BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                        SB 827|
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                                    THIRD READING


          Bill No:  SB 827
          Author:   Liu (D)
          Amended:  4/8/14
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  5-2, 3/19/14
          AYES:  Wolk, Beall, DeSaulnier, Hernandez, Liu
          NOES:  Knight, Vidak

           SENATE JUDICIARY COMMITTEE  :  5-2, 4/1/14
          AYES:  Jackson, Corbett, Lara, Leno, Monning
          NOES:  Anderson, Vidak


           SUBJECT  :    Local government:  Los Angeles County:  notice of  
          recordation

           SOURCE  :     Los Angeles County


           DIGEST  :    This bill extends, from January 1, 2015, to January  
          1, 2020, the authority of the Los Angeles County Recorder to  
          notify affected parties, including occupants of the property,  
          when a notice of default or notice of sale has been recorded on  
          a property.  The Los Angeles County Recorder may collect a fee  
          of up to $7 in order to cover the cost of notifying the parties  
          and providing information about housing assistance and  
          counseling.

           ANALYSIS  :    Existing law permits the Los Angeles County  
          Recorder (Recorder), upon the adoption of an authorizing  
          resolution by the Los Angeles Board of Supervisors (Board), to  
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          mail a notice to the party or parties executing a deed,  
          quitclaim deed, or deed of trust, within 30 days of recordation.  
           (Government Code [GOV] Section 27297.6.)

          Existing law provides that failure to provide the above notice  
          shall not result in any liability against the Recorder and the  
          county, and requires the Recorder to use a competitive bid  
          process if it contracts for the processing or mailing of the  
          notice.  (GOV Section 27297.6.)

          Existing law permits the Recorder to collect an additional fee  
          from the party filing a deed, quitclaim deed, or deed of trust,  
          to implement the above provision.  That fee shall not exceed the  
          mailing cost of the above notice, but in no case be greater than  
          $7. (GOV Section 27387.1.)

          Existing law requires the trustee, or authorized agent, that  
          represents the foreclosing financial institution to post and  
          mail a notice informing the residents of a property about a  
          pending foreclosure sale.  That notice informs residents that  
          the property may be sold at a foreclosure sale, the requirements  
          of an eviction notice, and that they may wish to contact a  
          lawyer or a local legal aid or housing counseling agency to  
          discuss any rights they may have.  (Civil Code Section 2924.8.)

          Existing law additionally permits the Recorder, upon adoption of  
          an authorizing resolution by the Board, to notify the party or  
          parties subject to a notice of default or notice of sale,  
          including the occupants of that property.  The Recorder must  
          notify those individuals by mail within five days, but in any  
          event no more than 20 days, of the recording of those documents.  
           (GOV Section 27297.6.)

          Existing law additionally authorizes the Recorder to collect an  
          additional fee from a party filing a notice of default or notice  
          of sale.  That fee, not to exceed seven dollars, shall not  
          exceed the mailing cost of the notice and the actual cost, if  
          any, to provide information, counseling, or assistance to a  
          person who receives the notice.  That fee may include specified  
          administrative costs to carry out the notification program, but  
          such administrative costs shall not exceed 10% of the total fee  
          collected.  (GOV Section 27387.1.)

          Existing law provides that the authority of the Recorder to  

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          notify parties of the recording of a notice of default or a  
          notice of sale, and to collect an additional fee from the party  
          recording the notice, shall remain in effect only until January  
          1, 2015, and as of that date shall be repealed, unless a later  
          enacted statute, that is enacted before January 1, 2015, deletes  
          or extends that date.  (GOV Section 27297.6.)

          Existing law requires the Board to submit a report to the Senate  
          Judiciary Committee and the Assembly Local Government Committee  
          that includes, but is not limited to, a copy of the type of  
          notices mailed, the number of recorded notices of default and  
          sale for which a fee was collected, the amount of fees  
          collected, and the amount of fees spent to provide housing  
          information, counseling, and assistance.  The report must be  
          submitted on or before January 1, 2014.  (GOV Section 27297.6.)

          This bill extends the authority of the Recorder to notify  
          parties of the recording of a notice of default or a notice of  
          sale, and to collect an additional fee from the party recording  
          the notice, to January 1, 2020.  The Recorder must notify the  
          party or parties subject to a notice of default or notice of  
          sale, including the occupants of that property by mail within  
          five days, but in any event no more than 14 days, of the  
          recording of those documents.


          This bill extends, until January 1, 2019, the date by which the  
          Board must submit a report to the Legislature containing the  
          following additional information:


           Documented examples showing how the county's homeowner  
            notification program led to successful investigations of real  
            estate fraud activity, referrals to prosecuting agencies,  
            avoided foreclosures, or helped property owners and residents  
            avoid falling victim to real estate fraud;


           An evaluation of whether the county's homeowner notification  
            program, in comparison to other available policy tools in Los  
            Angeles County, is a cost-effective approach to combating real  
            estate fraud and reducing foreclosures;



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           An evaluation of whether the county's homeowner notification  
            program is an effective way to inform tenants of an impending  
            foreclosure and to combat abusive post-foreclosure practices  
            by property owners; and

           An assessment of how the county's homeowner notification  
            program compares to real estate fraud and foreclosure  
            prevention programs being implemented in at least three other  
            large, urban California counties.

          Background
           
          Los Angeles County has, since 1992, operated a county-specific  
          "Homeowner Notification Program" that is designed to help combat  
          real estate fraud in Los Angeles County.  Under existing law,  
          the Recorder is authorized to collect a distinct fee from  
          parties that record certain documents evidencing the transfer of  
          title, specifically deeds, quitclaim deeds, and deeds of trust.   
          That fee is used to mail a notice of recordation to the party  
          that purportedly executed the document, and to fund a help line  
          at the Los Angeles County Department of Consumer Affairs (DCA)  
          that property owners who receive these notices can call to  
          receive information and assistance.  This notification program,  
          enacted in 1992 and renewed in 1996, seeks to address problems  
          related to forged real estate documents by notifying property  
          owners that their real estate is subject to a recently filed  
          document that could affect their property interests.  By  
          informing property owners about recently filed title transfer  
          documents, the notice allows these owners to contact law  
          enforcement if they suspect that the documents are fraudulent.

          The Homeowner Notification Program was expanded in 2012 to allow  
          the Recorder to also notify owners of a property (and occupants  
          of the home) when a notice of default or notice of sale is  
          recorded against the property.  Those documents signify either  
          the beginning of the non-judicial foreclosure process (notice of  
          default), or the announcement of the sale date (notice of sale),  
          which means that the home could be very close to being sold at  
          auction.   Although existing law mandates mailing or posting  
          several other statutory notices to both property owners and  
          tenants impacted by a non-judicial foreclosure, this additional  
          notice allows Los Angeles County to send region-specific  
          information to help affected individuals both become aware of  
          available resources, and aware of potential scams that may  

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          target owners of distressed properties.  As with the recording  
          of deeds, quitclaim deeds, and deeds of trust, the expanded  
          Homeowner Notification Program authorizes the Recorder to  
          collect a distinct fee from parties that record notices of  
          default and notices of sale in order to fund the program.  These  
          fees are used to cover the cost of mailing the notices as well  
          as to provide foreclosure avoidance assistance and housing  
          counseling via the DCA help line.  Authorization for this  
          expanded component of the Homeowner Notification Program is set  
          to expire on January 1, 2015.

           Comments
           
          The author writes:

            The home foreclosure crisis has created opportunities for  
            more fraudulent transactions, as well as displacing renters  
            who had no idea that the home they occupy was in the process  
            of foreclosure.  A Los Angeles County Real Estate  
            Fraud/Predatory Lending Task Force in 2009 made a series of  
            recommendations, including adding notices about default and  
            sale to the existing state law for the County. 

            The County has established the initial framework to  
            implement the SB 62 notice program, but the original bill  
            expires on January 1, 2015.  The County needs more time to  
            implement the notice program, given the size of Los Angeles  
            County and the large number of foreclosures.

            This bill will help prevent property sale fraud and protect  
            homeowners and renters in Los Angeles County.  When the  
            County records a notice of default or notice of sale for a  
            home, the occupants will receive a notice in the mail.  
            Residents will know that a home is being sold, foreclosed  
            on, or is possibly involved in a fraudulent transaction.

            This bill extends for five years the reporting requirements  
            and fraud-alert program authorized by SB 62, which Sen. Liu  
            authored in 2011.

           Prior Legislation  

          SB 62 (Liu, Chapter 141, Statutes of 2011) authorized the  
          Recorder to notify affected parties, including occupants of the  

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          property, when a notice of default or notice of sale has been  
          recorded on a property.  This bill permits the Recorder to  
          collect a fee of up to $7 in order to cover the costs of  
          notifying the parties and providing information about housing  
          assistance and counseling.  

          SB 878 (Liu, 2010) would have authorized a notification program  
          identical to that in SB 62 (Liu, Chapter 141, Statutes of 2011),  
          but was vetoed by Governor Schwarzenegger out of concern that  
          the proposed notices would be redundant.

          SB 1631 (Watson, Chapter 177, Statutes of 1996) reauthorized Los  
          Angeles County to notify property owners whenever a deed,  
          quitclaim deed, or deed of trust is recorded on their title.   
          This bill permitted the Recorder to collect a fee not to exceed  
          $7 from a party recording such deeds in order to fund the  
          notification program.

          SB 1842 (Watson, Chapter 815, Statutes of 1992) permitted the  
          Recorder, within 30 days of recordation of a deed, quitclaim  
          deed, or deed of trust, to notify by mail the party executing  
          the document.  This bill permitted the Recorder to collect a fee  
          not to exceed $10 from a party recording such deeds in order to  
          fund the notification program, and included a repeal provision  
          to sunset the bill on January 1, 1996.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

           SUPPORT  :   (Verified  4/8/14)

          Los Angeles County (source)
          California State Council of the Service Employees International  
          Union
          Consumer Federation of California
          Los Angeles County District Attorney's Office
          Los Angeles County Sheriff's Department
          Western Center on Law and Poverty


          AB:d  4/8/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE


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