 2924, 2924.9, 2924.10, 2924.11,
2924.12, 2924.13, or 2924f was intentional or reckless or resulted
from willful misconduct by a mortgagee, trustee, beneficiary, or
authorized agent.
(c) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
(d) Notwithstanding subdivisions (a) and (b), a borrower may not
obtain relief under this section for any violation that was technical
or de minimis in nature such that it did not impact the borrower's
ability to pursue an alternative to foreclosure as provided by this
article.
(e) It shall be an affirmative defense to any liability for
violation of Sections 2923.5, 2923.6, 2924.9, 2924.10, 2924.11,
2924.12, 2924.13, and 2924.15, that a signatory to a consent judgment
entered in the case entitled United States of America v. Bank of
America Corporation, filed in the Federal District Court for the
District of Washington, D.C., case number 1:12-cv-00361 RMC, is in
compliance with that consent judgment while the consent judgment is
in effect.
(f) A third party encumbrancer shall not be relieved from
liability resulting from violations of Section 2923.5, 2923.6, 2924,
2924.9, 2924.10, 2924.11, 2924.12, 2924.13, or 2924f committed by
that third party encumbrancer, which occurred prior to the sale of
the subject property to the bona fide purchaser.
SEC. 11. Section 2924.15 is added to the
Civil Code , to read:
2924.15. Unless otherwise provided, Sections 2923.6, 2923.7,
2923.9, 2924.9, 2924.10, 2924.11, 2924.12, 2924.13, 2924.15, and
2924f, shall apply to mortgages or deeds of trust that are secured by
residential real property containing no more than four dwelling
units.
SEC. 12. Section 2924.16 is added to the
Civil Code , to read:
2924.16. (a) There shall be established within state government
an Office of Homeowner Protection, which shall have the
responsibility for all of the following:
(1) Responding to inquiries and complaints from individuals
regarding the provisions of this article.
(2) Attempting to seek compliance by mortgagees, trustees,
beneficiaries, or authorized agents with the provisions of this
article.
(3) Maintaining an Internet Web site that is capable of receiving
inquiries and complaints from individuals and that provides
information to the public about publicly available resources intended
to help individuals avoid foreclosure.
(4) Providing an annual report to the Legislature, summarizing its
activities during the prior year.
(b) It is the intent of the Legislature that the office be funded
through payments made available to the Attorney General via the
Special Deposit Fund, which was created pursuant to the settlements
approved by the United States District Court for the District of
Columbia on ________.
SEC. 13. Section 2924g of the
Civil Code is amended to read:
2924g. (a) All sales of property under the power of sale
contained in any deed of trust or mortgage shall be held in the
county where the property or some part thereof is situated, and shall
be made at auction, to the highest bidder, between the hours of 9
a.m. and 5 p.m. on any business day, Monday through Friday.
The sale shall commence at the time and location specified in the
notice of sale. Any postponement shall be announced at the time and
location specified in the notice of sale for commencement of the sale
or pursuant to paragraph (1) of subdivision (c).
If the sale of more than one parcel of real property has been
scheduled for the same time and location by the same trustee, (1) any
postponement of any of the sales shall be announced at the time
published in the notice of sale, (2) the first sale shall commence at
the time published in the notice of sale or immediately after the
announcement of any postponement, and (3) each subsequent sale shall
take place as soon as possible after the preceding sale has been
completed.
(b) When the property consists of several known lots or parcels,
they shall be sold separately unless the deed of trust or mortgage
provides otherwise. When a portion of the property is claimed by a
third person, who requires it to be sold separately, the portion
subject to the claim may be thus sold. The trustor, if present at the
sale, may also, unless the deed of trust or mortgage otherwise
provides, direct the order in which property shall be sold, when the
property consists of several known lots or parcels which may be sold
to advantage separately, and the trustee shall follow that direction.
After sufficient property has been sold to satisfy the indebtedness,
no more can be sold.
If the property under power of sale is in two or more counties,
the public auction sale of all of the property under the power of
sale may take place in any one of the counties where the property or
a portion thereof is located.
(c) (1) There may be a postponement or postponements of the sale
proceedings, including a postponement upon instruction by the
beneficiary to the trustee that the sale proceedings be postponed, at
any time prior to the completion of the sale for any period of time
not to exceed a total of 365 days from the date set forth in the
notice of sale. The trustee shall postpone the sale in accordance
with any of the following:
(A) Upon the order of any court of competent jurisdiction.
(B) If stayed by operation of law.
(C) By mutual agreement, whether oral or in writing, of any
trustor and any beneficiary or any mortgagor and any mortgagee.
(D) At the discretion of the trustee.
(2) In the event that the sale proceedings are postponed for a
period or periods totaling more than 365 days, the scheduling of any
further sale proceedings shall be preceded by giving a new notice of
sale in the manner prescribed in Section 2924f. New fees incurred for
the new notice of sale shall not exceed the amounts specified in
Sections 2924c and 2924d, and shall not exceed reasonable costs that
are necessary to comply with this paragraph.
(d) The notice of each postponement and the reason therefor shall
be given by public declaration by the trustee at the time and place
last appointed for sale. sale for any
postponement that does not exceed nine days, otherwise, notice shall
be pursuant to subdivision (a) of Section 2924. A public
declaration of postponement shall also set forth the new date, time,
and place of sale and the place of sale shall be the same place as
originally fixed by the trustee for the sale. No other notice of
postponement need be given. However, the sale shall be conducted no
sooner than on the seventh day after the earlier of (1) dismissal of
the action or (2) expiration or termination of the injunction,
restraining order, or stay that required postponement of the sale,
whether by entry of an order by a court of competent jurisdiction,
operation of law, or otherwise, unless the injunction, restraining
order, or subsequent order expressly directs the conduct of the sale
within that seven-day period. For purposes of this subdivision, the
seven-day period shall not include the day on which the action is
dismissed, or the day on which the injunction, restraining order, or
stay expires or is terminated. If the sale had been scheduled to
occur, but this subdivision precludes its conduct during that
seven-day period, a new notice of postponement shall be given if the
sale had been scheduled to occur during that seven-day period. The
trustee shall maintain records of each postponement and the reason
therefor.
(e) Notwithstanding the time periods established under subdivision
(d), if postponement of a sale is based on a stay imposed by Title
11 of the United States Code (bankruptcy), the sale shall be
conducted no sooner than the expiration of the stay imposed by that
title and the seven-day provision of subdivision (d) shall not apply.
SEC. 14. The provisions of this article are
severable. If any provision of this article or its application is
held invalid, that invalidity shall not affect other provisions or
applications that can be given effect without the invalid provision
or application.
SECTION 1. Section
2923.7 is added to the Civil Code, to read:
2923.7. (a) A mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default pursuant to Section 2924
unless the mortgagee, trustee, beneficiary, or authorized agent has
made reasonable and good faith efforts to evaluate the borrower for
available loan modification options to avoid foreclosure.
(b) If the mortgagee, trustee, beneficiary, or authorized agent
fails to comply with this section, a borrower shall have a cause of
action to enjoin the foreclosure and to recover damages and
reasonable attorney's fees.
