BILL NUMBER: AB 1588 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY FEBRUARY 11, 2010
INTRODUCED BY Assembly Members Bass, Lieu, and Nava
SEPTEMBER 9, 2009
An act to amend Section 2923.5 of, and to add Article
1.7 (commencing with Section 2946) to Chapter 2 of Title 14 of Part 4
of Division 3 of the Civil Code, relating to mortgage defaults, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1588, as amended, Bass. Monitored Mortgage Workout Program.
(1) Upon a breach of the obligation of a mortgage or transfer of
an interest in property, existing law requires the trustee,
mortgagee, or beneficiary to record in the office of the county
recorder wherein the mortgaged or trust property is situated, a
notice of default, and to mail the notice of default to the borrower
named on the mortgage instrument. Existing law requires the notice to
contain specified statements, including, but not limited to, those
related to the borrower's legal rights, as specified.
This bill would establish the Monitored Mortgage Workout (MMW)
Program that would be offered to all borrowers to provide them with
an opportunity to explore options to avoid foreclosure. This bill
would require that any notice of default of a residential real
property, as defined, sent to a borrower include a notice of the
borrower's right to participate in the MMW Program as well as the
documents that authorize the borrower to elect to participate in the
MMW Program. This bill would authorize the California
Housing Finance Agency provide for the appointment, by
the Governor, subject to confirmation by the Senate, of an
administrator to administer implement
the MMW Program. This bill would require the administrator
of the MMW Program to provide quarterly reports to the Legislature
with specified information regarding the performance of the MMW
Program.
This bill would provide that, if a borrower elects to participate
in the MMW Program, no further action to foreclose upon the property
may be instituted until the completion of the borrower's
participation in the MMW Program.
(2) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2923.5 of the Civil
Code is amended to read:
2923.5. (a) (1) A mortgagee, trustee, beneficiary, or authorized
agent may not file a notice of default pursuant to Section 2924 until
30 days after initial contact is made as required by
paragraph paragraphs (2) and (3) or
30 days after satisfying the due diligence requirements as described
in subdivision (g).
(2) (A) A mortgagee, beneficiary, or authorized agent shall inform
the borrower, via certified mail accompanying a notice of
delinquency, that the borrower may request to participate in the
Mediated Mortgage Workout Program under Article 1.7 (commencing with
Section 2946) of this title. The notice shall include, in bold font,
the telephone number, e-mail address, and Internet Web site for the
administrator of the Mediated Mortgage Workout Program.
(B) (i) A borrower shall have 30 days from receipt of the notice
to request participation in the Mediated Mortgage Workout Program.
(ii) If a borrower chooses to participate in the Mediated Mortgage
Workout Program the requirements in paragraph (3) shall be deemed to
be completed.
(2)
(3 ) A mortgagee, beneficiary, or authorized
agent shall contact the borrower in person or by telephone in order
to assess the borrower's financial situation and explore options for
the borrower to avoid foreclosure. During the initial contact, the
mortgagee, beneficiary, or authorized agent shall advise the borrower
that he or she has the right to request a subsequent meeting and, if
requested, the mortgagee, beneficiary, or authorized agent shall
schedule the meeting to occur within 14 days. The assessment of the
borrower'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 borrower shall be provided the
toll-free telephone number made available by the United States
Department of Housing and Urban Development (HUD) to find a
HUD-certified housing counseling agency. Any meeting may occur
telephonically.
(b) A notice of default filed pursuant to Section 2924 shall
include a declaration that the mortgagee, beneficiary, or authorized
agent has contacted the borrower, has tried with due diligence to
contact the borrower as required by this section, or that no contact
was required pursuant to subdivision (h).
(c) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment of this
section and did not subsequently file a notice of rescission, then
the mortgagee, trustee, beneficiary, or authorized agent shall, as
part of the notice of sale filed pursuant to Section 2924f, include a
declaration that either:
(1) States that the borrower was contacted to assess the borrower'
s financial situation and to explore options for the borrower to
avoid foreclosure.
(2) Lists the efforts made, if any, to contact the borrower in the
event no contact was made.
(d) A mortgagee's, beneficiary's, or authorized agent's loss
mitigation personnel may participate by telephone during any contact
required by this section.
(e) For purposes of this section, a "borrower" shall include a
mortgagor or trustor.
(f) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other advisor
to discuss with the mortgagee, beneficiary, or authorized agent, on
the borrower's behalf, the borrowers financial situation and options
for the borrower to avoid foreclosure. That contact made at the
direction of the borrower shall satisfy the contact requirements of
paragraph (2) of subdivision (a). Any loan modification or workout
plan offered at the meeting by the mortgagee, beneficiary, or
authorized agent is subject to approval by the borrower.
(g) A notice of default may be filed pursuant to Section 2924 when
a mortgagee, beneficiary, or authorized agent has not contacted a
borrower as required by paragraph (2) of subdivision (a) provided
that the failure to contact the borrower occurred despite the due
diligence of the mortgagee, beneficiary, or authorized agent. For
purposes of this section, "due diligence" shall require and mean all
of the following:
(1) A mortgagee, beneficiary, or authorized agent shall first
attempt to contact a borrower 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.
(2) (A) After the letter has been sent, the mortgagee,
beneficiary, or authorized agent 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.
(B) A mortgagee, beneficiary, or authorized agent may attempt to
contact a borrower using an automated system to dial borrowers,
provided that, if the telephone call is answered, the call is
connected to a live representative of the mortgagee, beneficiary, or
authorized agent.
(C) A mortgagee, beneficiary, or authorized agent satisfies the
telephone contact requirements of this paragraph if it determines,
after attempting contact pursuant to this paragraph, that the
borrower's primary telephone number and secondary telephone number or
numbers on file, if any, have been disconnected.
(3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgagee, beneficiary, or authorized agent shall then send a
certified letter, with return receipt requested.
(4) The mortgagee, beneficiary, or authorized agent shall provide
a means for the borrower to contact it in a timely manner, including
a toll-free telephone number that will provide access to a live
representative during business hours.
(5) The mortgagee, beneficiary, or authorized agent has posted a
prominent link on the homepage of its Internet Web site, if any, to
the following information:
(A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
(B) A list of financial documents borrowers should collect and be
prepared to present to the mortgagee, beneficiary, or authorized
agent when discussing options for avoiding foreclosure.
(C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgagee, beneficiary,
or authorized agent.
(D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
(h) Subdivisions (a), (c), and (g) shall not apply if any of the
following occurs:
(1) The borrower has surrendered the 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.
(2) The borrower 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.
(3) A case has been filed by the borrower 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.
(4) The borrower has completed participation in the Mediated
Mortgage Workout Program and participation did not result in a
mortgage loan modification, or other result mutually agreed to by the
borrower and the mortgagee, trustee, beneficiary, or authorized
agent.
(i) This section shall apply only to mortgages or deeds of trust
recorded from January 1, 2003, to December 31, 2007, inclusive, that
are secured by owner-occupied residential real property containing no
more than four dwelling units. For purposes of this subdivision,
"owner-occupied" means that the residence is the principal residence
of the borrower as indicated to the lender in loan documents.
(j) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
SECTION 1. SEC. 2. Article 1.7
(commencing with Section 2946) is added to Chapter 2 of Title 14 of
Part 4 of Division 3 of the Civil Code, to read:
Article 1.7 Monitored Mortgage Workout Program
2946. This article shall apply to notices of default sent,
pursuant to Section 2924, to an owner of a residential real estate
property.
2946.1. In addition to the information required to be included in
a notice of default sent, pursuant to Section 2924, to a borrower of
residential real property subject to this chapter, the notice shall
also include all of the following:
(a) (1) A separate notice, entitled the Monitored Mortgage Workout
Program (MMW Program), advising the borrower of the right to
participate in a monitored mortgage workout program to explore
options for the borrower to avoid foreclosure. This notice and all of
the documents required to be included with the notice of default
shall be printed in large bold font and shall be printed in English,
Spanish, Chinese, Tagalog, and Korean. This separate notice shall be
sent to the borrower and to all other persons that have an ownership
interest in the residential real property.
(2) This separate notice shall explain the requirements for
participation in the MMW Program and shall advise the borrower of the
procedures that are to be followed to make an election to
participate in the program.
(3) This separate notice shall include the name, address,
telephone number, facsimile number, and e-mail address of two or more
local housing counseling agencies that are approved by the United
States Department of Housing and Urban Development. The notice shall
advise the borrower that private loan counselors are prohibited from
collecting an advance fee.
(b) Three copies of an election form upon which the borrower may
indicate his or her election to either participate in, or waive
participation in, the MMW Program.
(c) Two separate envelopes, one addressed to the trustee and one
addressed to the California Housing Finance Agency, for use by the
borrower to advise the trustee and the agency of the borrower's
election to participate in the MMW Program.
2946.2. For purposes of this article:
(a) "Agency" means the California Housing Finance Agency.
(b) "Borrower" includes a mortgagor, trustor, or owner of the
residential real estate property described in the notice of default
sent pursuant to Section 2924.
(c) "Residential real estate property" means residential real
property consisting of one- to four-family dwelling units.
(d) "Trustee" means the lender, mortgagee, trustee, beneficiary,
or authorized agent that filed the notice of default authorized by
Section 2924.
2946.3. (a) If the borrower elects to participate in the MMW
Program, the borrower shall complete the election form and mail a
copy of the election to the trustee and to the agency not later than
thirty calendar days after receipt of the notice of default. The
election form shall be sent by certified mail, return receipt
requested.
(b) Once a borrower has elected to participate in the MMW Program
no further action may be taken to exercise the power of sale until
completion of all sessions under the MMW Program.
2946.4. (a) The agency shall compile a list of qualified monitors
to facilitate the MMW Program and shall make this list available on
the agency's Internet Web site.
(b) In order to be eligible to be placed on the list of qualified
monitors, an individual shall have a minimum of four years
experience in real estate litigation, including experience as a
mediator, and shall have received formal training, or be able to
document professional experience with federal loan modification
guidelines.
(c) A monitor shall be compensated for his or her services in an
amount not to exceed seven hundred fifty dollars ($750). The
compensation shall initially be paid by the trustee and, in the event
that the mortgage loan is modified, the borrower shall reimburse the
trustee for one-half of the total compensation paid to the monitor.
(d) The agency shall encourage the State Bar of California to
allow mandatory continuing legal education program (MCLE) credits to
those qualified monitors who are members of the California State Bar
Association.
2946.5. (a) Upon receipt of a borrower's election to participate
in the MMW Program the executive director of the agency shall select
an individual from a list of qualified monitors to act as the monitor
for the borrower and the trustee. The monitor shall contact the
parties within 15 days of his or her appointment to schedule the
first session of the monitored workout program.
(b) The executive director of the agency shall notify the trustee
of the borrower's election to participate in the MMW Program within
15 days of the selection of the monitor. The trustee shall deposit a
fee of two hundred fifty dollars ($250) with the agency within 10
days of the executive director's notification of the borrower's
election. In the event that the mortgage loan is modified, as part of
the modification plan, the borrower shall be required to pay the
lender one hundred twenty-five dollars ($125) as partial
reimbursement of this fee.
2946.6. The borrower is not eligible to participate in the MMW
Program until the borrower has established a trust account with an
FDIC-insured bank or credit union in an amount equal to 60 percent of
the monthly payment established under the mortgage agreement. The
borrower shall make additional monthly deposits equal to 60 percent
of the monthly payment established under the mortgage during the
period that the borrower participates in the program. If the borrower
fails to establish and maintain this account on or before the date
of the first session of the MMW Program, the borrower's election
shall be deemed to be canceled and the MMW Program shall be deemed to
be completed for purposes of subdivision (b) of Section 2946.3.
2946.7. (a) The borrower shall bring all of the following
documents to the first scheduled session of the MMW Program:
(1) Bank statements verifying the creation and maintenance of the
trust account required by Section 2946.6.
(2) Tax returns filed for the prior tax year.
(3) Payroll verification for the previous two months from all
family members of the borrower's household.
(4) Return receipts verifying the borrower's notice of election
sent to the trustee and the agency as required by subdivision (a) of
Section 2946.3.
(b) The borrower may be represented by a person with complete
authority to bind the borrower, as evidenced by the borrower's
written authorization for that person's representation.
(c) If the monitor determines that the borrower has failed to
meaningfully participate in the MMW Program or has otherwise failed
to act in good faith, the monitor shall issue a final report to all
parties advising them that, based on the borrower's noncompliance,
the MMW Program is deemed to be completed for purposes of subdivision
(b) of Section 2946.3. If the borrower is able to demonstrate his or
her ability to continue with the program within 10 days of the
issuance of the final report, the monitor may rescind the final
report and continue with the MMW Program sessions.
2946.8. (a) The trustee may be represented by a person with
complete authority to bind the trustee, as evidenced by the trustee's
written authorization for that person's representation.
(b) If the monitor determines that the trustee has failed to
meaningfully participate in the MMW Program, has rejected a loan
modification that satisfies loan modification guidelines currently in
effect in this state, or has otherwise failed to act in good faith,
the monitor shall notify the agency of this finding and the borrower
shall be authorized to initiate legal proceedings in accordance with
Section 2946.11. If the borrower initiates legal proceedings in
accordance with Section 2946.11, the monitor shall prepare a loan
modification proposal as required by Section 2946.10.
2946.9. (a) The monitor shall use reasonable efforts to ensure
that each MMW Program is completed within 60 calendar days of the
monitor's appointment.
(b) The monitor shall be responsible for facilitating
communications between the borrower and the trustee.
(c) All reports prepared by the monitor in conjunction with the
MMW Program shall be subject to discovery under the Evidence Code.
(d) If the monitor fails to use reasonable efforts or fails to
participate in good faith, the parties shall promptly notify the
agency. If the agency determines that the monitor has failed to use
reasonable efforts or has failed to participate in good faith, the
agency shall appoint a new monitor to facilitate the MMW Program
sessions.
2946.10. (a) At the conclusion of the MMW Program sessions, the
monitor shall prepare a loan modification proposal that may include
any or all of the following features:
(1) An interest rate reduction for a fixed term of at least five
years.
(2) An extension of the mortgage term, not to exceed 40 years from
the original date of the loan.
(3) Deferral of a portion of the principal amount of the unpaid
principal balance until maturity of the loan.
(4) Reduction of the principal balance.
(5) Compliance with a federally mandated loan modification
program.
(b) A copy of the loan modification proposal shall be distributed
to the parties for agreement. If the borrower does not accept the
loan modification proposal within 15 days of receipt, the borrower's
election to participate in the program shall be deemed to be canceled
and the program shall be deemed to be completed for purposes of
subdivision (b) of Section 2946.3. If the borrower accepts the
proposal, the terms of the proposal shall have immediate effect.
2946.11. If the trustee rejects the monitor's loan modification
proposal or if the monitor has made a determination that the trustee
has failed to meaningfully participate in the MMW Program, or has
failed to act in good faith the borrower may institute an action in
superior court seeking to enforce the monitor's loan modification
proposal. The court shall enforce the terms of the loan modification
proposal in an expedited proceeding, provided that the borrower's
trust account, as required by Section 2946.6, remains current and the
borrower has verified that his or her income is substantially the
same as it was during the MMW Program sessions. The court shall award
attorney's fees and costs to the prevailing party.
2946.12. If the borrower does not accept the loan modification
proposal, the trustee may proceed with the foreclosure proceedings
authorized by this chapter.
2946. This article shall apply to loans secured by residential
real property used as the primary residence of the borrower and for
which a notice of default has been filed pursuant to Section 2924.
2946.1. (a) In addition to the information required to be
included in a notice of default sent, pursuant to Section 2924, to a
borrower of residential real property subject to this chapter, the
notice shall also include all of the following:
(1) A separate notice, entitled "Opportunity to Meet Face to Face
with Your Lender/Servicer and a Neutral Professional in a Mediated
Mortgage Workout Program," advising the borrower of his or her right
to participate in a Mediated Mortgage Workout Program (MMW Program)
to explore options for the borrower to avoid foreclosure. This notice
and all of the documents required to be included with the notice of
default shall be printed in large, bold font and shall be printed in
English, Spanish, Chinese, Tagalog, and Korean. This separate notice
shall be sent to the borrower and to all other persons that have an
ownership interest in the residential real property. This notice
shall be recorded along with the notice of default, in the office of
the appropriate county recorder.
(2) This separate notice shall explain the requirements for
participation in the MMW Program and shall advise the borrower of the
procedures that are to be followed to make an election to
participate in the program.
(3) This separate notice shall include the name, address,
telephone number, facsimile number, and e-mail address of the
mortgagee, trustee, beneficiary, or authorized agent, and the
administrator of the MMW Program, as well as two or more local
housing counseling agencies that are approved by the United States
Department of Housing and Urban Development. The notice shall advise
the borrower that loan counselors are prohibited from collecting an
advance fee.
(b) Three copies of an election form, in a form as developed and
approved by the administrator of the MMW Program, upon which the
borrower may indicate his or her election to either participate in,
or waive participation in, the MMW Program.
(c) Two separate envelopes, one addressed to the mortgagee,
trustee, beneficiary, or authorized agent and one addressed to the
administrator of the MMW Program, for use by the borrower to advise
the mortgagee, trustee, beneficiary, or authorized agent and the
administrator of the borrower's election to participate in the MMW
Program.
2946.2. For purposes of this article:
(a) "Administrator" means the administrator of the MMW Program.
(b) "Borrower" includes a mortgagor, trustor, or owner of the
residential real estate property described in the notice of default
sent pursuant to Section 2924.
(c) "Meaningful participation" includes all of the following,
(1) Attendance at all mediation sessions.
(2) Presentation of all required documents.
(3) The offering and acceptance of a loan modification or other
mutually acceptable outcome between the mortgagee, trustee,
beneficiary, or authorized agent and borrower when, based on the
documentation, is in the best interest of the parties.
(d) "Residential real estate property" means residential real
property consisting of one- to four-family dwelling units.
2946.3. (a) If the borrower elects to participate in the MMW
Program, the borrower shall complete the election form and mail a
copy of the election to the mortgagee, trustee, beneficiary, or
authorized agent and to the administrator not later than 30 calendar
days after receipt of the notice of default. The election form shall
be sent by certified mail, return receipt requested.
(b) The administrator may allow for the election to participate in
the MMW Program through an Internet Web site, e-mail form, or
telephonic means. The administrator shall maintain a platform that
responsibly records and gives the borrower a receipt of election to
participate under recognizable standards for recording and storing
critical electronic information.
(c) Once a borrower has elected to participate in the MMW Program,
the timeliness set forth in Section 2924 shall be tolled and no
further action may be taken to exercise the power of sale until the
completion of the MMW Program, as evidenced by the mediator's final
report as described in Section 2946.12.
2946.4. (a) The administrator of the MMW Program shall be
appointed by the Governor and confirmed by the Senate.
(b) The administrator shall have the authority to do the following
in order to carry out this article:
(1) Implement rules and standards for choosing qualified
mediators.
(2) Implement rules and standards for the removal of mediators for
good cause.
(3) Develop standards for forms and reports, as may be required to
implement the MMW Program.
(4) Require or design additional training for mediators to meet
the goals of this article.
2946.5. (a) A mediator shall be compensated for his or her
services at the hourly rate of one hundred fifty
dollars ($150) and in an amount not to
exceed seven hundred fifty dollars ($750), up to a maximum of two
cases per day. The compensation shall initially be paid by the
mortgagee, trustee, beneficiary, or authorized agent and, in the
event that the mortgage loan is modified, the borrower shall
reimburse the mortgagee, trustee, beneficiary, or authorized agent
for one-half of the total compensation paid to the mediator. The
borrower's share of the mediator's fees may be added to the principal
balance of the loan if requested by the borrower. In the event that
the parties' efforts to modify the loan fail and the property is
sold, the mortgagee, trustee, beneficiary, or authorized agent,
alone, shall be responsible for the expense of the mediator's fees.
(b) The administrator shall encourage the State Bar of California
to allow mandatory continuing legal education program (MCLE) credits
to those qualified mediators who are members of the California State
Bar Association for completion of the training required to
participate in this program.
2946.6. (a) Upon receipt of a borrower's election to participate
in the MMW Program the administrator shall select an individual from
a list of qualified mediators to act as the mediator for the borrower
and the mortgagee, trustee, beneficiary, or authorized agent. The
mediator shall contact the parties within 15 days of his or her
appointment to schedule the first session of the MMW Program.
(b) (1) The administrator shall notify the mortgagee, trustee,
beneficiary, or authorized agent of the borrower's election to
participate in the MMW Program within 15 days of receipt of the
borrower's election to participate in the program. The mortgagee,
trustee, beneficiary, or authorized agent shall deposit a fee of five
hundred ($500) with the administrator within 10 days of the
administrator's notification of the borrower's election. In the event
that the mortgage loan is modified, as part of the modification
plan, the borrower shall reimburse the mortgagee, trustee,
beneficiary, or authorized agent two hundred fifty dollars ($250) as
partial reimbursement of this fee according to the same terms as set
forth in subdivision (a) of Section 2946.5. In the event that the
parties' efforts to modify the loan fail and the property is sold by
the mortgagee, trustee, beneficiary, or authorized agent, the
mortgagee, trustee, beneficiary or authorized agent, alone, shall be
responsible for the program fee.
(2) Failure of the mortgagee, trustee, beneficiary, or authorized
agent to deposit the fee within 10 days of the administrator's
notification of the borrower's election to participate shall result
in a stay of foreclosure proceedings and delay of MMW Program until
such time as the fee is deposited with an additional penalty of one
hundred dollars ($100) per day that the fee was not deposited past
the deadline.
2946.7. Any borrower who elects to participate in the MMW
Program, after a notice of default has been filed, shall establish an
account, or use an existing account with an FDIC-insured bank or
credit union for the deposit of 50 percent of the current mortgage
payment in that account every month during participation in the MMW
Program. The first monthly deposit shall be made before the first
session of the MMW Program. If the borrower fails to substantially
comply with these terms, the borrower's election shall be deemed to
be canceled and the MMW Program shall be deemed to be completed for
purposes of subdivision (c) of Section 2946.3. Under no circumstances
shall the mortgagee, trustee, beneficiary, or authorized agent have
any right to or interest in the funds or funds that may accrue in the
borrower's account, which shall, at all times, remain the property
of the borrower.
2946.8. A borrower who participates in the MMW Program shall not
be required, as a condition of participation, or as a condition of
acceptance of a modification to waive any rights and remedies that
may otherwise be available.
2946.9. The borrower and mortgagee, trustee, beneficiary, or
authorized agent shall engage in meaningful participation during the
MMW Program.
2946.10. (a) The borrower shall bring all of the following
documents to the first scheduled session of the MMW Program:
(1) Bank statements verifying the creation and maintenance of the
account required by Section 2946.7.
(2) Tax returns filed for the prior tax year.
(3) Payroll or other income verification for the previous two
months.
(b) The mortgagee, trustee, beneficiary, or authorized agent shall
bring all of the following documents to the first scheduled session
of the MMW Program:
(1) The applicable Pooling and Service Agreement, if any.
(2) The loan application, loan origination documents, appraisal,
and payment history.
(3) The original note and assignments or certificate regarding a
lost document.
(4) Documentary evidence of current ownership or chain of custody
of the mortgage note.
(5) The net present value formula that the mortgagee, trustee,
beneficiary, or authorized agent uses.
(c) Both borrower and mortgagee, trustee, beneficiary, or
authorized agent shall attend the MMW Program sessions in person. In
the event of exigent circumstances, the mediator may allow either
party to be represented by a person with a power of attorney or other
written authorization to represent and bind such party. In addition,
each party may be represented by an attorney or housing counselor.
However, no attorney, other representative, or loan counselor
appearing on behalf of the borrower may receive an advance fee for
any services rendered in connection with the MMW Program.
(d) No request for a continuance of a MMW Program session may be
granted, except upon showing of extraordinary circumstances. A
request shall be made to the presiding mediator detailing the
extraordinary circumstances that require the continuance.
(e) The borrower and mortgagee, trustee, beneficiary, or
authorized agent shall endeavor to agree on the terms of a reasonable
loan modification that satisfies the FDIC net present value test or
a comparable net present value test. The parties shall be guided by
federal and other generally accepted loan modification methodologies
which include any or all of the following features:
(1) An interest rate reduction for a fixed term of at least five
years.
(2) An extension of the mortgage term, not to exceed 40 years from
the original date of the loan.
(3) Deferral of a portion of the principal amount of the unpaid
principal balance until maturity of the loan.
(4) Reduction of the principal balance.
(5) Compliance with a federally mandated loan modification
program.
(6) Other alternatives that may reduce the borrower's monthly
payment to 31 percent or less of their debt-to-income ratio and that
are designed to meet long-term sustainability for the borrower.
(7) Nothing in this section shall be construed to prevent a
creditor from offering or accepting alternatives in writing to
foreclosure, such as a short sale or deed-in-lieu of foreclosure, but
only if the borrower requests these alternatives, rejects a loan
modification offered pursuant to this section, or does not qualify
for a loan modification pursuant to this section.
(f) If a borrower has failed to meaningfully participate in the
MMW Program the MMW Program shall be deemed to be completed for
purposes of subdivision (c) of Section 2946.3. If the borrower cures
the noncompliance to the satisfaction of the mediator within 10 days
of notice of failure to comply the mediator shall rescind suspension
of the mediation sessions and continue with MMW Program.
(g) If a mortgagee, trustee, beneficiary, or authorized agent
fails to meaningfully participate in the MMW Program, the MMW Program
shall be suspended. During the suspension of the program for failure
to meaningfully participate, the mortgagee, trustee, beneficiary, or
authorized agent may not pursue further foreclosure actions until
the time that the mortgagee, trustee, beneficiary, or authorized
agent cures the noncompliance.
2946.11. The mediator shall use reasonable efforts to ensure that
each MMW Program is completed within 60 calendar days of the
mediator's appointment.
2946.12. (a) The mediator's final report shall describe the basic
terms of the loan at issue, including the principal balance and
arrearages. The final report shall state whether the borrower was
offered a loan modification meeting the conditions of subdivision (e)
of Section 2946.10, or any other mutually acceptable resolution.
(b) The final report shall be sent by first-class mail or via
electronic means to the borrower, mortgagee, trustee, beneficiary, or
authorized agent, and the administrator and shall include a
statement that the MMW Program has been completed.
2946.13. (a) The administrator shall report quarterly to the
Legislature regarding the performance of the MMW Program, that shall
include the following information:
(1) The number of homeowners who attend mediation prior to notice
of default.
(2) The number of homeowners who attend mediation after receiving
a notice of default.
(3) The number of mediations suspended because of lack of
meaningful participation by the borrower.
(4) The number of mediations suspended because of lack of
meaningful participation on the part of mortgagee, trustee,
beneficiary, or authorized agents.
(5) The number of mediations that result in a loan modification.
(6) The number of mediations that result in a solution other than
a loan modification.
(b) The servicers participating in the MMW Program shall post
public data reports on a quarterly basis on their Internet Web sites
detailing the following:
(1) The number of borrower's loans that have been modified through
the MMW Program and the type of modification.
(2) The final disposition of borrowers' loans that were in the MMW
Program but not modified.
(3) The final disposition of borrowers' loans that did not
participate in the MMW Program.
(4) Projections of loans eligible for federal loan modification
programs.
(5) Information regarding loans in a portfolio or serviced for
others categorized by product type, for example prime, subprime, and
nontraditional, for the following:
(A) The type of loans in portfolio serviced by others, delineated
by prime, subprime, and nontraditional.
(B) The loans in a portfolio or serviced by others that are
securitized.
(C) The number of home retention actions.
(D) Re-Default Rates for portfolio loans and loans serviced for
others.
(E) The default rates for portfolio loans and loans serviced for
others.
(F) The default rates of loans modified in 2008 by changes in
payment.
(G) Newly initiated home retention actions compared with
foreclosure actions.
(H) Completed foreclosures and other home forfeiture actions.
(I) The overall portfolio performance by percentage.
(J) The performance of government-guaranteed loans, by percentage.
(K) The performance of GSE loans, by percentage.
(L) Seriously delinquent mortgages, by percentage.
(M) HAMP Actions by investor and risk category.
(N) Changes in loan terms made by modifications made during 2009.
(O) Changes in monthly principal and interest payments owing to
modification, by the number of modifications.
(P) The number of modified loans, 30 or more days delinquent.
(Q) The number of modified loans, 60 or more days delinquent.
(R) The number of modified loans, 90 or more days delinquent.
2946.14. A mortgagee, trustee, beneficiary, or authorized agent
shall not report negative credit information about a consumer who has
received a loan modification to a credit reporting agency if the
consumer has successfully participated in the MMW Program and has
achieved a mortgage loan modification.
2946.15. A consumer shall not be responsible for fees, late
payment charges, or other monetary penalties during the time when the
MMW Program or final report is pending.
SEC. 2. SEC. 3. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to stabilize and protect state and local economies and
the housing market at the earliest possible time, it is necessary for
this act to take effect immediately.