BILL NUMBER: AB 935 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 28, 2011
AMENDED IN ASSEMBLY APRIL 14, 2011
AMENDED IN ASSEMBLY APRIL 4, 2011
INTRODUCED BY Assembly Member Blumenfield
FEBRUARY 18, 2011
An act to add and repeal Section 27389 to
of the Government Code, relating to
foreclosures, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 935, as amended, Blumenfield. Foreclosures: foreclosure
mitigation charges.
Existing law sets forth the criteria for procedures for the
foreclosure of property, including the filing of various notices with
the county recorder, and generally sets forth the duties of the
county recorder in this regard.
This bill would, until January 1, 2015, for loans already
originated as of the date that this bill becomes effective,
with some exceptions, prohibit a notice of trustee's sale from being
accepted for filing with the county recorder until the mortgage
servicer pays a foreclosure mitigation charge of $20,000. It would
require the county recorder to keep the moneys in trust until a
notice of rescission is filed, at which time the moneys would be
returned to the mortgage servicer, or until a trustee deed of sale is
filed, at which time the moneys would be transmitted to the
Treasurer for deposit in the Foreclosure Mitigation Fund, which would
be created by the bill; the interest earned on the moneys would be
retained by the county recorder in either case. The fund would be
continuously appropriated for distribution by the Treasurer to local
agencies for specified purposes.
By imposing a new duty on county recorders in collecting this fee,
the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 27389 is added to the Government Code, to read:
27389. (a) (1) Notwithstanding Section 23182 of the Revenue and
Tax Code and any other provision of law, and subject to paragraph
(2), no notice of trustee's sale shall be accepted for filing with
the county recorder until the mortgage servicer, as defined in
subdivision (q) of Section 50003 of the Financial Code, pays a
foreclosure mitigation charge of 5 percent of the price for
which the house was last sold. This charge shall not exceed
twenty thousand dollars ($20,000). The cost of this charge may not be
passed on to borrowers.
(2) Mortgage servicers shall only be required to pay the charge
described in paragraph (1) for loans that have already been
originated as of the effective date of the act that added this
section.
(2)
(3) (A) A mortgage servicer shall be exempt from paying
the foreclosure mitigation charge described in paragraph (1) if
it any of the following apply:
(i) The mortgage servicer is
servicing a loan for a mortgage lender with assets below ten billion
dollars ($10,000,000,000). In addition, a mortgage servicer
shall be exempt from paying the foreclosure mitigation charge for any
loans
(ii) The underlying loan is owned by any local or state
government agency, as the intent of this section is to
recoup some of the foreclosure costs currently being borne by the
taxpayers of this state. agency.
(iii) The mortgage servicer is a credit union organized under
federal law or the laws of any state, or is servicing a loan for
which a credit union is the mortgagee, lender, or beneficiary of the
deed of trust, at the time the notice of default is recorded.
(iv) The mortgage servicer is servicing a fixed-rate prime
mortgage of at least 15 years of duration.
(v) The mortgage servicer has done everything possible to modify
the existing loan on the property, including, but not limited to,
offering the current property owner a principal write down on the
loan amount that lowers the remaining loan amount to the current
market value of the property.
(4) If paragraph (3) applies, the mortgage servicer shall furnish
a declaration to the county recorder when filing the notice of sale
stating that it is exempt from the foreclosure mitigation charge and
setting forth the facts to support the exemption.
(B) If a mortgage servicer is exempt from paying the foreclosure
mitigation charge pursuant to subparagraph (A), the mortgage servicer
shall furnish a document to the county recorder when filing the
notice of sale indicating that the loan is owned by a mortgage lender
with assets below ten billion dollars ($10,000,000,000) or that the
loan is owned by a local or state government agency and therefore
exempt from the foreclosure mitigation charge.
(b) (1) The county recorder shall hold the moneys collected
pursuant to subdivision (a) in trust until either of the following
occurs:
(A) If a notice of rescission is filed with respect to the
property, the county recorder shall return the moneys to the mortgage
servicer, except as provided in paragraph (2).
(B) If a trustee deed upon sale is filed with respect to the
property, and except as provided in paragraph (2) the county recorder
shall transmit the moneys to the Treasurer for deposit in the
Foreclosure Mitigation Fund, which is hereby established as a special
fund in the State Treasury.
(2) The county recorder may retain any interest earned while the
moneys were held in trust pursuant to this subdivision, to cover
administrative costs.
(c) (1) Moneys in the Foreclosure Mitigation Fund are hereby
continuously appropriated for distribution by the Treasurer to local
agencies, in the same amount as the applicable counties' respective
deposits.
(2) Moneys distributed to local agencies pursuant to this
subdivision shall be used as follows:
(A) Twenty percent for K-12 and community college purposes.
(B) Twenty percent for public safety purposes, at least half
of which shall be allocated to fire protection services. The
remaining portion shall be allocated to other public safety purposes,
including, but not limited to, local police ,
and county sheriffs , and local fire
protection .
(C) Twenty percent for redevelopment activities within the
jurisdiction of the local agency, including, but not limited to, the
construction of affordable housing.
(D) Twenty percent for mitigating the effects of foreclosures on
the community, including, but not limited to, reimbursement of the
county recorder's costs in collecting the charge imposed pursuant to
subdivision (a).
(E) Twenty percent for loans for small businesses within the
jurisdiction of the local agency.
(d) This shall remain in effect only until January 1, 2015, and as
of that date is repealed, unless a later enacted statute, that is
enacted before January 1, 2015, deletes or extends that date.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.