Amended in Assembly January 4, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 244

Introduced by Assembly Member Eggman

(Coauthor: Assembly Member Brown)

February 9, 2015

An act to amend Section 2920.5 of the Civil Code, relating to mortgages and deeds of trust.

LEGISLATIVE COUNSEL’S DIGEST

AB 244, as amended, Eggman. Mortgages and deeds of trust: successors in interest.

Existing law imposes various requirements to be satisfied prior to exercising a power of sale under a mortgage or deed of trust. Existing law defines a mortgage servicer as a person or entity who directly services a loan, or is responsible for interacting with the borrower, and managing the loan account on a daily basis, as specified. Existing law defines a borrower, for purposes of specified provisions relating to mortgages and deeds of trust, as a natural person who is a mortgagor or trustor who is potentially eligible for any federal, state, or proprietary foreclosure prevention alternative program offered by, or through, his or her mortgage servicer.

This bill would include a successor in interest in the definition of a borrower for purposes of the eligibility provisions described above. The bill would define a successor in interest for these purposes as a natural person who provides the mortgage servicer with notification of the death of the mortgagor or trustor and reasonable documentation, as specified, showing that the person begin delete falls into one of four categories of successors, including a personal representative of the mortgagor’s or trustor’s estate or end delete begin insert is end insert a surviving spouse, as specified.

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 of the Civil Code, as added by
Section 2 of Chapter 87 of the Statutes of 2012, is amended to
read:

2920.5.  

For purposes of this article, the following definitions
apply:

(a) “Mortgage servicer” means a person or entity who directly
services a loan, or who is responsible for interacting with the
borrower, managing the loan account on a daily basis including
collecting and crediting periodic loan payments, managing any
escrow account, or enforcing the note and security instrument,
either as the current owner of the promissory note or as the current
owner’s authorized agent. “Mortgage servicer” also means a
subservicing agent to a master servicer by contract. “Mortgage
servicer” shall not include a trustee, or a trustee’s authorized agent,
acting under a power of sale pursuant to a deed of trust.

(b) “Foreclosure prevention alternative” means a first lien loan
modification or another available loss mitigation option.

(c) (1) (A) Unless otherwise provided and for purposes of
Sections 2923.4, 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10,
2924.11, 2924.18, and 2924.19, “borrower” means any natural
person who is a mortgagor or trustor, or who is the successor in
interest to the mortgagor or trustor following the death of the
mortgagor or trustor, and who is potentially eligible for any federal,
state, or proprietary foreclosure prevention alternative program
offered by, or through, his or her mortgage servicer.

(B) For purposes of this subdivision:

(i) “Successor in interest” means a natural person who provides
the mortgage servicer with begin delete notification end delete begin insert both of the following: end insert

begin insert (I) end insert begin insert   end insert begin insert Notification end insert of the death of the mortgagor or begin delete trustor and
reasonable end delete begin insert trustor. end insert

begin insert (II) end insert begin insert   end insert begin insert Reasonable end insert documentation showing that the person is begin delete one
of the following: end delete

begin delete

(I) The personal representative, as defined in Section 58 of
Probate Code, of the mortgagor’s or trustor’s estate.

end delete begin delete

(II) The surviving joint tenant of the mortgagor or trustor.

end delete

begin delete (III) end delete begin delete   end delete begin delete The end delete begin insert the end insert surviving spouse of the mortgagor or trustor if the
real property that secures the mortgage or deed of trust was held
as community property with right of survivorship pursuant to
Section 682.1 of the Civil Code.

begin delete

(IV) The trustee of the trust that owns the real property that
secures the mortgage or deed of trust or the beneficiary of that
trust.

end delete

(ii) “Notification of the death of the mortgagor or trustor” means
provision to the mortgage servicer of a death certificate or, if a
death certificate is not available, of other written evidence of the
death of the mortgagor or trustor deemed sufficient by the mortgage
servicer.

(iii) “Reasonable documentation” means begin delete copies of the following
documents, as may be applicable, end delete begin insert a copy of an affidavit of death
of the spouse or a deed showing community property with the right
of survivorship, end insert or, if the relevant documentation listed is not
available, other written evidence of the person’s status as successor
in interest to the real property that secures the mortgage or deed
of trust deemed sufficient by the mortgage begin delete servicer: end delete begin insert servicer. end insert

begin delete

(I) In the case of a personal representative, letters as defined in
Section 52 of Probate Code.

(II) In the case of a surviving joint tenant, an affidavit of death
of the joint tenant or a grant deed showing joint tenancy.

(III) In the case of a surviving spouse where the real property
was held as community property with right of survivorship, an
affidavit of death of the spouse or a deed showing community
property with right of survivorship.

(IV) In the case of a trustee of a trust, a certification of trust
pursuant to 18100.5 of the Probate Code.

(V) In the case of a beneficiary of a trust, relevant trust
documents related to the beneficiary’s interest.

end delete

(C) Designation of a successor in interest as a borrower for
purposes of this subdivision does not impose an affirmative duty
on a mortgage servicer to offer a loan modification to, or accept
an assumption of the loan by, the successor in interest and does
not alter any obligation the mortgage servicer may otherwise have
to accept an assumption of the loan by the successor in interest. If
a successor in interest assumes the loan, he or she may be required
to otherwise qualify for available foreclosure prevention
alternatives offered by the mortgage servicer.

(2) For purposes of the sections listed in paragraph (1),
“borrower” shall not include any of the following:

(A) An individual who has surrendered the secured property as
evidenced by either a letter confirming the surrender or delivery
of the keys to the property to the mortgagee, trustee, beneficiary,
or authorized agent.

(B) An individual who has contracted with an organization,
person, or entity whose primary business is advising people who
have decided to leave their homes on how to extend the foreclosure
process and avoid their contractual obligations to mortgagees or
beneficiaries.

(C) An individual who has filed a case under Chapter 7, 11, 12,
or 13 of Title 11 of the United States Code and the bankruptcy
court has not entered an order closing or dismissing the bankruptcy
case, or granting relief from a stay of foreclosure.

(d) “First lien” means the most senior mortgage or deed of trust
on the property that is the subject of the notice of default or notice
of sale.