BILL NUMBER: SB 633 CHAPTERED
BILL TEXT
CHAPTER 57
FILED WITH SECRETARY OF STATE AUGUST 6, 2009
APPROVED BY GOVERNOR AUGUST 5, 2009
PASSED THE SENATE MAY 14, 2009
PASSED THE ASSEMBLY JULY 6, 2009
AMENDED IN SENATE APRIL 27, 2009
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senator Wright
FEBRUARY 27, 2009
An act to amend Section 2954 of the Civil Code, relating to
mortgages.
LEGISLATIVE COUNSEL'S DIGEST
SB 633, Wright. Mortgages: impound accounts.
Existing law prohibits requiring an impound, trust, or other type
of account for payment of property taxes, insurance premiums, or
other purposes relating to the property as a condition of a real
property sale contract or a loan secured by a deed of trust or
mortgage on real property containing only a single-family,
owner-occupied dwelling, except as specified.
This bill would include among those exceptions sales where a loan
is made in compliance with the requirements for higher priced
mortgage loans established in Regulation Z, as defined, whether or
not the loan is a higher priced mortgage loan, and where a loan is
refinanced or modified in connection with a lender's homeownership
preservation program or a lender's participation in such a program
sponsored by a federal, state, or local government authority or a
nonprofit organization.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2954 of the Civil Code is amended to read:
2954. (a) (1) No impound, trust, or other type of account for
payment of taxes on the property, insurance premiums or other
purposes relating to the property shall be required as a condition of
a real property sale contract or a loan secured by a deed of trust
or mortgage on real property containing only a single-family,
owner-occupied dwelling, except: (1) where required by a state or
federal regulatory authority; or (2) where a loan is made,
guaranteed, or insured by a state or federal governmental lending or
insuring agency; or (3) upon a failure of the purchaser or borrower
to pay two consecutive tax installments on the property prior to the
delinquency date for such payments; or (4) where the original
principal amount of such a loan is (i) 90 percent or more of the sale
price, if the property involved is sold, or is (ii) 90 percent or
more of the appraised value of the property securing the loan; or (5)
whenever the combined principal amount of all loans secured by the
real property exceeds 80 percent of the appraised value of the
property securing the loans; or (6) where a loan is made in
compliance with the requirements for higher priced mortgage loans
established in Regulation Z, whether or not the loan is a higher
priced mortgage loan; or (7) where a loan is refinanced or modified
in connection with a lender's homeownership preservation program or a
lender's participation in such a program sponsored by a federal,
state, or local government authority or a nonprofit organization.
Nothing contained in this section shall preclude establishment of
such an account on terms mutually agreeable to the parties to the
loan, if, prior to the execution of the loan or sale agreement, the
seller or lender has furnished to the purchaser or borrower a
statement in writing, which may be set forth in the loan application,
to the effect that the establishment of such an account shall not be
required as a condition to the execution of the loan or sale
agreement, and further, stating whether or not interest will be paid
on the funds in such an account.
An impound, trust, or other type of account for the payment of
taxes, insurance premiums or other purposes relating to property
established in violation of this subdivision is voidable, at the
option of the purchaser or borrower, at any time, but shall not
otherwise affect the validity of the loan or sale.
(2) For the purposes of this subdivision, "Regulation Z" means any
rule, regulation, or interpretation promulgated by the Board of
Governors of the Federal Reserve System and any interpretation or
approval issued by an official or employee duly authorized by the
board to issue interpretations or approvals dealing with,
respectively, consumer leasing or consumer lending, pursuant to the
Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et
seq.).
(b) Every mortgagee of real property, beneficiary under a deed of
trust on real property or vendor on a real property sale contract
upon the written request of the mortgagor, trustor or vendee shall
furnish to the mortgagor, trustor or vendee for each calendar year
within 60 days after the end of such year an itemized accounting of
moneys received for interest and principal repayment and received and
held in or disbursed from an impound or trust account, if any, for
payment of taxes on the property, insurance premiums or other
purposes relating to the property subject to the mortgage, deed of
trust or real property sale contract. The mortgagor, trustor or
vendee shall be entitled to receive one such accounting for each
calendar year without charge and shall be entitled to additional
similar accountings for one or more months upon written request and
on payment in advance of fees as follows:
(1) Fifty cents ($0.50) per statement when requested in advance on
a monthly basis for one or more years.
(2) One dollar ($1) per statement when requested for only one
month.
(3) Five dollars ($5) if requested for a single cumulative
statement giving all the information described above back to the last
statement rendered.
If the mortgagee, beneficiary or vendor transmits to the
mortgagor, trustor or vendee a monthly statement or passbook showing
moneys received for interest and principal repayment and received and
held in and disbursed from an impound or trust account, if any, the
mortgagee, beneficiary or vendor shall be deemed to have complied
with this section.
No increase in the monthly rate of payment of a mortgagor, trustor
or vendee on a real property sale contract for impound or trust
accounts shall be effective until after the mortgagee, beneficiary or
vendor has furnished the mortgagor, trustor or vendee with an
itemized accounting of the moneys presently held by it in the
accounts, and a statement of the new monthly rate of payment, and an
explanation of the factors necessitating the increase.
The provisions of this section shall be in addition to the
obligations of the parties as stated by Section 2943 of this code.
Every person who willfully or repeatedly violates this subdivision
shall be subject to punishment by a fine of not less than fifty
dollars ($50) nor more than two hundred dollars ($200).
(c) As used in this section, "single-family, owner-occupied
dwelling" means a dwelling which will be owned and occupied by a
signatory to the mortgage or deed of trust secured by such dwelling
within 90 days of the execution of such mortgage or deed of trust.