California Legislature—2013–14 Regular Session

Assembly Bill No. 1091

Introduced by Assembly Member Skinner

February 22, 2013

An act to amend Sections 2923.3 and 2924 of the Civil Code, relating to mortgages.

LEGISLATIVE COUNSEL’S DIGEST

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 1.  

Section 2923.3 of the Civil Code is amended to
read:

2923.3.  

(a) With respect to residential real property containing
no more than four dwelling units, a mortgagee, trustee, beneficiary,
or authorized agent shall provide to the mortgagor or trustor a copy
of the recorded notice of default with an attached separate summary
document of the notice of default in English and the languages
described in Section 1632, as set forth in subdivision (c), and a
copy of the recorded notice of sale with an attached separate
summary document of the information required to be contained
in the notice of sale in English and the languages described in
Section 1632, as set forth in subdivision (d). These summaries are
not required to be recorded or published. This subdivision shall
become operative on April 1, 2013, or 90 days following the
issuance of the translations by the Department of Corporations,
pursuant to subdivision (b), whichever is later.

(b) (1) The Department of Corporations shall provide a standard
translation of the statement in paragraph (1) of subdivision (c),
and of the summary of the notice of default, as set forth in
paragraph (2) of subdivision (c) in the languages described in
Section 1632.

(2) The Department of Corporations shall provide a standard
translation of the statement in paragraph (1) of subdivision (d),
and of the summary of the notice of sale, as set forth in paragraph
(2) of subdivision (d).

(3) The department shall make the translations described in
paragraphs (1) and (2) available without charge on its Internet Web
site. Any mortgagee, trustee, beneficiary, or authorized agent who
provides the department’s translations in the manner prescribed
by this section shall be in compliance with this section.

(c) (1) The following statement shall appear in the languages
described in Section 1632 at the beginning of the notice of default:

NOTE: THERE IS A SUMMARY OF THE INFORMATION
IN THIS DOCUMENT ATTACHED.

(2) The following summary of key information shall be attached
to the copy of the notice of default provided to the mortgagor or
trustor:

SUMMARY OF KEY INFORMATION

The attached notice of default was sent to [name of the trustor],
in relation to [description of the property that secures the mortgage
or deed of trust in default]. This property may be sold to satisfy
your obligation and any other obligation secured by the deed of
trust or mortgage that is in default. [Trustor] has, as described in
the notice of default, breached the mortgage or deed of trust on
the property described above.

IMPORTANT NOTICE: IF YOUR PROPERTY IS IN
FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR
PAYMENTS, IT MAY BE SOLD WITHOUT ANY COURT
ACTION, and you may have the legal right to bring your account
in good standing by paying all of your past due payments plus
permitted costs and expenses within the time permitted by law for
reinstatement of your account, which is normally five business
days prior to the date set for the sale of your property. No sale date
may be set until approximately 90 days from the date the attached
notice of default may be recorded (which date of recordation
appears on the notice).

This amount is ____________ as of ___(date)____________and
will increase until your account becomes current.

While your property is in foreclosure, you still must pay other
obligations (such as insurance and taxes) required by your note
and deed of trust or mortgage. If you fail to make future payments
on the loan, pay taxes on the property, provide insurance on the
property, or pay other obligations as required in the note and deed
of trust or mortgage, the beneficiary or mortgagee may insist that
you do so in order to reinstate your account in good standing. In
addition, the beneficiary or mortgagee may require as a condition
to reinstatement that you provide reliable written evidence that
you paid all senior liens, property taxes, and hazard insurance
premiums.

Upon your written request, the beneficiary or mortgagee will
give you a written itemization of the entire amount you must pay.
You may not have to pay the entire unpaid portion of your account,
even though full payment was demanded, but you must pay all
amounts in default at the time payment is made. However, you
and your beneficiary or mortgagee may mutually agree in writing
prior to the time the notice of sale is posted (which may not be
earlier than three months after this notice of default is recorded)
to, among other things, (1) provide additional time in which to
cure the default by transfer of the property or otherwise; or (2)
establish a schedule of payments in order to cure your default; or
both (1) and (2).

Following the expiration of the time period referred to in the
first paragraph of this notice, unless the obligation being foreclosed
upon or a separate written agreement between you and your creditor
permits a longer period, you have only the legal right to stop the
sale of your property by paying the entire amount demanded by
your creditor.

To find out the amount you must pay, or to arrange for payment
to stop the foreclosure, or if your property is in foreclosure for any
other reason, contact:

____________________________________

(Name of beneficiary or mortgagee)

____________________________________

(Mailing address)

____________________________________

(Telephone)

If you have any questions, you should contact a lawyer or the
governmental agency which may have insured your loan.

Notwithstanding the fact that your property is in foreclosure,
you may offer your property for sale, provided the sale is concluded
prior to the conclusion of the foreclosure.

Remember, YOU MAY LOSE LEGAL RIGHTS IF YOU DO
NOT TAKE PROMPT ACTION.

If you would like additional copies of this summary, you may
obtain them by calling [insert telephone number].

(d) (1) The following statement shall appear in the languages
described in Section 1632 at the beginning of the notice of sale:

NOTE: THERE IS A SUMMARY OF THE INFORMATION
IN THIS DOCUMENT ATTACHED.

(2) The following summary of key information shall be attached
to the copy of the notice of sale provided to the mortgagor or
trustor:

SUMMARY OF KEY INFORMATION

The attached notice of sale was sent to [trustor], in relation to
[description of the property that secures the mortgage or deed of
trust in default].

YOU ARE IN DEFAULT UNDER A (Deed of trust or
mortgage) DATED ____. UNLESS YOU TAKE ACTION TO
PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A
PUBLIC SALE.

IF YOU NEED AN EXPLANATION OF THE NATURE OF
THE PROCEEDING AGAINST YOU, YOU SHOULD
CONTACT A LAWYER.

The total amount due in the notice of sale is ____.

Your property is scheduled to be sold on [insert date and time
of sale] at [insert location of sale].

However, the sale date shown on the attached 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 to 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 [telephone number for information regarding the trustee’s sale]
or visit this Internet Web site [Internet Web site address for
information regarding the sale of this property], using the file
number assigned to this case [case 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.

If you would like additional copies of this summary, you may
obtain them by calling [insert telephone number].

(e) Failure to provide these summaries to the mortgagor or
trustor shall have the same effect as if the notice of default or notice
of sale were incomplete or not provided.

(f) This section sets forth a requirement for translation in
languages other than English, and a document complying with the
provisions of this section may be recorded pursuant to subdivision
(b) of Section 27293 of the Government Code. A document that
complies with this section shall not be rejected for recordation on
the ground that some part of the document is in a language other
than English.

begin insert

(g) The statement required pursuant to subdivision (c) shall
also include 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.

end insert

SEC. 2.  

Section 2924 of the Civil Code 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.

begin insert

(E) 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.

end insert

(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 record 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
recording of the notice of default.

(5) Until January 1, 2018, whenever a sale is postponed for a
period of at least 10 business days pursuant to Section 2924g, a
mortgagee, beneficiary, or authorized agent shall provide written
notice to a borrower regarding the new sale date and time, within
five business days following the postponement. Information
provided pursuant to this paragraph shall not constitute the public
declaration required by subdivision (d) of Section 2924g. Failure
to comply with this paragraph shall not invalidate any sale that
would otherwise be valid under Section 2924f. This paragraph
shall be inoperative on January 1, 2018.

(6) No entity shall 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 mortgage or deed of
trust, the original trustee or the substituted trustee under the deed
of trust, or the designated agent of the holder of the beneficial
interest. No agent of the holder of the beneficial interest under the
mortgage or deed of trust, original trustee or substituted trustee
under the deed of trust may record a notice of default or otherwise
commence the foreclosure process except when acting within the
scope of authority designated by the holder of the beneficial
interest.

(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) With respect to residential real property containing no more
than four dwelling units, a separate document containing a
summary of the notice of default information in English and the
languages described in Section 1632 shall be attached to the notice
of default provided to the mortgagor or trustor pursuant to Section
2923.3.