BILL NUMBER: AB 2187 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 30, 2008
AMENDED IN ASSEMBLY MARCH 24, 2008
INTRODUCED BY Assembly Member Caballero
FEBRUARY 20, 2008
An act to amend Sections 2924 and 2924c of, and to add
Section 2924.8 to, and repeal Section 2929.3 of,
the Civil Code, relating to mortgages.
LEGISLATIVE COUNSEL'S DIGEST
AB 2187, as amended, Caballero. Mortgages: foreclosure.
Existing law regulates the process of foreclosing on real property
subject to a mortgage or deed of trust. Existing law requires a
lender or other specified person, in order to foreclose on real
property subject to a mortgage or deed of trust, to file a notice of
default in the office of the recorder for the county in which the
property is located. Existing law regulates contracts between
borrowers and mortgage foreclosure consultants.
This bill would require a lender or other person foreclosing on
real property subject to a mortgage or deed of trust to mail to the
borrower, at the time that the notice of default is mailed, a
homeowner's bill foreclosure statement
of rights specifying the process processes
of foreclosure employed by the lender or other person
and setting forth the rights of the borrower regarding
contracts with mortgage foreclosure consultants.
The bill would require a lender or other person who takes
possession of real property by foreclosure proceedings to notify the
city or county in which the property is located, by mail, of its plan
for managing the property in the period prior to the sale of the
property. It would require the lender or other person, if the city or
county provides goods or services to maintain the property in order
to prevent or remedy blight, hazardous conditions, or unsightliness,
to reimburse the city or county for the reasonable cost of those
goods or services.
Existing law requires a person engaged in a trade or business who
negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or
Korean in the course of entering into specified agreements, to
deliver a translation of the agreement in the language in which it
was negotiated. Existing law requires that, for certain agreements
secured by a mortgage or deed of trust, a notice of default be in
Spanish if the trustor requested a Spanish translation of the
agreement.
This bill would require that, for certain agreements secured by a
mortgage or deed of trust, a notice of default be in the appropriate
language as required by the above provisions of law governing the
translation of agreements.
Until January 1, 2013, this bill would require a legal owner to
maintain vacant residential property purchased at a foreclosure sale,
or acquired by that owner through foreclosure under a mortgage or
deed of trust. The bill would authorize a governmental entity to
impose civil fines and penalties for failure to maintain that
property of up to $1,000 per day for a violation. The bill would
require a governmental entity that seeks to impose those fines and
penalties to give notice of the claimed violation and an opportunity
to correct the violation at least 14 days prior to imposing the fines
and penalties, and to allow a hearing for contesting those fines and
penalties.
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 2924 of the Civil Code 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. If, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for less than two years, 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, unless 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 in which the mortgaged or trust property, or
some part or parcel of that property, 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
statements specified in paragraphs (1) and (2) of subdivision (b) of
Section 2924c.
(2) Not less than three months shall elapse from the filing of the
notice of default.
(3) 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.
(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, the publication of a copy of the notice of
default, the personal delivery of the copy of the notice of default,
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.
SEC. 2. Section 2924c of the Civil Code is amended to read:
2924c. (a) (1) Whenever all or a portion of the principal sum of
any obligation secured by deed of trust or mortgage on real property
or an estate for years has, prior to the maturity date fixed in that
obligation, become due or been declared due by reason of default in
payment of interest or of any installment of principal, or by reason
of a failure of the trustor or mortgagor to pay, in accordance with
the terms of that obligation or of the deed of trust or mortgage,
taxes, assessments, premiums for insurance, or advances made by the
beneficiary or mortgagee in accordance with the terms of that
obligation or of the deed of trust or mortgage, the trustor or
mortgagor, his or her successor in interest in the mortgaged or trust
property or any part thereof, any beneficiary under a subordinate
deed of trust, or any other person having a subordinate lien or
encumbrance of record on the real property, at any time within the
period specified in subdivision (e), if the power of sale is to be
exercised, or, otherwise at any time prior to entry of the decree of
foreclosure, may pay to the beneficiary or the mortgagee, or their
successors in interest, respectively, the entire amount due, at the
time payment is tendered, with respect to (A) all amounts of
principal, interest, taxes, assessments, insurance premiums, or
advances actually known by the beneficiary to be, and that are, in
default and shown in the notice of default, under the terms of the
deed of trust or mortgage and the obligation secured thereby, (B) all
amounts in default on recurring obligations not shown in the notice
of default, and (C) all reasonable costs and expenses, subject to
subdivision (c), that are actually incurred in enforcing the terms of
the obligation, deed of trust, or mortgage, and trustee's or
attorney's fees, subject to subdivision (d), other than the portion
of principal as would not then be due had no default occurred, and
thereby cure the default. If the default is cured, all proceedings
instituted prior to that event shall be dismissed or discontinued,
and the obligation and deed of trust or mortgage shall be reinstated
and shall be and remain in force and effect, the same as if the
acceleration had not occurred. This section does not apply to bonds
or other evidences of indebtedness authorized or permitted to be
issued by the Commissioner of Corporations or made by a public
utility subject to the Public Utilities Code. For the purposes of
this subdivision, the term "recurring obligation" means all amounts
of principal and interest on the loan, or rents, subject to the deed
of trust or mortgage in default due after the notice of default is
recorded; all amounts of principal and interest or rents advanced on
senior liens or leaseholds that are advanced after the recordation of
the notice of default; and payments of taxes, assessments, and
hazard insurance advanced after recordation of the notice of default.
If the beneficiary or mortgagee has made no advances on defaults
that would constitute recurring obligations, the beneficiary or
mortgagee may require the trustor or mortgagor to provide reliable
written evidence that the amounts have been paid prior to
reinstatement.
(2) If the trustor, mortgagor, or other person authorized to cure
the default pursuant to this subdivision does cure the default, the
beneficiary or mortgagee, or the agent for the beneficiary or
mortgagee shall, within 21 days following the reinstatement, execute
and deliver to the trustee a notice of rescission which rescinds the
declaration of default and demand for sale and advises the trustee of
the date of reinstatement. The trustee shall cause the notice of
rescission to be recorded within 30 days of receipt of the notice of
rescission and of all allowable fees and costs.
No charge, except for the recording fee, shall be made against the
trustor or mortgagor for the execution and recordation of the notice
that rescinds the declaration of default and demand for sale.
(b) (1) The notice of any default described in this section,
recorded pursuant to Section 2924 and mailed to any person pursuant
to Section 2924b, shall begin with the following statement, printed
or typed on the notice:
"IMPORTANT NOTICE (14-point boldface type if printed or in
capital letters if typed)
IF YOUR PROPERTY IS IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR
PAYMENTS, IT MAY BE SOLD WITHOUT ANY COURT ACTION, (14-point boldface
type if printed or in capital letters if typed) and you may have the
legal right to bring your account in good standing by paying all of
your past due payments plus permitted costs and expenses within the
time permitted by law for reinstatement of your account, which is
normally five business days prior to the date set for the sale of
your property. No sale date may be set until three months from the
date this notice of default may be recorded (which date of
recordation appears on this notice).
This amount is ____________ as of _______________
(Date)
and will increase until your account becomes current.
While your property is in foreclosure, you still must pay other
obligations (such as insurance and taxes) required by your note and
deed of trust or mortgage. If you fail to make future payments on the
loan, pay taxes on the property, provide insurance on the property,
or pay other obligations as required in the note and deed of trust or
mortgage, the beneficiary or mortgagee may insist that you do so in
order to reinstate your account in good standing. In addition, the
beneficiary or mortgagee may require as a condition to reinstatement
that you provide reliable written evidence that you paid all senior
liens, property taxes, and hazard insurance premiums.
Upon your written request, the beneficiary or mortgagee will give
you a written itemization of the entire amount you must pay. You may
not have to pay the entire unpaid portion of your account, even
though full payment was demanded, but you must pay all amounts in
default at the time payment is made. However, you and your
beneficiary or mortgagee may mutually agree in writing prior to the
time the notice of sale is posted (which may not be earlier than the
end of the three-month period stated above) to, among other things,
(1) provide additional time in which to cure the default by transfer
of the property or otherwise; or (2) establish a schedule of payments
in order to cure your default; or both (1) and (2).
Following the expiration of the time period referred to in the
first paragraph of this notice, unless the obligation being
foreclosed upon or a separate written agreement between you and your
creditor permits a longer period, you have only the legal right to
stop the sale of your property by paying the entire amount demanded
by your creditor.
To find out the amount you must pay, or to arrange for payment to
stop the foreclosure, or if your property is in foreclosure for any
other reason, contact:
____________________________________
(Name of beneficiary or mortgagee)
____________________________________
(Mailing address)
____________________________________
(Telephone)
If you have any questions, you should contact a lawyer or the
governmental agency which may have insured your loan.
Notwithstanding the fact that your property is in foreclosure, you
may offer your property for sale, provided the sale is concluded
prior to the conclusion of the foreclosure.
Remember, YOU MAY LOSE LEGAL RIGHTS IF YOU DO NOT TAKE PROMPT
ACTION. (14-point boldface type if printed or in capital letters if
typed)"
Unless otherwise specified, the notice, if printed, shall appear
in at least 12-point boldface type.
If the obligation secured by the deed of trust or mortgage is a
contract or agreement described in paragraph (1) or (4) of
subdivision (a) , (4), or (5) of subdivisi
on (b) of Section 1632, the notice required by this paragraph
shall be in Spanish if the trustor requested a Spanish
language translation of the contract or agreement pursuant to
the appropriate language required by Section
1632. If the obligation secured by the deed of trust or mortgage is
contained in a home improvement contract, as defined in Sections
7151.2 and 7159 of the Business and Professions Code, which is
subject to Title 2 (commencing with Section 1801), the seller shall
specify on the contract whether or not the contract was principally
negotiated in Spanish a language other than
English, and if the contract was principally negotiated in
Spanish a language other than English ,
the notice required by this paragraph shall be in Spanish
that language . No assignee of the contract or
person authorized to record the notice of default shall incur any
obligation or liability for failing to mail a notice in
Spanish unless Spanish a language other than English
unless that language is specified in the contract or the
assignee or person has actual knowledge that the secured obligation
was principally negotiated in Spanish a
language other than English . Unless specified in writing to
the contrary, a copy of the notice required by subdivision (c) of
Section 2924b shall be in English.
(2) The trustee, mortgagee, or beneficiary, or any of their
authorized agents, shall mail to the mortgagor or trustor, at the
time that and in the same manner as the
notice of default is mailed pursuant to paragraph (1), a
homeowner's bill of rights. The bill of rights shall specify the
process of foreclosure employed by the trustee, mortgagee, or
beneficiary a foreclosure statement of rights. The
statement of rights shall specify, in detail and in plain language at
a reading level no higher than grade 6, the processes of foreclosure
provided in this article, including the legal rights of the
mortgagor or trustor with respect to the foreclosure , and
shall set forth the rights of the mortgagor or trustor regarding
contracts with mortgage foreclosure consultants, as specified in
Article 1.5 (commencing with Section 2945). If the notice of default
is required to be in Spanish a language other
than English pursuant to paragraph (1), the homeowner'
s bill of rights shall also be in Spanish. (1), the
foreclosure statement of rights shall also be in that language.
(3) Any failure to comply with the provisions of this subdivision
shall not affect the validity of a sale in favor of a bona fide
purchaser or the rights of an encumbrancer for value and without
notice.
(c) Costs and expenses that may be charged pursuant to Sections
2924 to 2924i, inclusive, shall be limited to the costs incurred for
recording, mailing, including certified and express mail charges,
publishing, and posting notices required by Sections 2924 to 2924i,
inclusive, postponement pursuant to Section 2924g not to exceed fifty
dollars ($50) per postponement and a fee for a trustee's sale
guarantee or, in the event of judicial foreclosure, a litigation
guarantee. For purposes of this subdivision, a trustee or beneficiary
may purchase a trustee's sale guarantee at a rate meeting the
standards contained in Sections 12401.1 and 12401.3 of the Insurance
Code.
(d) Trustee's or attorney's fees that may be charged pursuant to
subdivision (a), or until the notice of sale is deposited in the mail
to the trustor as provided in Section 2924b, if the sale is by power
of sale contained in the deed of trust or mortgage, or otherwise at
any time prior to the decree of foreclosure, are hereby authorized to
be in a base amount that does not exceed three hundred dollars
($300) if the unpaid principal sum secured is one hundred fifty
thousand dollars ($150,000) or less, or two hundred fifty dollars
($250) if the unpaid principal sum secured exceeds one hundred fifty
thousand dollars ($150,000), plus one-half of 1 percent of the unpaid
principal sum secured exceeding fifty thousand dollars ($50,000) up
to and including one hundred fifty thousand dollars ($150,000), plus
one-quarter of 1 percent of any portion of the unpaid principal sum
secured exceeding one hundred fifty thousand dollars ($150,000) up to
and including five hundred thousand dollars ($500,000), plus
one-eighth of 1 percent of any portion of the unpaid principal sum
secured exceeding five hundred thousand dollars ($500,000). Any
charge for trustee's or attorney's fees authorized by this
subdivision shall be conclusively presumed to be lawful and valid
where the charge does not exceed the amounts authorized by this
subdivision. For purposes of this subdivision, the unpaid principal
sum secured shall be determined as of the date the notice of default
is recorded.
(e) Reinstatement of a monetary default under the terms of an
obligation secured by a deed of trust or mortgage may be made at any
time within the period commencing with the date of recordation of the
notice of default until five business days prior to the date of sale
set forth in the initial recorded notice of sale.
In the event the sale does not take place on the date set forth in
the initial recorded notice of sale, or a subsequent recorded notice
of sale is required to be given, the right of reinstatement shall be
revived as of the date of recordation of the subsequent notice of
sale and shall continue from that date until five business days prior
to the date of sale set forth in the subsequently recorded notice of
sale.
In the event the date of sale is postponed on the date of sale set
forth in either an initial or any subsequent notice of sale, or is
postponed on the date declared for sale at an immediately preceding
postponement of sale, and the postponement is for a period that
exceeds five business days from the date set forth in the notice of
sale, or declared at the time of postponement, then the right of
reinstatement is revived as of the date of postponement and shall
continue from that date until five business days prior to the date of
sale declared at the time of the postponement.
Nothing in this subdivision shall give rise to a right of
reinstatement during the period of five business days prior to the
date of sale, whether the date of sale is noticed in a notice of sale
or declared at a postponement of sale.
Pursuant to the terms of this subdivision, no beneficiary,
trustee, mortgagee, or their agents or successors shall be liable in
any manner to a trustor, mortgagor, their agents or successors, any
beneficiary under a subordinate deed of trust or mortgage, or any
other person having a subordinate lien or encumbrance of record on
the property for the failure to allow a reinstatement of the
obligation secured by a deed of trust or mortgage during the period
of five business days prior to the sale of the security property, and
no such right of reinstatement during this period is created by this
section. Any right of reinstatement created by this section is
terminated five business days prior to the date of sale set forth in
the initial date of sale, and is revived only as prescribed, and only
as of the date set forth, in this subdivision.
As used in this subdivision, the term "business day" has the same
meaning as specified in Section 9.
SEC. 3. Section 2924.8 is added to the Civil
Code, to read:
2924.8. (a) A trustee, mortgagee, or beneficiary that takes
possession of real property by foreclosure proceedings shall, within
10 business days of completing foreclosure proceedings, notify the
city, county, or city and county in which the property is located, by
mail, of its plan for managing the property in the period prior to
the sale of the property.
(b) If the city, county, or city and county in which the property
is located provides goods or services to maintain the property in
order to prevent or remedy blight, hazardous conditions, or
unsightliness, the trustee, mortgagee, or beneficiary shall reimburse
the city, county, or city and county for the reasonable cost of
those goods or services.
SEC. 3. Section 2929.3 is added to the
Civil Code , to read:
2929.3. (a) (1) A legal owner shall maintain vacant residential
property purchased by that owner at a foreclosure sale, or acquired
by that owner through foreclosure under a mortgage or deed of trust.
A governmental entity may impose a civil fine of up to one thousand
dollars ($1,000) per day for a violation. If the governmental entity
chooses to impose a fine pursuant to this section, it shall give
notice of the alleged violation, including a description of the
conditions giving rise to the allegation, and notice of the entity's
intent to assess a civil fine if action to correct the violation is
not commenced within a period of not less than 14 days and completed
within a period of not less than 30 days. The notice shall be mailed
to the address provided in the deed or other instrument, as specified
in subdivision (a) of Section 27321.5 of the Government Code, or, if
none, to the return address provided on the deed or other
instrument.
(2) The governmental entity shall provide a period of not less
than 30 days for the legal owner to remedy the violation prior to
imposing a civil fine and shall allow for a hearing and opportunity
to contest any fine imposed. In determining the amount of the fine,
the governmental entity shall take into consideration any timely and
good faith efforts by the legal owner to remedy the violation. The
maximum civil fine authorized by this section is one thousand dollars
($1,000) for each day that the owner fails to maintain the property,
commencing on the day following the expiration of the period to
remedy the violation established by the governmental entity.
(3) Subject to the provisions of this section, a governmental
entity may establish different compliance periods for different
conditions on the same property in the notice of alleged violation
mailed to the legal owner.
(b) For purposes of this section, "failure to maintain" means
failure to care for the exterior of the property, including, but not
limited to, permitting excessive foliage growth that diminishes the
value of surrounding properties, failing to take action to prevent
trespassers or squatters from remaining on the property, failing to
take action to prevent mosquito larvae from growing in standing
water, or any other condition that creates a public nuisance.
(c) Notwithstanding subdivisions (a) and (b), a governmental
entity may provide less than 30 days to remedy a condition before
imposing a fine if the entity determines that a specific condition of
the property threatens public health or safety, and the entity gives
notice of that determination and time for compliance.
(d) Fines and penalties collected pursuant to this section shall
be directed to local nuisance abatement programs.
(e) A governmental entity may not impose fines on a legal owner
under both this section and a local ordinance.
(f) These provisions shall not preempt any local ordinance.
(g) This section shall only apply to residential real property.
(h) The rights and remedies provided in this section are
cumulative and in addition to any other rights and remedies provided
by law.
(i) 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.