BILL NUMBER: SB 1150	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Leno

                        FEBRUARY 18, 2016

   An act to add Section 2920.7 to the Civil Code, relating to
mortgages and deeds of trust.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1150, as introduced, Leno. Mortgages and deeds of trust:
mortgage servicers and lenders: 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.
   This bill would prohibit a mortgage servicer or lender, as
defined, upon notification that a borrower has died, from recording a
notice of default for at least 30 days after requesting reasonable
documentation of the death of the borrower from the successor in
interest, as defined. The bill would require the mortgage servicer or
lender to, among other things, contact the successor in interest in
person or by telephone in order to assess the successor's financial
situation and explore options for the successor to avoid foreclosure,
provide the successor in interest with information about loan
assumption options and foreclosure avoidance programs, and allow a
successor in interest to simultaneously apply to assume the deceased
borrower's loan and to apply to receive a loan modification. The bill
would authorize a successor in interest or the Attorney General to
bring an action to enforce these provisions, as provided.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 2920.7 is added to the Civil Code, to read:
   2920.7.  (a) Upon notification that a borrower has died, and where
a successor in interest is not a party to the loan or promissory
note, a mortgage servicer or lender shall not record a notice of
default pursuant to Section 2924 until that servicer or lender does
all of the following:
   (1) Requests reasonable documentation of the death of the borrower
from the successor in interest, including, but not limited to, a
death certification or other written evidence of the death of the
borrower.
   (2) Requests reasonable documentation of the status of a successor
in interest as such, and that successor's interest relation to the
real property.
   (3) Allows at least 30 days after receiving the information in
paragraph (1) before taking any further action on the loan.
   (4) Allows a successor in interest to simultaneously apply to
assume the deceased borrower's loan and to apply to receive a loan
modification.
   (5) Provides the successor in interest with a single point of
contact and provides the successor one or more direct means of
communication with the single point of contact.
   (6) (A) Provides the successor in interest with information about
loan assumption options and foreclosure avoidance programs.
   (B) The information in subparagraph (A) shall be provided in
Spanish, Chinese, Tagalog, Vietnamese, and Korean and shall include a
list of counselors certified by the United States Department of
Housing and Urban Development (HUD) that the successor may contact
for assistance.
   (7) (A) Contacts the successor in interest in person or by
telephone in order to assess the successor's financial situation and
explore options for the successor to avoid foreclosure. During the
initial contact, the mortgage servicer or lender shall advise the
successor that he or she has the right to request a subsequent
meeting and, if requested, the mortgage servicer or lender shall
schedule the meeting to occur within 14 days. The assessment of the
successor's financial situation and discussion of options may occur
during the first contact, or at the subsequent meeting scheduled for
that purpose. In either case, the successor shall be provided the
toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency. Any meeting may occur
telephonically.
   (B) A mortgage servicer's or lender's loss mitigation personnel
may participate by telephone during any contact required by this
section.
   (C) A successor in interest may designate, with consent given in
writing, a HUD-certified housing counseling agency, attorney, or
other advisor to discuss with the mortgage servicer or lender, on the
successor's behalf, the successor's financial situation and options
for the successor to avoid foreclosure. That contact made at the
direction of the successor shall satisfy the contact requirements of
this paragraph. Any loan modification or workout plan offered at the
meeting by the mortgage servicer or lender is subject to approval by
the successor.
   (8) If a mortgage servicer or lender is unable to contact a
successor in interest pursuant to paragraph (7), the mortgage
servicer or lender shall alternatively do all of the following:
   (A) Attempt to contact a successor in interest by sending a
first-class letter that includes the toll-free telephone number made
available by HUD to find a HUD-certified housing counseling agency.
   (B) (i) After the letter has been sent, the mortgage servicer or
lender shall attempt to contact the borrower by telephone at least
three times at different hours and on different days. Telephone calls
shall be made to the primary telephone number on file.
   (ii) A mortgage servicer or lender may attempt to contact a
successor in interest using an automated system to dial successors in
interest, provided that, if the telephone call is answered, the call
is connected to a live representative of the mortgage servicer or
lender.
   (iii) A mortgage servicer or lender satisfies the telephone
contact requirements of this subparagraph if it determines, after
attempting contact pursuant to this subparagraph, that the successor'
s primary telephone number and secondary telephone number or numbers
on file, if any, have been disconnected.
   (C) If the successor in interest does not respond within two weeks
after the telephone call requirements of subparagraph (B) have been
satisfied, the mortgage servicer or lender shall then send a
certified letter, with return receipt requested.
   (D) Provide a means for the successor in interest to contact it in
a timely manner, including a toll-free telephone number that will
provide access to a live representative during business hours.
   (E) Post a prominent link on the homepage of its Internet Web
site, if any, to the following information:
   (i) Options that may be available to a successor in interest to
avoid foreclosure, and instructions to a successor advising him or
her on steps to take to explore those options.
   (ii) A list of financial documents successor in interest should
collect and be prepared to present to the mortgage servicer or lender
when discussing options for avoiding foreclosure.
   (iii) A toll-free telephone number for a successor in interest who
wishes to discuss options for avoiding foreclosure with a mortgage
servicer or lender.
   (iv) The toll-free telephone number made available by HUD to find
a HUD-certified housing counseling agency.
   (b) For purposes of this section, all of the following definitions
shall apply:
   (1) "Lender" means a finance lender or broker licensed under the
California Finance Lenders Law (Division 9 (commencing with Section
22000) of the Financial Code), a residential mortgage lender licensed
under the California Residential Mortgage Lending Act (Division 20
(commencing with Section 50000) of the Financial Code), a commercial
or industrial bank organized under the Banking Law (Division 1
(commencing with Section 99) of the Financial Code), a savings
association organized under the Savings Association Law (Division 2
(commencing with Section 5000) of the Financial Code), and a credit
union organized under the California Credit Union Law (Division 5
(commencing with Section 14000) of the Financial Code).
   (2) "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.
   (3) "Reasonable documentation" means copies of the following
documents, as may be applicable, 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
servicer:
   (A) In the case of a personal representative, letters as defined
in Section 52 of Probate Code.
   (B) In the case of a surviving joint tenant, an affidavit of death
of the joint tenant or a grant deed showing joint tenancy.
   (C) 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.
   (D) In the case of a trustee of a trust, a certification of trust
pursuant to Section 18100.5 of the Probate Code.
   (E) In the case of a beneficiary of a trust, relevant trust
documents related to the beneficiary's interest.
   (4) (A) "Successor in interest" means a natural person who
provides the mortgage servicer with notification of the death of the
mortgagor or trustor and reasonable documentation showing that the
person is any of the following:
   (i) The personal representative, as defined in Section 58 of
Probate Code, of the mortgagor's or trustor's estate.
   (ii) The surviving joint tenant of the mortgagor or trustor.
   (iii) The 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.
   (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.
   (B) Designation of a successor in interest for purposes of this
subdivision does not impose an affirmative duty on a mortgage
servicer or lender 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 or lender 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 or lender.
   (c) (1) (A) If a trustee's deed upon sale has not been recorded, a
successor in interest may bring an action for injunctive relief to
enjoin a material violation of this section.
   (B) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer or lender has corrected and remedied the violation or
violations giving rise to the action for injunctive relief. An
enjoined entity may move to dissolve an injunction based on a showing
that the material violation has been corrected and remedied.
   (2) After a trustee's deed upon sale has been recorded, a mortgage
servicer or lender shall be liable to a successor in interest for
actual economic damages pursuant to Section 3281 resulting from a
material violation of this section.
   (3) The Attorney General may bring a civil action in the name of
the people to obtain appropriate equitable and declaratory relief
whenever the Attorney General has reasonable cause to believe that a
violation of this section has occurred.