BILL NUMBER: AB 2425	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 9, 2012

INTRODUCED BY   Assembly Member Mitchell
    (   Coauthor:   Senator  
DeSaulnier   ) 

                        FEBRUARY 24, 2012

    An act relating to mortgages.   An act to
amend Section 2932.5 of, to amend and repeal Section 2924 of, and to
add Sections 2920.5, 2923.7, 2924.17, and 2924.18 to, the Civil Code,
relating to mortgages. 


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2425, as amended, Mitchell. Mortgages and deeds of trust:
foreclosure. 
   (1) Existing law prescribes foreclosure procedures, including,
among other things, procedures for recording a notice of default,
recording a notice of sale, and conducting a foreclosure sale. 

   This bill would define a mortgage servicer, and would, commencing
July 1, 2013, require a mortgage servicer to establish a single point
of contact when a borrower on a residential mortgage or deed of
trust is 60 or more days delinquent, has had a notice of default
recorded, or is seeking a loan modification or other loss mitigation,
as specified. The bill would impose various obligations on the
single point of contact in connection with loan modification or other
loss mitigation options.  
   (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
default.  
   This bill would prohibit an entity from recording a notice of
default or otherwise initiating foreclosure procedures unless the
entity is the holder of the beneficial interest under the deed of
trust, and would prohibit an entity acting as an agent from doing so
without specific direction from the actual owner of the beneficial
interest under the deed of trust.  
   (3) Existing law authorizes the recording by the county recorder
of various documents.  
   This bill would provide that a document that contains factual
assertions that are not accurate, are incomplete, or are unsupported
by competent, reliable evidence, or a document that has not been
reviewed by its signer to substantiate the factual assertions
contained in the document is a robosigned document. The bill would
provide that any entity that records a robosigned document, or files
a robosigned document in a court relative to a foreclosure proceeding
is liable for a civil penalty of $10,000 for each robosigned
document. The bill would authorize specified governmental entities to
enforce the civil penalty, and would authorize the Department of
Real Estate, the Department of Corporations, and the Department of
Financial Institutions to enforce the civil penalty provisions
against their respective licensees.  
   (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) Existing law provides that where the power to sell real
property is given to a mortgagee or other encumbrancer, in an
instrument intended to secure the payment of money, the power is part
of the security and vests with any person who by assignment becomes
entitled to payment of the money.  
   This bill would expand these provisions to include a power to sell
real property given to a trustee or a beneficiary of a deed of trust
in an instrument intended to secure the payment of money.  

   (6) The bill would repeal duplicate provisions of law. 

   Existing law generally regulates mortgages and deeds of trust,
including establishing procedures for foreclosure in the case of
default.  
   This bill would express the intent of Legislature to enact
legislation to amend the state's foreclosure laws to implement and
make permanent the servicing standards and other provisions of the
National Mortgage Settlement. 
   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 2920.5 is added to the 
 Civil Code   , to read:  
   2920.5.  For purposes of this article, "mortgage servicer" means a
person or entity responsible for the day-to-day management of a
mortgage loan account, including collecting and crediting periodic
loan payments, managing any escrow account, or enforcing mortgage
loan terms either as the holder of the loan note or on behalf of the
holder of the loan note. 
   SEC. 2.    Section 2923.7 is added to the  
Civil Code   , to read:  
   2923.7.  (a) If a borrower is 60 or more days delinquent, the
mortgage servicer shall inform the borrower that if the borrower
wishes to pursue a loan modification or other foreclosure prevention
alternative, the mortgage servicer shall establish a single point of
contact (SPOC) for the borrower.
   (b) Upon written or telephonic communication from a borrower who
is 60 or more days delinquent and who requests loss mitigation
assistance, the identity of and contact information for the SPOC
shall be provided to the borrower within 10 business days. The
mortgage servicer shall provide updated contact information to the
borrower if the designated SPOC is changed no later than five
business days after the change.
   (c) The SPOC shall be responsible for all of the following:
   (1) Communicating the options available to the borrower, the
actions the borrower must take to be considered for those options,
and the status of the mortgage servicer's evaluation of the borrower
for those options.
   (2) Coordinating receipt of all documents associated with loan
modification or loss mitigation activities and notifying the borrower
of any missing documents.
   (3) Maintaining and providing accurate information about the
borrower's situation and current status in the loss mitigation
process.
   (4) Ensuring that a borrower, who is not eligible for a federal
Making Home Affordable (MHA) program, is considered for proprietary
or other investor loss mitigation options.
   (5) Having access to individuals with the ability to stop
foreclosure proceedings when necessary to comply with the MHA program
or California law.
   (d) The SPOC shall remain assigned to the borrower's account until
the mortgage servicer determines that all loss mitigation options
have been exhausted, the borrower's account becomes current, or, in
the case of a borrower in bankruptcy, the borrower has exhausted all
loss mitigation options for which the borrower is potentially
eligible and has applied.
   (e) The mortgage servicer shall ensure that a SPOC refers and
transfers a borrower to an appropriate supervisor upon request of the
borrower.
   (f) This section shall become operative on July 1, 2013. 
   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), 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. 
   (5) An entity shall not record or cause a notice of default to be
recorded or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the deed of trust. An
agent shall not record a notice of default or otherwise commence the
foreclosure process without the specific direction of the actual
owner of the beneficial interest under the deed of trust. 
   (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 2924.17 is added to the  
Civil Code   , to read:  
   2924.17.  (a) For purposes of this section, a "robosigned document"
means any document that contains factual assertions that are not
accurate, are incomplete, or are unsupported by competent, reliable
evidence. A "robosigned document" also means any document that has
not been reviewed by its signer to substantiate the factual
assertions contained in the document. For purposes of this
definition, multiple people may verify the document or statement so
long as the document or statement specifies the portions verified by
each signer.
   (b) Any entity that records a robosigned document or files a
robosigned document in any court relative to a foreclosure proceeding
shall be liable for a civil penalty of ten thousand dollars
($10,000) per robosigned document. The civil penalty may be enforced
by any governmental entity identified in Section 17204 of the
Business and Professions Code. In addition, the Department of Real
Estate, the Department of Corporations, and the Department of
Financial Institutions may enforce the civil penalties under this
section against any of their respective licensees. The civil
penalties under this section are separate from and exclusive of any
other remedies or liabilities that may apply. This section is not
intended to limit the type of actions regarding robosigned documents
that may be filed by any governmental entity identified in Section
17204 of the Business and Professions Code. 
   SEC. 6.    Section 2924.18 is added to the  
Civil Code   , to read:  
   2924.18.  (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 2923.7, 2924, 2924.9, or
2932.5. Any injunction shall remain in place until the mortgagee,
trustee, beneficiary, or authorized agent has complied with the
requirements of Section 2923.7, 2924, 2924.9, or 2932.5. 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 2923.7, 2924, 2924.9, or 2932.5.
   (2) A court may award a borrower the greater of treble actual
damages or statutory damages of fifty thousand dollars ($50,000),
plus attorney's fees and costs, if it finds that the violation of
Section 2923.7, 2924, 2924.9, or 2932.5 was intentional, reckless, or
resulted from willful misconduct by a mortgagee, trustee,
beneficiary, or authorized agent.
   (c) A violation of this article shall not 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 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 2920.5, 2923.5, 2923.7, 2924, and 2924.9, 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 2923.7, 2924, 2924.17,
or 2932.5 committed by that third-party encumbrancer, that occurred
prior to the sale of the subject property to the bona fide purchaser.

   SEC. 7.    Section   2932.5 of the 
 Civil Code   is amended to read: 
   2932.5.  Where a power to sell real property is given to a
mortgagee,  trustee, beneficiary of a deed of trust,  or
other encumbrancer, in an instrument intended to secure the payment
of money, the power is part of the security and vests in any person
who by assignment becomes entitled to payment of the money secured by
the instrument. The power of sale may be exercised by the assignee
if the assignment is duly acknowledged and recorded. 
  SECTION 1.    It is the intent of the Legislature
to enact legislation to amend the state's foreclosure laws to
implement and make permanent the servicing standards and other
provisions of the National Mortgage Settlement.