BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 4|
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UNFINISHED BUSINESS
Bill No: SB 4
Author: Calderon (D) and Vargas (D)
Amended: 6/21/11
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 4/26/11
AYES: Evans, Harman, Blakeslee, Corbett, Leno
SENATE FLOOR : 40-0, 5/9/11 (Consent)
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De León, DeSaulnier, Dutton,
Emmerson, Evans, Fuller, Gaines, Hancock, Harman,
Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu,
Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio,
Runner, Simitian, Steinberg, Strickland, Vargas, Walters,
Wolk, Wright, Wyland, Yee
ASSEMBLY FLOOR : 77-0, 7/11/11 - See last page for vote
SUBJECT : Mortgages
SOURCE : Author
DIGEST : This bill requires, on and after April 1, 2012,
that a notice of non-judicial foreclosure sale contain:
(1) language notifying potential bidders of specified risks
involved in bidding on the property; and (2) a notice to
the property owner informing the owner about how to obtain
information regarding any postponement of the sale. This
bill additionally requires a trustee handling the
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foreclosure to make a good faith effort to provide
up-to-date information regarding sale dates and
postponements, as specified.
Assembly Amendments add additional clarifying language to
the required notices.
ANALYSIS : Existing law regulates the non-judicial
foreclosure of properties pursuant to the power of sale
contained within a mortgage contract. To commence the
process, existing law authorizes the trustee, mortgagee, or
beneficiary to record a Notice of Default and generally
requires three months to lapse before noticing the sale of
the property. (Civil Code ÝCIV] Sections 2924, 2924f)
Existing law requires the Notice of Sale to be posted,
published, and filed with the county recorder at least 20
days before the sale of the property. (CIV Section 2924f)
Existing law governs the manner in which the sale must be
conducted and permits the sale to be postponed at any time
prior to completion of the sale. Any postponements may not
exceed a total of 365 days from the date set forth in the
Notice of Sale. If the sale is postponed for a total of
more than 365 days, the sale must be re-noticed. (CIV
Section 2924g)
Existing law requires notice of each postponement and the
reason therefore to be given by public declaration by the
trustee at the time and place last appointed for sale.
That declaration must set forth the new date, time, and
place of sale, as specified. (CIV Section 2924g(d))
This bill, on and after April 1, 2012, requires the notice
of sale to contain substantially the following language if
the property is between one and four single-family
residences:
"NOTICE TO POTENTIAL BIDDERS: If you are considering
bidding on this property lien, you should understand that
there are risks involved in bidding at a trustee auction.
You will be bidding on a lien, not the property itself.
Placing the highest bid at a trustee auction does not
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automatically entitle you to free and clear ownership of
the property. You should also be aware that the lien
being auctioned off may be a junior lien. If you are the
highest bidder at the auction, you are or may be
responsible for paying off all liens senior to the lien
being auctioned off, before you can receive clear title
to the property. You are encouraged to investigate the
existence, priority, and size of outstanding liens that
may exist on this property by contacting the county
recorder's office or a title insurance company, either of
which may charge you a fee for this information. If you
consult either of these resources, you should be aware
that the same lender may hold more than one mortgage or
deed of trust on the property.
"NOTICE TO PROPERTY OWNER: The sale date shown on this
notice of sale may be postponed one or more times by the
mortgagee, beneficiary, trustee, or a court, pursuant to
Section 2924g of the California Civil Code. The law
requires that information about trustee sale
postponements be made available you and to the public, as
a courtesy to those not present at the sale. If you wish
to learn whether your sale date has been postponed, and,
if applicable, the rescheduled time and date for the sale
of this property, you may call Ýtelephone number for
information regarding the trustee's sale] or visit this
Internet Web site ÝInternet Web site address for
information regarding the sale of this property], using
the file number assigned to this case Ýcase file number].
Information about postponements that are very short in
duration or that occur close in time to the scheduled
sale may not immediately be reflected in the telephone
information or on the Internet Web site. The best way to
verify postponement information is to attend the
scheduled sale."
This bill provides that nothing in the above disclosures is
intended to modify or create substantive rights or
obligations for any person providing, or specified in,
either of the required notices.
This bill requires the mortgagee, beneficiary, trustee, or
authorized agent to make a good faith effort to provide
up-to-date information regarding sale dates to persons who
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request that information, and to make that information
available free of charge. That information may be made
available via an Internet Web site, phone recording, or any
other means that allows 24 hour a day access, as specified;
disruption of those methods for reasonable maintenance or
due to a service outage is not deemed to be a violation of
the good faith standard.
This bill provides that failure to comply with the above
provisions shall not invalidate any sale that would
otherwise be valid, and that the information required to be
provided above does not constitute the public declaration
required to postpone a trustee sale.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/12/11)
California Bankers Association
United Trustees Association
ARGUMENTS IN SUPPORT : According to the author:
"Most residential real property foreclosures in
California are conducted nonjudicially, using a process
set forth in the Civil Code (Civil Code Sections 2924 et
seq.) Although the nonjudicial foreclosure rules are
very precisely described in law and have been clarified
many times by the courts, the process can be quite
confusing to the uninitiated. Two groups in particular
-- homeowners who have received a notice of trustee sale
and individuals who bid at a trustee sale, hoping to
acquire a good deal on residential real property - are
particularly at risk, both emotionally and financially,
if they fail to thoroughly understand the key rules that
govern their situations.
"Two of the most common sources of confusion among these
groups involve: 1) the rules for postponing foreclosure
sales; and 2) the obligations of a bidder who places the
high bid at a foreclosure sale.
. . .
SB 4 adds two informative paragraphs to the Notice of
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Trustee Sale, a document which must be provided to
homeowners, filed with a county recorder, posted in a
public place, and published in a newspaper of general
circulation, before a home may be sold at foreclosure.
These informative paragraphs - one intended for
homeowners facing the sale of their home, and the other
intended for potential bidders at the foreclosure sale -
are designed to help alleviate some of the most common
sources of confusion experienced by homeowners and
bidders, regarding the non-judicial foreclosure sale
process."
The United Trustees Association states that their members
"support the bill because it provides greater information
on the foreclosure process, which can be mystifying to
those not conversant with it."
ASSEMBLY FLOOR : 77-0, 7/11/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Beall, Gorell, Mitchell
RJG:kc 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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