BILL NUMBER: SB 1275 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 28, 2010
AMENDED IN SENATE APRIL 8, 2010
INTRODUCED BY Senators Leno and Steinberg
( Principal coauthor: Assembly Member
Caballero )
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, 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 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, trustee,
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 require, until January 1, 2013, that a mortgagee,
beneficiary, or authorized agent, 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 the
borrower solicitation requirements have been met. The bill would
provide that failure to record a declaration of compliance, or
failure to materially comply with these provisions, would constitute
grounds for the borrower to bring an action to void the foreclosure,
or to recover specified damages 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
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 30, 2011. A mortgagee,
beneficiary, or authorized agent shall be subject to the requirements
of this section on and after March 1, 2011, or 30 days following the
availability of the English and translated forms of the notice,
whichever occurs first, but in no event shall a mortgagee,
beneficiary, or authorized agent be subject to the requirements of
this section any earlier than January 1, 2011.
(d) (1) This section shall not apply if any
of the following occurs:
(1)
(A) 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)
(B) 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)
(C) 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.
(2) Nothing in this subdivision shall be construed to alter in any
way the obligations of a mortgagee, trustee, beneficiary, or
authorized agent that is participating in HAMP or is otherwise
required to review a loan under HAMP guidelines.
(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) A mortgagee, trustee, beneficiary, or authorized
agent may not file a notice of default pursuant to Section 2924 until
the requirements of this section and Sections 2923.4, 2923.7, and
2923.73 have been satisfied.
(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
making 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
to the borrower the written communication and notice
described in required by 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
of the 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, trustee, 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).
(d) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment
of this section effective date of the amendment to
this section at the 2009-10 Regular Session of the
Legislature 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 the mortgagee, trustee,
beneficiary, or authorized agent satisfied the requirements of
Section 2923.73 at least 45 days before filing the notice of sale.
(e) A mortgagee's, beneficiary's, or authorized agent's loss
mitigation personnel may participate by telephone during any contact
required by this section.
(f) For purposes of this section, a "borrower" shall include a
mortgagor or trustor.
(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 borrower'
s 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 (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.
(h) (1) Subdivisions (a) and (b) shall not
apply if any of the following occurs:
(1)
(A) 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)
(B) 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)
(C) 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.
(2) Nothing in this subdivision shall be construed to alter in any
way the obligations of a mortgagee, trustee, beneficiary, or
authorized agent that is participating in HAMP or is otherwise
required to review a loan under HAMP guidelines.
(i) 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.
(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 shall 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
( ) 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 mortgagee, beneficiary, or authorized
agent is participating in the Making Home
Affordable Modification Program (HAMP) or is
otherwise required to review this loan under
HAMP guidelines.
( ) The mortgagee, beneficiary, or authorized
agent is not participating in HAMP or is not
otherwise required to review this loan under
HAMP guidelines.
/-/ 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 4 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 mortgagee, beneficiary, or authorized
agent made the applicable reasonable efforts
described in Cal. Civil Code Sec. 2923.5(b),
but failed to establish contact with the
borrower.
( ) The borrower was offered a HAMP trial
period plan, but the borrower did not accept
the trial period 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 offered
.
( ) The borrower was offered a permanent loan
modification, but the borrower failed to 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 denies either a
permanent loan modification or a HAMP trial period plan , 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 the mortgagee,
beneficiary, or authorized agent sends a denial explanation
letter in compliance with subdivision (a), a mortgagee, trustee,
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) (1) This section shall not apply if any
of the following occurs:
(1)
(A) 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)
(B) 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)
(C) 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.
(2) Nothing in this subdivision shall be construed to alter
in any way the obligations of a mortgagee, trustee, beneficiary, or
authorized agent that is participating in HAMP or is otherwise
required to review a loan under HAMP guidelines.
(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
any one of the following applicable
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 at issue 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
actual 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 , prior to the initiation of an action under this
section, 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
actual 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 actual
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. If, however, the borrower initiated an
action under this section prior to the sale to a bona fide purchaser,
paragraph (3) shall apply.
(3) If title to the property that is the subject of the
declaration of compliance at issue 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 , except if paragraph (2)
applies .
(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 construed to be
retroactive.
SEC. 7. Nothing in this act shall affect any cause
of action or claim that is pending as of the effective date of this
act.
SEC. 7. SEC. 8. 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.