Amended in Assembly May 8, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1770

Introduced by Assembly Member Dababneh

February 14, 2014

An act to add Section 2941.8 to the Civil Code, relating to real property.

LEGISLATIVE COUNSEL’S DIGEST

AB 1770, as amended, Dababneh. Real property liens: request to terminate home equity line of credit.

Under existing law, within 30 days after a mortgage has been satisfied, the mortgagee or the assignee of the mortgagee is required to execute a certificate of the discharge of the mortgage, as specified, and to deliver, upon the request of the mortgagor or another authorized person, the original note and mortgage to the person making the request.

Existing law requires a creditor to make certain disclosures to a consumer applying for a home equity loan, as defined. Existing federal law relating to lending practices specifies certain circumstances under which a lender may reduce or terminate an existing home equity line of credit.

This bill would require a lender, upon receipt of a begin insert written end insert request from an authorized person, as defined, to terminate a borrower’s begin delete revolving line of credit secured by a mortgage or deed of trust, also referred to as a home end delete equity line of credit, begin insert as defined, end insert when the secured property is in escrow. This bill would prescribe the contents of this written request, and would require the authorized person to provide a copy of the written request to the borrower, along with a notice to the borrower relating to the effect of the termination of the home equity line of credit.

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 2941.8 is added to the Civil Code, to
read:

2941.8.  

(a) Upon receipt of a written request from an
authorized person to terminate begin delete a revolving end delete begin insert a end insert begin insert n equity end insert line of begin delete credit
secured by a mortgage or deed of trust, end delete begin insert credit, end insert the lender shall do
all of the following:

(1) Terminate the borrower’s right to obtain advances under the
borrower’s begin delete revolving end delete begin insert end insert begin insert equity end insert line of credit.

(2) Apply all sums subsequently paid by or on behalf of the
borrower in connection with the begin delete revolving end delete begin insert end insert begin insert equity end insert line of credit to
the satisfaction of the begin delete revolving line of credit and other sums
secured by the related revolving line security instrument. end delete begin insert end insert begin insert equity
line of credit. end insert

begin delete

(3) When the balance of all outstanding sums secured by the
related revolving line security instrument becomes zero, satisfy
the related revolving line security instrument.

end delete begin insert

(3) Reconvey the mortgage or deed of trust when the home equity
line of credit has a zero balance outstanding.

end insert

(b)  begin delete No particular phrasing is required in the end delete begin insert The end insert begin insert end insert written request
provided to the lender to terminate an equity line of begin delete credit, but end delete
begin insert credit end insert shall contain at least the following:

(1) The name of each borrower.

(2) The account number of the equity line of credit.

(3) The street address of the property, if appropriate.

(c) For purposes of this section “authorized person” includes a
licensed title insurance company, underwritten title company, or
controlled escrow company, as defined in Sections 12340.4,
12340.5, and 12340.6, respectively, of the Insurance Code, or an
escrow company as used in the Financial Code begin insert , that is acting on
behalf of the borrower end insert .

begin insert

(d) For purposes of this section, “equity line of credit” means
a revolving line of credit secured by a mortgage or deed of trust.

end insert begin delete

(d)

end delete

begin insert (e) end insert  For purposes of this section, “receipt of a written request”
includes confirmation begin delete by fax, email, or paper copy sent by certified
mail. end delete begin insert delivered by first-class mail, registered or certified mail,
express mail, overnight delivery by an express services carrier,
email, facsimile, or other electronic means. end insert

begin delete

(e)

end delete

begin insert (f) end insert  A written request to terminate begin delete a revolving line of credit
secured by a mortgage or deed of trust end delete begin insert an equity line of credit end insert from
an authorized person shall be provided to the borrower and be
accompanied by the following language:

“NOTICE TO begin delete BORROWER” end delete begin insert BORROWER end insert

You have a home equity line of credit with _____, secured by
a mortgage or deed of trust, and lien, on real property located at
______________.

Our company is handling the escrow for your transaction. We
are sending the attached notice to your lender, requesting begin delete that end delete
begin insert cancellation of end insert your home equity line of begin delete credit be terminated. end delete
begin insert credit. end insert Our reason for making this request is:
________________________.

When your lender receives our request, your lender will begin delete terminate
and end delete close your home equity line of credit, and you will no longer
be able to obtain credit advances. However, begin delete termination of end delete begin insert this
notice to cancel end insert your home equity line of credit does not release
you from liability for amounts owed under the account. begin delete All sums
your lender subsequently receives in connection with your home
equity line of credit, including any sums we may send to your
lender, shall end delete begin insert Any funds sent to your lender in connection with your
home equity line of credit, including any funds we may send to
your lender, will end insert be applied by your lender to the satisfaction of
your account. When the balance of your account becomes zero,
your lender will be required to begin delete cancel the mortgage or deed of trust
as a matter of public record. end delete begin insert remove the lien against the property
that is connected to the home equity line of credit. end insert

If you have questions about this notice or our action, begin insert or believe
you have received this notice in error, end insert please contact ___________
by calling us at __________________ or writing to us at
______________.

__________________________

(Name of begin delete Company) end delete begin insert Company) end insert begin insert ” end insert