BILL NUMBER: SB 1471 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 29, 2012
INTRODUCED BY Senators DeSaulnier and Pavley
(Coauthors: Senators Hancock and Leno)
FEBRUARY 24, 2012
An act to amend Sections 2932.5 and 2934 of, to amend and
repeal Section 2924 of, and to add Sections 2920.5, 2923.7, and
2924.9 to, the Civil Code, relating to mortgages.
LEGISLATIVE COUNSEL'S DIGEST
SB 1471, as amended, DeSaulnier. 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 actual holder of the beneficial interest under the deed
of trust, and would prohibit an entity acting as 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 information
that was not verified for accuracy by the person or persons signing,
attesting, or swearing to the accuracy of the document or statement
is a robosigned document. The bill would also authorize a borrower to
obtain a postponement of a foreclosure sale until a new notice of
default and a corrected version of the robosigned document are
recorded, as specified.
(4) 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.
(5) Existing law authorizes any assignment of a mortgage or
beneficial interest under a deed of trust to be recorded.
This bill would require any assignment of a mortgage or beneficial
interest under a deed of trust to be recorded.
(6) The bill would repeal duplicate provisions of law.
(7) The bill would make a specified statement of legislative
intent regarding appropriate remedies under the bill for violations
of the bill's provisions.
Existing state and federal law regulate the terms and conditions
of mortgages and deeds of trust secured by real property. Existing
state law requires, upon a breach of the obligation of a mortgage or
deed of trust secured by real property, that the trustee, mortgagee,
or beneficiary record a notice of default in the office of the county
recorder where the mortgaged or trust property is situated and mail
the notice of default to the mortgagor or trustor, among other acts,
prior to exercising a power of sale. Existing state law, until
January 1, 2013, prohibits the filing of a notice of default on a
mortgage or deed of trust, as specified, secured by owner-occupied
real property, as defined, until 30 days after specified parties
contact the borrower or 30 days after satisfying due diligence
requirements in this regard.
This bill would express the intent of the Legislature to enact
legislation that would improve protections for homeowners who are
subject to foreclosure.
Vote: majority. Appropriation: no. Fiscal committee: no.
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 the borrower on a residential mortgage, where the
property securing the mortgage or deed of trust is the primary
residence of the borrower, is 60 or more days delinquent, has had a
notice of default recorded against the property, or is seeking a loan
modification or other loss mitigation option, the mortgage servicer
shall establish a single point of contact (SPOC) for the borrower.
(b) The identity of and contact information for the SPOC shall be
provided to the borrower no later than 10 business days after the
60th day of delinquency, the recordation of the notice of default, or
the date the mortgage servicer receives notice that the borrower is
seeking a loan modification or other loss mitigation option,
whichever is sooner. 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 post on its Internet Web site the
average response time following a single point of contact's receipt
of a borrower's inquiry regarding the foreclosure process or the
status of any request for a loan modification, short sale, or other
loss mitigation option.
(f) The mortgage servicer shall allow the borrower to speak with a
management or supervisory level employee if the borrower makes that
request to an assigned single point of contact.
(g) This section shall become operative 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 actual current 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 2924.9 is added to the
Civil Code , to read:
2924.9. (a) For purposes of this section, "robosigned" means any
document that contains information that was not verified for accuracy
by the person or persons signing, attesting, or swearing to the
accuracy of the document or statement. Evidence of a failure to
verify may include, but is not limited to, inaccurate information
contained within the document or statement. 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) No party other than a bona fide third-party purchaser may
raise any equitable defenses to any action to halt or set aside any
foreclosure proceeding conducted with respect to a residential
mortgage loan if a court of competent jurisdiction has found that any
document pertaining to either the residential mortgage loan or the
foreclosure was robosigned.
SEC. 6. 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
only if the assignment is duly acknowledged and recorded.
SEC. 7. Section 2934 of the
Civil Code is amended to read:
2934. Any assignment of a mortgage and any assignment of the
beneficial interest under a deed of trust may
shall be recorded, and from the time the same is filed for
record operates as constructive notice of the contents thereof to all
persons; and any instrument by which any mortgage or deed of trust
of, lien upon or interest in real property, (or by which any mortgage
of, lien upon or interest in personal property a document evidencing
or creating which is required or permitted by law to be recorded),
is subordinated or waived as to priority may be recorded, and from
the time the same is filed for record operates as constructive notice
of the contents thereof, to all persons.
SEC. 8. It is the intent of the Legislature that
there be appropriate remedies under this act for violations of the
act's provisions.
SECTION 1. It is the intent of the Legislature
to enact legislation that would improve protections for homeowners
who are subject to foreclosure.