BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 708 (Corbett) Hearing Date: 01/17/2012 Amended: 01/11/2012 Consultant: Maureen Ortiz Policy Vote: B&FI: 6-0 Jud: 5-0 _________________________________________________________________ ____ BILL SUMMARY: SB 708 extends the provisions of law that established requirements that mortgage lenders had to adhere to before issuing a notice of default on a homeowner (SB 1137 Perata/Corbett/Machado, Chapter 69, Statutes of 2008) from January 1, 2013 to January 1, 2018. In addition, SB 708 revises the contents of the notice relating to the rights of residents. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2012-13 2013-14 2014-15 Fund Dept Financial Institutions -------------minor, absorbable--------------- Special* Dept Real Estate -------------minor, absorbable-------------- Special** Dept of Corporations ---------------------minor--------------------- Special*** *Financial Institutions Fund **Real Estate Fund ***Corporations Fund _________________________________________________________________ ____ STAFF COMMENTS: SB 1137 (chapter 69, Statutes of 2008) imposed the following requirements on lenders before a notice of default (NOD) may be recorded on a mortgage or deed of trust secured by single-family, owner-occupied residential real property: a) A mortgagee, beneficiary, or authorized agent must contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the SB 708 (Corbett) Page 1 borrower that might avoid foreclosure. The bill prescribes specific requirements for making contact. b) A mortgagee, beneficiary, or authorized agent has to wait at least 30 days after making initial contact with a borrower before recording a NOD. c) Each NOD has to include a statement explaining how the contact with the borrower was made, or specifying that no contact was required due to qualifying exemptions. d) Requires a notice to be posted on a property on which a notice of sale has been recorded, and also requires the notice to be mailed to the resident of that property. e) Provides a tenant of a rental housing unit that is to be sold in foreclosure with 60 days written notice to exit the property. (This provision was superseded by federal law allowing renters to remain in the home for 90 days, or through the term of their lease, whichever is longer. The federal provision will sunset on January 1, 2015.) f) Requires a legal property owner to maintain vacant residential property purchased at a foreclosure sale as specified, and provides for penalties of up to $1,000 per day for noncompliance. SB 708 will extend all of the above provisions until January 1, 2018. As amended January 11, 2012, SB 708 revises the contents of the written notice sent to a tenant of a rental housing unit that is to be sold in foreclosure. Instead of informing the tenant of the right to receive a 60 day notice to vacate, this notice will inform the tenant of his or her right of a "60 days written eviction notice or 90 days if required by any other provision of state or federal law". SB 708 (Corbett) Page 2