BILL NUMBER: SB 1275 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 8, 2010
INTRODUCED BY Senators Leno and Steinberg
FEBRUARY 19, 2010
An act to amend Section 2923.5 of, and to add and repeal Sections
2923.4, 2923.7, 2923.73, and 2923.75 of, the Civil Code, relating to
mortgages.
LEGISLATIVE COUNSEL'S DIGEST
SB 1275, as amended, Leno. Mortgages: foreclosures.
Existing law requires that, upon a breach of the obligation of a
mortgage or transfer of an interest in property, the trustee,
mortgagee, or beneficiary record a notice of default in the office of
the county recorder where the mortgaged or trust property is
situated and mail the notice of default to the mortgagor or trustor.
Existing law provides that, after not less than 3 months after the
filing of the notice of default, the parties described above may give
notice of sale, stating the time and place of the sale, as
specified.
Existing law requires , until January 1, 2013,
and as applied to mortgages and deeds of trust recorded between
January 1, 2003, and December 31, 2007, that are secured by
owner-occupied residential real property containing no
more than 4 dwelling units, requires a mortgagee, trustee,
beneficiary, or authorized agent to contact the borrower, as defined,
prior to filing a notice of default, in order to assess the borrower'
s financial situation and explore options for the borrower to avoid
foreclosure. Existing law requires the notice of default to include a
specified declaration from the mortgagee, beneficiary, or authorized
agent regarding its contact with the borrower.
This bill would, until January 1, 2013, extend those
requirements to apply to mortgages or deeds of trust recorded prior
to January 1, 2009, that are secured by owner-occupied residential
real property containing no more than 4 dwelling units. The bill
would require a mortgagee, trustee, beneficiary, or authorized
agent, within a specified time period prior to the filing
of a notice of default, to provide the borrower with an
application for a loan modification and other foreclosure avoidance
options written information regarding loan
modifications and a specified notice regarding the borrower's
rights during the foreclosure process, subject to specified
exceptions. The bill would require an unspecified state entity to
make that notice available in English and specified languages.
The bill would further revise the borrower contact requirements
described above by requiring a mortgagee, beneficiary, or authorized
agent to make reasonable borrower solicitation efforts, as specified,
to explore options for the borrower to avoid foreclosure. The bill
would prohibit a mortgagee, beneficiary, or authorized agent from
filing a notice of default until these solicitation efforts have
failed or the borrower has been evaluated and determined to be
ineligible for a loan modification. The bill would establish time
periods in which the mortgagee, beneficiary, or authorized agent is
required to review and respond to a borrower's request for
a loan modification, subject to certain exceptions.
This bill would prohibit the mortgagee, beneficiary, or
authorized agent from combining collections activity with
communication with the borrower about foreclosure avoidance options.
The bill would delete the requirement that the notice of default
contain a specified declaration, and would instead require
the , until January 1, 2013, that a
mortgagee, beneficiary, or authorized agent to ,
concurrently with the filing of a notice of default, record a
declaration of compliance that attests to specified facts, and mail
the borrower a notice stating that these requirements have
been met the borrower solicitation requirements have
been met . The bill would provide that failure to record a
declaration of compliance, or recordation of a declaration
of compliance that fails to meet the specified requirements,
failure to materially comply with these provisions,
would constitute grounds for the borrower to bring an action to
void the foreclosure, or to recover either treble damages
or statutory specified damages in the
amount of $10,000, whichever is greater, from the
mortgagee, trustee, beneficiary, or authorized agent, if specified
conditions exist.
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 2923.4 is added to the
Civil Code , to read:
2923.4. (a) (1) After a loan becomes 31 days delinquent, but not
later than 10 days after the loan becomes 60 days delinquent, a
mortgagee, trustee, beneficiary, or authorized agent shall provide
the borrower with a copy of the notice described in subdivision (b)
together with written communication that describes options that may
be available to borrowers who are unable to afford their mortgage
payments and who wish to avoid foreclosure and that clearly describes
the process, if any is available to the borrower, for applying for a
loan modification.
(2) The written communication shall include all of the following:
(A) (i) If the mortgagee, trustee, beneficiary, or authorized
agent is participating in the federal Making Home Affordable
Modification Program (HAMP) or is otherwise required to review the
borrower's loan under HAMP guidelines, then the written communication
shall clearly describe HAMP and list the documents and other
information the borrower is required to submit in order to have the
mortgagee, trustee, beneficiary, or authorized agent complete a loan
modification analysis.
(ii) If the mortgagee, trustee, beneficiary, or authorized agent
is not participating in HAMP and is not otherwise required to review
the borrower's loan under HAMP guidelines, then the written
communication shall clearly describe the loan modification program or
programs available to the borrower, if any, and list the documents
and other information the borrower is required to submit in order to
have the mortgagee, trustee, beneficiary, or authorized agent
complete a loan modification analysis. If no programs are available
to the borrower, the written communication shall state that fact.
(B) A toll-free telephone number that will provide access to a
live representative during business hours for borrowers who wish to
discuss options for avoiding foreclosure with their mortgagee,
beneficiary, or authorized agent.
(C) The Internet Web site address, if any, of the mortgagee,
beneficiary, or authorized agent, where a borrower may obtain the
following information:
(i) 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 of steps to take to explore
those options.
(ii) A list of information and documents borrowers should collect
and be prepared to present to the mortgagee, beneficiary, or
authorized agent when discussing options for avoiding foreclosure.
(iii) A toll-free telephone number for borrowers who wish to
discuss options for avoiding foreclosure with their mortgagee,
beneficiary, or authorized agent.
(iv) 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.
(b) A state government entity shall create the following notice in
at least 12-point type and make it available in English and the
languages set forth in subdivision (b) of Section 1632:
"Important Notice Regarding Your Rights and Foreclosure Avoidance
Options: California law requires that you receive this notice of your
legal rights before the foreclosure process begins.
ARE YOU HAVING TROUBLE PAYING YOUR MORTGAGE?
If you are having trouble paying your mortgage, you should contact
your loan servicer as soon as possible to discuss options for
avoiding foreclosure. Your loan servicer is the company listed on
your mortgage bills as the party to which your mortgage payment
should be sent.
You may also call [1-800-xxx-xxxx] to find a housing counseling
agency certified by the United States Department of Housing and Urban
Development (HUD) that offers free services in your area.
POTENTIAL FORECLOSURE AVOIDANCE OPTIONS
One potential option for avoiding foreclosure is a loan
modification. Your loan servicer may be participating in the federal
loan modification program called the Home Affordable Modification
Program (HAMP), which has specific requirements and guidelines. To
see if your servicer is participating, or to find out more about this
program, visit
http://www.makinghomeaffordable.gov/contact_servicer.html.
Your servicer may offer other loan modification programs instead
of or in addition to HAMP. You may also qualify for other options for
avoiding foreclosure, including loan refinancing, a temporary
forbearance, short sale, or a deed in lieu of foreclosure.
With this notice, you should have received a letter from your
servicer that describes options that may be available to borrowers
who are unable to afford their mortgage payments and who wish to
avoid foreclosure. That letter describes any loan modification
programs available to you and the steps you must take to apply for a
loan modification.
If you are interested in applying for a loan modification, you
must submit the required documentation to your mortgage servicer as
soon as possible. Be sure to read and carefully review any
communication from your mortgage servicer, and submit all of the
forms, documents, and information required by the deadlines indicated
in the servicer's communications. If you submit all of the forms,
documents, and information required for a loan modification
evaluation by the specified deadlines, your servicer must review your
application and inform you of its decision before initiating the
foreclosure process by filing a document called a Notice of Default.
If your servicer denies your request for a loan modification, it must
send you a detailed letter that explains the reason(s) for the
denial and provides you with information about how to dispute the
denial.
THE FORECLOSURE PROCESS
If your servicer denies your application and complies with the
contact and notice requirements described in Sections 2923.5 and
2923.73 of the Civil Code, it may proceed with the foreclosure
process.
Notice of Default: Your loan servicer may not foreclose on your
home without filing official documents with the county recorder. You
are entitled to receive copies of those documents. The first step in
the foreclosure process is the filing of a notice of default. If your
loan servicer records a notice of default on your loan, it must mail
you a copy of that notice by certified mail and must wait at least
90 days before taking further steps to sell your home.
Notice of Sale: Once 90 days have passed from the filing of the
notice of default, your servicer may file a notice of sale. If your
servicer has not received an exemption from the California
Foreclosure Prevention Act (CFPA), it must wait an additional 90 days
(for a total of 180 days) after filing the notice of default before
filing a notice of sale. A list of servicers with exemptions under
the CFPA is available at
http://www.corp.ca.gov/FSD/CFP/pdf/ExemptList.pdf,
http://www.dfi.ca.gov/cfpa/default.asp, and
http://www.dre.ca.gov/ind_cfpa_exemptlist.asp. Your servicer must
post the notice of sale on your property, mail you a copy of the
notice by certified mail, and wait at least 20 days before selling
your home. Your notice of sale will include the contact information
of the person or company to call if you want more information about
your sale date. You should make note of that contact information and
be sure to check for any changes to the sale date.
Please seek legal help if you believe that you have been denied
your legal foreclosure rights. It is illegal for any person,
including a lawyer, to charge you for helping you with a loan
modification or other effort to avoid foreclosure before providing
the services promised."
(c) The English and translated forms of this notice shall be made
available on or before January 1, 2011.
(d) This section 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 about 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. This shall not
preclude a mortgagee, trustee, beneficiary, or authorized agent from
soliciting or considering a borrower who is in bankruptcy for a loan
modification, whether under the requirements of HAMP, or under its
own proprietary loan modification program.
(e) This section shall apply only to mortgages or deeds of trust
recorded prior to January 1, 2009, and 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.
(f) 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.
SEC. 2. 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 (2) or 30 days
after satisfying the due diligence requirements as described in
subdivision (g) the requirements of this section and
Sections 2923.4, 2923.7, and 2923.73 have been satisfied .
(2) 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).
(b) For all first lien mortgage loans described in subdivision (i)
and not excluded by subdivision (h), a notice of default may not be
filed until reasonable borrower solicitation efforts have failed or a
borrower who applies for a loan modification has been evaluated and
determined to be ineligible for a loan modification. If a mortgagee,
trustee, beneficiary, or authorized agent is subject to paragraph (2)
and reasonable solicitation efforts have failed, the mortgagee,
trustee, beneficiary, or authorized agent shall not file a notice of
default until at least 30 days after complying with the reasonable
solicitation efforts.
(1) If the mortgagee, trustee, beneficiary, or authorized agent is
participating in the Making Home Affordable Modification Program
(HAMP) or is otherwise required to review the borrower's loan under
HAMP guidelines, compliance with all borrower outreach and loan
application review procedures and timelines set forth in the
applicable HAMP guidelines shall constitute reasonable borrower
solicitation efforts. The notice and written communication required
by Section 2923.4 may be used to satisfy one of the applicable
written borrower outreach requirements of this paragraph.
(2) If the mortgagee, trustee, beneficiary, or authorized agent is
not participating in HAMP and is not otherwise required to review
the borrower's loan under HAMP guidelines, compliance with all of the
following shall constitute reasonable borrower solicitation efforts:
(A) 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. This in-person or telephone communication shall
be clearly identified as an attempt to initiate discussion with the
borrower about foreclosure avoidance options, and may not include a
demand for immediate payment of any past-due amounts owed by the
borrower. During the initial telephone 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 mortgagee, beneficiary, or authorized agent shall send the
written communication and notice described in Section 2923.4 to the
borrower.
(C) (i) After the written communication and notice described in
Section 2923.4 have been sent, the mortgagee, beneficiary, or
authorized agent shall attempt to 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.
(ii) In order to make this contact, a mortgagee, beneficiary, or
authorized agent shall attempt to contact a borrower by telephone at
least three times at different hours and on different days. Telephone
calls shall be made to the last known telephone numbers of record.
These communications and attempted communications shall be clearly
identified as attempts to initiate discussion with the borrower about
foreclosure avoidance options, and may not include a demand for
immediate payment of any past-due amounts owed by the borrower.
(iii) 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.
(iv) 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 telephone numbers on file, if any, have been disconnected.
(D) If the borrower does not respond within two weeks after the
telephone call requirements of clause (ii) have been satisfied, the
mortgagee, beneficiary, or authorized agent shall then send a
certified letter, with return receipt requested.
(E) 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.
(F) The mortgagee, beneficiary, or authorized agent shall 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 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.
(ii) 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.
(iii) A toll-free telephone number for borrowers who wish to
discuss options for avoiding foreclosure with their mortgagee,
beneficiary, or authorized agent.
(iv) The toll-free telephone number made available by HUD to find
a HUD-certified housing counseling agency.
(c) A mortgagee, beneficiary, or authorized agent, concurrently
with the filing of a notice of default, shall do both of the
following:
(1) Record a declaration of compliance pursuant to Section 2923.7.
The declaration may be included as part of or attached to the notice
of default.
(2) Mail the borrower a notice stating that the requirements of
subdivision (b) have been met. That notice shall be sent by certified
mail and shall include the dates and times of, and addresses and
telephone numbers used for, the contact or attempted contact required
by subdivision (b).
(c)
(d) 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. the mortgagee, trustee, beneficiary, or
authorized agent satisfied the requirements of Section 2923.73 at
least 45 days before filing the notice of sale.
(d)
(e) A mortgagee's, beneficiary's, or authorized agent's
loss mitigation personnel may participate by telephone during any
contact required by this section.
(e)
(f) For purposes of this section, a "borrower" shall
include a mortgagor or trustor.
(f)
(g) 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)
subdivision (b) . 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) and (b)
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. This shall not
preclude a mortgagee, trustee, beneficiary, or authorized agent from
soliciting or considering a borrower who is in bankruptcy for a loan
modification, whether under the requirements of HAMP, or under its
own proprietary loan modification program.
(i) This section shall apply only to mortgages or deeds of trust
recorded from January 1, 2003, to December 31, 2007,
inclusive prior to January 1, 2009 , 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.
SEC. 3. Section 2923.7 is added to the
Civil Code , to read:
2923.7. (a) (1) In order to initiate the foreclosure process, a
mortgage servicer must transmit to the foreclosure trustee a
declaration of compliance that is signed on behalf of the mortgage
servicer by an individual having personal knowledge of the facts
stated within. The declaration of compliance shall be included as
part of, or attached to every notice of default filed pursuant to
Section 2924. A notice of default that does not include a declaration
of compliance shall not be valid.
(2) The declaration of compliance shall be substantially similar
to the following form:
DECLARATION OF COMPLIANCE
BORROWER CONTACT
/-/ This loan is not subject to Cal. Civil Code Sec. 2923.5,
pursuant to the following provisions (check all that apply):
( ) Cal. Civil Code Sec. 2923.5(h).
( ) Cal. Civil Code Sec. 2923.5(i).
/-/ This loan is subject to Cal. Civil Code Sec. 2923.5, and the
mortgagee, beneficiary, or authorized agent has complied with the
requirements of Cal. Civil Code Sec. 2923.5 by doing the following
(check all that apply):
( ) Satisfying the applicable reasonable
borrower solicitation efforts described in Cal.
Civil Code Sec. 2923.5(b). If checked, insert
the date that the reasonable borrower
solicitation efforts were completed here:_____
( ) Sending the letter required by Cal. Civil
Code Sec. 2923.5(c).
( ) Sending the notice and written
communication described in Cal. Civil Code Sec.
2923.6 during the time period set forth in that
section.
FORECLOSURE AVOIDANCE REVIEW
/-/ This loan is not subject to Cal. Civil Code Sec. 2923.73,
pursuant to the following provisions (check all that apply):
( ) Cal. Civil Code Sec. 2923.73(d).
( ) Cal. Civil Code Sec. 2923.73(e).
□ This loan is subject to Cal. Civil Code Sec. 2923.73 and
(check only one):
( ) The borrower did not submit a written
request to modify the loan that is the subject
of the accompanying notice of default or
otherwise apply for a loan modification
according to the mortgagee, beneficiary, or
authorized agent's applicable procedures.
( ) The borrower submitted a written request to
modify the loan that is the subject of the
accompanying notice of default or otherwise
applied for a loan modification according to
the mortgagee, beneficiary, or authorized
agent's applicable procedures, the request was
denied, and the mortgagee, beneficiary, or
authorized agent sent the borrower a denial
explanation letter in compliance with the
requirements of Cal. Civil Code a7 2923.73(a).
( ) The borrower was evaluated for a loan
modification and was determined to be
ineligible for any loan modification program,
and the mortgagee, beneficiary, or authorized
agent sent the borrower a denial explanation
letter in compliance with the requirements of
Cal. Civil Code Sec. 2923.73(a).
( ) The borrower did not submit all required
written application materials and documentation
by the applicable deadline.
( ) The borrower did not respond to the
reasonable solicitation efforts of the
mortgagee, beneficiary, or authorized agent by
the applicable deadline.
( ) The borrower was offered a trial period
loan modification plan, but the borrower did
not accept the trial period loan modification
plan or failed to comply with the terms of the
plan.
( ) The borrower was offered a permanent loan
modification, but the borrower did not accept
the modification offered or did not comply with
the terms of the modification.
( ) The borrower has communicated to the
mortgagee, beneficiary, or authorized agent
that he or she is not interested in pursuing a
loan modification.
(b) 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.
SEC. 4. Section 2923.73 is added to the
Civil Code , to read:
2923.73. (a) If a borrower expresses an interest in applying for
a loan modification either verbally or in writing, and the mortgagee,
beneficiary, or authorized agent does not offer the borrower a trial
or permanent loan modification according to applicable program
guidelines, the mortgagee, beneficiary, or authorized agent shall
send the borrower a denial explanation letter by certified mail no
later than 10 business days following the denial decision.
(1) If a borrower fails to provide all required verification
documents or information by the applicable deadline as set forth in
subdivision (b), the letter shall indicate the date by which the
documents or information were to be provided, list the documents or
information that were not provided, and state that the borrower's
request for a loan modification has been denied for this reason.
(2) If a borrower submits all required written application
materials for a loan modification by the applicable deadline as set
forth in subdivision (b), and the application is denied, the denial
explanation letter shall include all of the following in plain
English or one of the languages set forth in subdivision (b) of
Section 1632, as appropriate:
(A) The date a completed application for a loan modification was
received from the borrower.
(B) The date on which a decision was made regarding the borrower's
application.
(C) The final decision made by the mortgagee, beneficiary, or
authorized agent, which shall indicate each loan modification program
for which the borrower was considered, and the decision made with
respect to each loan modification program.
(D) If the mortgagee, beneficiary, or authorized agent was
required to consider the borrower for a loan modification under the
federal Making Home Affordable Modification Program (HAMP), the
information required to be provided in the borrower notice described
in the federal Home Affordable Modification Guidelines Supplemental
Directive 09-08, issued November 3, 2009, and any amendments thereto.
(E) If the borrower was considered for a loan modification program
or programs other than HAMP, information detailing the reasons the
borrower did not qualify for the program, including quantitative data
supporting the decision if the decision is based on the borrower's
income, expenses, or on a net present value calculation. This
information may include a finding that the borrower was previously
offered a loan modification and failed to successfully make payments
under the terms of the modified loan.
(F) The name and contact information of the holder of the note for
the borrower's loan.
(G) Instructions regarding how to dispute the decision described
in the denial explanation letter.
(b) (1) If the mortgagee, trustee, beneficiary, or authorized
agent is participating in HAMP or is otherwise required to review the
borrower's loan under HAMP guidelines, the deadlines for the
borrower to submit information and the mortgagee, trustee, or
beneficiary to review and respond to the information the borrower has
submitted are those set forth in the applicable HAMP guidelines.
(2) If the mortgagee, trustee, beneficiary, or authorized agent is
not participating in HAMP and is not otherwise required to review
the borrower's loan under HAMP guidelines, the applicable deadlines
are as follows:
(A) The mortgagee, trustee, beneficiary, or authorized agent shall
communicate to the borrower in each contact, both oral and written,
the borrower's deadline for submitting an initial application for a
loan modification, which shall not be less than 45 days from the
borrower's receipt of the notice required by Section 2923.4.
(B) If a borrower submits an initial application, but does not
include all the forms, documents, or information the mortgagee,
trustee, beneficiary, or authorized agent needs in order to consider
the borrower for a loan modification, the mortgagee, beneficiary, or
authorized agent must provide the borrower with written notice that
clearly describes any supplemental documentation or information
needed to consider the borrower for a loan modification, and the
deadline for providing that documentation or information, which shall
not be less than 25 days from the date the borrower receives the
notice.
(c) After sending a denial explanation letter in compliance with
subdivision (a), a mortgagee, beneficiary, or authorized agent may
proceed to record a notice of default and declaration of compliance
pursuant to Section 2923.7 even if the borrower initiates a dispute
relating to the denial explanation letter and the dispute has not yet
been resolved.
(d) This section 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 about 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. This shall not
preclude a mortgagee, trustee, beneficiary, or authorized agent from
soliciting or considering a borrower who is in bankruptcy for a loan
modification, whether under the requirements of HAMP, or under its
own proprietary loan modification program.
(e) This section shall apply only to mortgages or deeds of trust
recorded prior to January 1, 2009, 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.
(f) 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.
SEC. 5. Section 2923.75 is added to the
Civil Code , to read:
2923.75. (a) Failure to record a declaration of compliance in
accordance with Section 2923.7, recordation of a false declaration of
compliance pursuant to Section 2923.7, or failure to materially
comply with the requirements of Section 2923.5, 2923.7, or 2923.73,
shall constitute grounds for a borrower to pursue either of the
following options subsequent to a trustee sale conducted in
accordance with Section 2924f:
(1) If the property that is the subject of the declaration of
compliance is sold to a bona fide purchaser at a trustee sale
conducted in accordance with Section 2924f, the borrower may recover
the greater of treble damages or statutory damages in the amount of
ten thousand dollars ($10,000) from the mortgagee, trustee,
beneficiary, or authorized agent that failed to comply with Section
2923.5, 2923.7, or 2923.73.
(2) (A) If the property that is the subject of the declaration of
compliance is sold to a bona fide purchaser by the foreclosing party
subsequent to a trustee sale conducted in accordance with Section
2924f in which title was transferred to the foreclosing party, the
borrower may recover the greater of treble damages or statutory
damages in the amount of ten thousand dollars ($10,000) from the
mortgagee, trustee, beneficiary, or authorized agent that failed to
comply with Section 2923.5, 2923.7, or 2923.73.
(B) If the foreclosing party had notice of the borrower's claim
under this section prior to selling the property to a bona fide
purchaser, the borrower may recover the greater of treble damages or
statutory damages in the amount of twenty-five thousand dollars
($25,000) from the mortgagee, trustee, beneficiary, or authorized
agent that failed to comply with Section 2923.5, 2923.7, or 2923.73.
(3) If title to the property that is the subject of the
declaration of compliance is transferred to the foreclosing party at
a trustee sale conducted in accordance with Section 2924f, the
borrower may bring an action to void the foreclosure sale.
(b) 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.
SEC. 6. The provisions of this act are not
intended to be and shall not be deemed to be retroactive.
SEC. 7. The provisions of this act are severable.
If any provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that
can be given effect without the invalid provision or application.
All matter omitted in this version of the bill appears in the
bill as introduced in the Senate, February 19, 2010. (JR11)