AB 1091, as introduced, Skinner. Mortgages: notice of default.
Existing law requires that, upon a breach of the obligation of a mortgage or transfer of an interest in property, the mortgagee, trustee, 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. Existing law specifies other requirements and procedures for completion of a foreclosure sale, including recording a notice of sale prior to exercising a power of sale. Existing law requires, under a notice of default, that a summary of mortgage terms be provided to the mortgagor or trustor, as specified.
This bill would require a notice of default and the summary of mortgage terms provided to a mortgagor or trustor to include a statement that includes the telephone number of the Homeowners Home Ownership and Opportunity for People Everywhere (HOPE) program or a similar mortgage payment assistance program of the United States Department of Treasury or Housing and Urban Development.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 2923.3 of the Civil Code is amended to
(a) With respect to residential real property containing
4no more than four dwelling units, a mortgagee, trustee, beneficiary,
5or authorized agent shall provide to the mortgagor or trustor a copy
6of the recorded notice of default with an attached separate summary
7document of the notice of default in English and the languages
8described in Section 1632, as set forth in subdivision (c), and a
9copy of the recorded notice of sale with an attached separate
10summary document of the information required to be contained
11in the notice of sale in English and the languages described in
12Section 1632, as set forth in subdivision (d). These summaries are
13not required to be recorded or published. This subdivision shall
14become operative on April 1, 2013, or 90 days following the
15issuance of the translations by the Department of Corporations,
16 pursuant to subdivision (b), whichever is later.
17(b) (1) The Department of Corporations shall provide a standard
18translation of the statement in paragraph (1) of subdivision (c),
19and of the summary of the notice of default, as set forth in
20paragraph (2) of subdivision (c) in the languages described in
22(2) The Department of Corporations shall provide a standard
23translation of the statement in paragraph (1) of subdivision (d),
24and of the summary of the notice of sale, as set forth in paragraph
25(2) of subdivision (d).
26(3) The department shall make the translations described in
27paragraphs (1) and (2) available without charge on its Internet Web
28site. Any mortgagee, trustee, beneficiary, or authorized agent who
29provides the department’s translations in the manner prescribed
30by this section shall be in compliance with this section.
31(c) (1) The following statement shall appear in the languages
32described in Section 1632 at the beginning of the notice of default:
34NOTE: THERE IS A SUMMARY OF THE INFORMATION
35IN THIS DOCUMENT ATTACHED.
P3 1(2) The following summary of key information shall be attached
2to the copy of the notice of default provided to the mortgagor or
5SUMMARY OF KEY INFORMATION
6The attached notice of default was sent to [name of the trustor],
7in relation to [description of the property that secures the mortgage
8or deed of trust in default]. This property may be sold to satisfy
9your obligation and any other obligation secured by the deed of
10trust or mortgage that is in default. [Trustor] has, as described in
11the notice of default, breached the mortgage or deed of trust on
12the property described above.
13IMPORTANT NOTICE: IF YOUR PROPERTY IS IN
14FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR
15PAYMENTS, IT MAY BE SOLD WITHOUT ANY COURT
16ACTION, and you may have the legal right to bring your account
17in good standing by paying all of your past due payments plus
18permitted costs and expenses within the time permitted by law for
19reinstatement of your account, which is normally five business
20days prior to the date set for the sale of your property. No sale date
21may be set until approximately 90 days from the date the attached
22notice of default may be recorded (which date of recordation
23appears on the notice).
24This amount is ____________ as of ___(date)____________and
25will increase until your account becomes current.
26While your property is in foreclosure, you still must pay other
27obligations (such as insurance and taxes) required by your note
28and deed of trust or mortgage. If you fail to make future payments
29on the loan, pay taxes on the property, provide insurance on the
30property, or pay other obligations as required in the note and deed
31of trust or mortgage, the beneficiary or mortgagee may insist that
32you do so in order to reinstate your account in good standing. In
33addition, the beneficiary or mortgagee may require as a condition
34to reinstatement that you provide reliable written evidence that
35you paid all senior liens, property taxes, and hazard insurance
37Upon your written request, the beneficiary or mortgagee will
38give you a written itemization of the entire amount you must pay.
39You may not have to pay the entire unpaid portion of your account,
40even though full payment was demanded, but you must pay all
P4 1amounts in default at the time payment is made. However, you
2and your beneficiary or mortgagee may mutually agree in writing
3prior to the time the notice of sale is posted (which may not be
4earlier than three months after this notice of default is recorded)
5to, among other things, (1) provide additional time in which to
6cure the default by transfer of the property or otherwise; or (2)
7establish a schedule of payments in order to cure your default; or
8both (1) and (2).
9Following the expiration of the time period referred to in the
10first paragraph of this notice, unless the obligation being foreclosed
11upon or a separate written agreement between you and your creditor
12permits a longer period, you have only the legal right to stop the
13sale of your property by paying the entire amount demanded by
15To find out the amount you must pay, or to arrange for payment
16to stop the foreclosure, or if your property is in foreclosure for any
17other reason, contact:
19(Name of beneficiary or mortgagee)
24If you have any questions, you should contact a lawyer or the
25governmental agency which may have insured your loan.
26Notwithstanding the fact that your property is in foreclosure,
27you may offer your property for sale, provided the sale is concluded
28prior to the conclusion of the foreclosure.
29Remember, YOU MAY LOSE LEGAL RIGHTS IF YOU DO
30NOT TAKE PROMPT ACTION.
would like additional copies of this summary, you may
32obtain them by calling [insert telephone number].
33(d) (1) The following statement shall appear in the languages
34described in Section 1632 at the beginning of the notice of sale:
36NOTE: THERE IS A SUMMARY OF THE INFORMATION
37IN THIS DOCUMENT ATTACHED.
P5 1(2) The following summary of key information shall be attached
2to the copy of the notice of sale provided to the mortgagor or
5SUMMARY OF KEY INFORMATION
6The attached notice of sale was sent to [trustor], in relation to
7[description of the property that secures the mortgage or deed of
8 trust in default].
9YOU ARE IN DEFAULT UNDER A (Deed of trust or
10mortgage) DATED ____. UNLESS YOU TAKE ACTION TO
11PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A
13IF YOU NEED AN EXPLANATION OF THE NATURE OF
14THE PROCEEDING AGAINST YOU, YOU SHOULD
15CONTACT A LAWYER.
16The total amount due in the notice of sale is ____.
17Your property is scheduled to be sold on [insert date and time
18of sale] at [insert location of sale].
19However, the sale date shown on the attached notice of sale may
20be postponed one or more times by the mortgagee, beneficiary,
21trustee, or a court, pursuant to Section 2924g of the California
22Civil Code. The law requires that information about trustee sale
23postponements be made available to you and to the public, as a
24courtesy to those not present at the sale. If you wish to learn
25 whether your sale date has been postponed, and, if applicable, the
26rescheduled time and date for the sale of this property, you may
27call [telephone number for information regarding the trustee’s sale]
28 or visit this Internet Web site [Internet Web site address for
29information regarding the sale of this property], using the file
30number assigned to this case [case file number]. Information about
31postponements that are very short in duration or that occur close
32in time to the scheduled sale may not immediately be reflected in
33the telephone information or on the Internet Web site. The best
34way to verify postponement information is to attend the scheduled
36If you would like additional copies of this summary, you may
37obtain them by calling [insert telephone number].
38(e) Failure to provide these summaries to the mortgagor or
39trustor shall have the same effect as if the notice of default or notice
40of sale were incomplete or not provided.
P6 1(f) This section sets forth a requirement for translation in
2languages other than English, and a document complying with the
3provisions of this section may be recorded pursuant to subdivision
4(b) of Section 27293 of the Government Code. A document that
5complies with this section shall not be rejected for recordation on
6the ground that some part of the document is in a language other
Section 2924 of the Civil Code is amended to read:
(a) Every transfer of an interest in property, other than
17in trust, made only as a security for the performance of another
18act, is to be deemed a mortgage, except when in the case of
19personal property it is accompanied by actual change of possession,
20in which case it is to be deemed a pledge. Where, by a mortgage
21created after July 27, 1917, of any estate in real property, other
22than an estate at will or for years, less than two, or in any transfer
23in trust made after July 27, 1917, of a like estate to secure the
24performance of an obligation, a power of sale is conferred upon
25the mortgagee, trustee, or any other person, to be exercised after
26a breach of the obligation for which that mortgage or transfer is a
27security, the power shall not be exercised except where the
28mortgage or transfer is made pursuant to an order, judgment, or
29 decree of a court of record, or to secure the payment of bonds or
30other evidences of indebtedness authorized or permitted to be
31issued by the Commissioner of Corporations, or is made by a public
32utility subject to the provisions of the Public Utilities Act, until
33all of the following apply:
34(1) The trustee, mortgagee, or beneficiary, or any of their
35authorized agents shall first file for record, in the office of the
36recorder of each county wherein the mortgaged or trust property
37or some part or parcel thereof is situated, a notice of default. That
38notice of default shall include all of the following:
39(A) A statement identifying the mortgage or deed of trust by
40stating the name or names of the trustor or trustors and giving the
P7 1book and page, or instrument number, if applicable, where the
2mortgage or deed of trust is recorded or a description of the
3mortgaged or trust property.
4(B) A statement that a breach of the obligation for which the
5mortgage or transfer in trust is security has occurred.
6(C) A statement setting forth the nature of each breach actually
7known to the beneficiary and of his or her election to sell or cause
8to be sold the property to satisfy that obligation and any other
9obligation secured by the deed of trust or mortgage that is in
11(D) If the default is curable pursuant to Section 2924c, the
12statement specified in paragraph (1) of subdivision (b) of Section
19(2) Not less than three months shall elapse from the filing of
20the notice of default.
21(3) Except as provided in paragraph (4), after the lapse of the
22three months described in paragraph (2), the mortgagee, trustee,
23or other person authorized to take the sale shall give notice of sale,
24stating the time and place thereof, in the manner and for a time
25not less than that set forth in Section 2924f.
26(4) Notwithstanding paragraph (3), the mortgagee, trustee, or
27other person authorized to take sale may record a notice of sale
28pursuant to Section 2924f up to five days before the lapse of the
29three-month period described in paragraph (2), provided that the
30date of sale is no earlier than three months and 20 days after the
31recording of the notice of default.
32(5) Until January 1, 2018, whenever a sale is postponed for a
33period of at least 10 business days pursuant to Section 2924g, a
34mortgagee, beneficiary, or authorized agent shall provide written
35notice to a borrower regarding the new sale date and time, within
36five business days following the postponement. Information
37provided pursuant to this paragraph shall not constitute the public
38declaration required by subdivision (d) of Section 2924g. Failure
39to comply with this paragraph shall not invalidate any sale that
P8 1would otherwise be valid under Section 2924f. This paragraph
2shall be inoperative on January 1, 2018.
3(6) No entity shall record or cause a notice of default to be
4recorded or otherwise initiate the foreclosure process unless it is
5the holder of the beneficial interest under the mortgage or deed of
6trust, the original trustee or the substituted trustee under the deed
7of trust, or the designated agent of the holder of the beneficial
8interest. No agent of the holder of the beneficial interest under the
9mortgage or deed of trust, original trustee or substituted trustee
10under the deed of trust may record a notice of default or otherwise
11commence the foreclosure process except when acting within the
12scope of authority designated by the holder of the beneficial
14(b) In performing acts required by this article, the trustee shall
15incur no liability for any good faith error resulting from reliance
16on information provided in good faith by the beneficiary regarding
17the nature and the amount of the default under the secured
18obligation, deed of trust, or mortgage. In performing the acts
19required by this article, a trustee shall not be subject to Title 1.6c
20(commencing with Section 1788) of Part 4.
21(c) A recital in the deed executed pursuant to the power of sale
22of compliance with all requirements of law regarding the mailing
23of copies of notices or the publication of a copy of the notice of
24default or the personal delivery of the copy of the notice of default
25or the posting of copies of the notice of sale or the publication of
26a copy thereof shall constitute prima facie evidence of compliance
27with these requirements and conclusive evidence thereof in favor
28of bona fide purchasers and encumbrancers for value and without
30(d) All of the following shall constitute privileged
31communications pursuant to Section 47:
32(1) The mailing, publication, and delivery of notices as required
33by this section.
34(2) Performance of the procedures set forth in this article.
35(3) Performance of the functions and procedures set forth in
36this article if those functions and procedures are necessary to carry
37out the duties described in Sections 729.040, 729.050, and 729.080
38of the Code of Civil Procedure.
39(e) There is a rebuttable presumption that the beneficiary
40actually knew of all unpaid loan payments on the obligation owed
P9 1to the beneficiary and secured by the deed of trust or mortgage
2subject to the notice of default. However, the failure to include an
3actually known default shall not invalidate the notice of sale and
4the beneficiary shall not be precluded from asserting a claim to
5this omitted default or defaults in a separate notice of default.
6(f) With respect to residential real property containing no more
7than four dwelling units, a separate document containing a
8summary of the notice of default information in English and the
9languages described in Section 1632 shall be attached to the notice
10of default provided to the mortgagor or trustor pursuant to Section