BILL NUMBER: AB 1547	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Eng

                        JANUARY 25, 2012

   An act to amend Sections 2923.5, 2923.6, 2924.8, and 2929.3 of the
Civil Code, and to amend Section 1161b of the Code of Civil
Procedure, relating to mortgages.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1547, as introduced, Eng. Residential mortgage loans:
foreclosure procedures.
   (1) Existing law, until January 1, 2013, requires a 30-day notice,
as specified, to be given to the borrower of certain home mortgages,
as specified, before a mortgagee, trustee, beneficiary, or
authorized agent may file a notice of default. Existing law requires
the notice of default to include certain information, as specified.
Existing law also requires contact with the borrower, as defined, in
order to assess the borrower's financial situation and explore
options for the borrower to avoid foreclosure. Existing law
authorizes a borrower to designate a HUD-certified housing counseling
agency, attorney, or other advisor to discuss with the mortgagee,
beneficiary, or authorized agent, on the borrower's behalf, options
for the borrower to avoid foreclosure. Under existing law, it is a
crime to tear down the notice of sale posted on a property within 72
hours of posting.
   Existing law, until January 1, 2013, requires a legal owner to
maintain vacant residential property acquired through foreclosure.
Existing law also authorizes 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, after notice and an opportunity to
correct the violation is given.
   This bill would delete the repeal clause for these provisions and
thus extend the operation of these provisions indefinitely. Because
this bill would change the definition of a crime, it would impose a
state-mandated local program.
   (2) Existing law, until January 1, 2013, requires a tenant or
subtenant in possession of a rental housing unit at the time the
property is sold in foreclosure to be given 60 days' written notice
to quit the property before being removed.
   This bill would delete the repeal clause for this provision and
thus extend the operation of this provision indefinitely.
   (3) 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: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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 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).
   (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 United States Department of
Housing and Urban Development (HUD) to find a HUD-certified housing
counseling agency. Any meeting may occur telephonically.
   (b) A notice of default filed pursuant to Section 2924 shall
include a declaration 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).
   (c) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment of this
section 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 pursuant to Section 2924f, include a
declaration that either:
   (1) States that the borrower was contacted to assess the borrower'
s financial situation and to explore options for the borrower to
avoid foreclosure.
   (2) Lists 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) 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 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.
   (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.
   (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.
   (h) Subdivisions (a), (c), and (g) 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) 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 of the Civil Code is amended 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 such a modification or plan is
consistent with its contractual or other authority. 
   (c) 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. 3.  Section 2924.8 of the Civil Code is amended to read:
   2924.8.  (a) Upon posting a notice of sale pursuant to Section
2924f, a trustee or authorized agent shall also post the following
notice, in the manner required for posting the notice of sale on the
property to be sold, and a mortgagee, trustee, beneficiary, or
authorized agent, concurrently with the mailing of the notice of sale
pursuant to Section 2924b, shall send by first-class mail in an
envelope addressed to the "Resident of property subject to
foreclosure sale" the following notice in English and the languages
described in Section 1632: "Foreclosure process has begun on this
property, which may affect your right to continue to live in this
property. Twenty days or more after the date of this notice, this
property may be sold at foreclosure. If you are renting this
property, the new property owner may either give you a new lease or
rental agreement or provide you with a 60-day eviction notice.
However, other laws may prohibit an eviction in this circumstance or
provide you with a longer notice before eviction. You may wish to
contact a lawyer or your local legal aid or housing counseling agency
to discuss any rights you may have."
   (b) It shall be an infraction to tear down the notice described in
subdivision (a) within 72 hours of posting. Violators shall be
subject to a fine of one hundred dollars ($100).
   (c) A state government entity shall make available translations of
the notice described in subdivision (a) which may be used by a
mortgagee, trustee, beneficiary, or authorized agent to satisfy the
requirements of this section.
   (d) This section shall only apply to loans secured by residential
real property, and if the billing address for the mortgage note is
different than the property address. 
   (e) 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. 4.  Section 2929.3 of the Civil Code is amended 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 that gave 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, or failing
to take action to prevent mosquito larvae from growing in standing
water or other conditions that create a public nuisance.
   (c) Notwithstanding subdivisions (a) and (b), a governmental
entity may provide less than 30 days' notice to remedy a condition
before imposing a civil fine if the entity determines that a specific
condition of the property threatens public health or safety and
provided that notice of that determination and time for compliance is
given.
   (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. 
  SEC. 5.  Section 1161b of the Code of Civil Procedure is amended to
read:
   1161b.  (a) Notwithstanding Section 1161a, a tenant or subtenant
in possession of a rental housing unit at the time the property is
sold in foreclosure shall be given 60 days' written notice to quit
pursuant to Section 1162 before the tenant or subtenant may be
removed from the property as prescribed in this chapter.
   (b) This section shall not apply if any party to the note remains
in the property as a tenant, subtenant, or occupant. 
   (c) 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. 6.  The provisions of this act are severable. If any provision
of this act 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.
  SEC. 7.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.