BILL ANALYSIS                                                                                                                                                                                                    






                        SENATE COMMITTEE ON BANKING, FINANCE,
                                    AND INSURANCE
                           Senator Ronald Calderon, Chair


          SB 1275 (Leno)           Hearing Date:  April 7, 2010  

          As Introduced: February 19, 2010
          Fiscal:             Yes
          Urgency:       No
          

           SUMMARY    Would require servicers to complete additional  
          actions, as specified, before recording a notice of default  
          (NOD), and record a new document, called a declaration of  
          compliance, as an attachment to every NOD; and would establish  
          specific penalties to be applied to servicers who failed to  
          comply with the provisions of the bill, as specified.  Would  
          include the following, among the additional actions that  
          servicers would be required to perform, prior to recording a  
          NOD:  mail borrowers a notice informing them of their  
          foreclosure-related rights and regarding foreclosure avoidance  
          options that may be available to them; mail borrowers an  
          application for a loan modification or other alternative to  
          foreclosure; evaluate borrowers who submit a written request for  
          a loan modification or other alternative to foreclosure for that  
          modification or other alternative; mail borrowers who have been  
          denied a loan modification or other alternative to foreclosure a  
          detailed denial explanation letter explaining the reasons for  
          their denial.
           
          DIGEST
            
          Existing law
            
           1.  Prescribes rules that govern the nonjudicial foreclosure  
              process in California (Civil Code Section 2924 et seq.).  A  
              layman's description of the portions of the process that are  
              relevant to this bill follows immediately below.  Modifications  
              that were made to this process by three recently-enacted pieces  
              of legislation are described in Existing Law numbers 2 and 3,  
              below.  

               a.     The nonjudicial foreclosure process begins with the  
                 recordation of a notice of default (NOD) by a mortgagee,  
                 trustee, beneficiary, or authorized agent.  The NOD must be  




                                                 SB 1275 (Leno), Page 2




                 recorded in the county in which the property securing the  
                 defaulted loan is located, and must be mailed to specified  
                 persons with a financial interest in the property, including  
                 the property owner.  Existing law does not prescribe the  
                 minimum amount of time that must pass between a delinquency  
                 and the recordation of a NOD, although NODs are commonly  
                 recorded only after a borrower is at least 90 days delinquent  
                 on his or her mortgage loan;  

               b.     At least three months must pass after the recordation of  
                 a NOD, before the mortgagee, trustee, beneficiary, or  
                 authorized agent may record a notice of sale.  Notices of  
                 sale must be recorded in the county in which the property  
                 securing the defaulted loan is located, mailed to the  
                 property owner and other specified persons with a financial  
                 interest in the property, published in a newspaper of general  
                 circulation, and posted on the property that is the subject  
                 of the sale;

               c.     At least 20 days must pass after recordation of a notice  
                 of sale, before a property may be sold.  However, sale dates  
                 may be, and often are, postponed.  Under existing law, a sale  
                 date may be postponed for any of the following reasons:  a)  
                 upon the order of any court of competent jurisdiction; b) if  
                 stayed by operation of law; c) by mutual agreement, whether  
                 oral or in writing, of any trustor and any beneficiary or any  
                 mortgagor and any mortgagee (i.e., by mutual agreement  
                 between a borrower and his or her lender); and/or d) at the  
                 discretion of the trustee.  A new notice of sale must be  
                 recorded, if a postponement or postponements delay the sale  
                 for more than 365 days following the first scheduled sale  
                 date;  

           2.  Pursuant to SB 1137 (Perata), Chapter 69, Statutes of 2008,  
              until January 1, 2013, requires the following, before a NOD may  
              be recorded on a mortgage or deed of trust, which was recorded  
              from January 1, 2003 through December 31, 2007, and which is  
              secured by single-family, owner-occupied residential real  
              property:

               a.     A mortgagee, beneficiary, or authorized agent must  
                 contact a borrower in person or by telephone, in order to  
                 assess the borrower's financial situation and explore options  
                 for the borrower to avoid foreclosure.  Contact (or attempted  
                 contact, if a borrower is unreachable) must be made  
                 telephonically and in writing, as specified.   During the  




                                                 SB 1275 (Leno), Page 3




                 initial contact, the mortgagee, beneficiary, or authorized  
                 agent must advise the borrower that he or she has the right  
                 to request a subsequent meeting, which, if requested, must  
                 occur within 14 days of request.  The mortgagee, beneficiary,  
                 or authorized agent must also provide the borrower with a  
                 toll-free telephone number that can be used by the borrower  
                 to contact a HUD-certified housing counseling agency;

               b.     A mortgagee, beneficiary, or authorized agent must wait  
                 at least 30 days after making initial contact with a  
                 borrower, or satisfying specified due diligence requirements  
                 to make contact, before it may record a NOD on a loan covered  
                 by the provisions of SB 1137;

               c.     Each NOD that is recorded on a loan covered by the  
                 provisions of SB 1137 must include a statement that the  
                 mortgagee, beneficiary, or authorized agent contacted the  
                 borrower, tried with due diligence to contact the borrower,  
                 or that no contact was required, because one of the express  
                 exemptions applied.  Exemptions from the bill's contact  
                 requirements are provided, in cases where a borrower has  
                 already surrendered the property, has contracted with an  
                 organization or other entity that advises borrowers on how to  
                 "game" the foreclosure process, or has filed for a bankruptcy  
                 that is still before a court;

           3.  Pursuant to SB 7 (Corbett) and AB 7 (Lieu), Chapters 4 and 5,  
              Statutes of 2009-2010 Second Extraordinary Session, until  
              January 1, 2011, requires the following, before a notice of sale  
              may be recorded on a mortgage or deed of trust, which was  
              recorded from January 1, 2003 to January 1, 2008, and which is  
              secured by single-family, owner-occupied residential real  
              property:

               a.     A mortgagee, trustee, or other person authorized to take  
                 sale must wait an additional 90 days (over and above the  
                 three months described in Existing law 1b above), before  
                 recording a NOD.  Exemptions from this additional 90-day  
                 delay may be obtained by mortgage lenders and servicers who  
                 apply to the Department of Financial Institutions,  
                 Corporations, or Real Estate (depending on their primary  
                 regulator), and who are deemed by the relevant commissioner  
                 to have implemented a comprehensive loan modification  
                 program, as specified;

               b.     Each notice of sale must include a declaration from the  




                                                 SB 1275 (Leno), Page 4




                 mortgage loan servicer, indicating whether the servicer  
                 obtained an order of exemption from one of the commissioners,  
                 which was current and valid on the date the notice of sale  
                 was recorded, or that no additional delay was required,  
                 because one of the express exemptions applied.  Exemptions  
                 from the bill's 90-day delay requirements are provided, in  
                 cases where a borrower has already surrendered the property,  
                 contracted with an organization or other entity that advises  
                 borrowers on how to "game" the foreclosure process, or filed  
                 for a bankruptcy that is still before a court; and in cases  
                 where the loan was made, purchased, or is being serviced by a  
                 state or local public housing agency or authority.   

          This bill

            1.  Would, with one exception (see Number 3 below), apply its  
              requirements to mortgages and deeds of trust recorded prior  
              to January 1, 2009, which are secured by single-family,  
              owner-occupied, residential real property; 

           2.  Would require a mortgagee, trustee, beneficiary, or  
              authorized agent to do all of the following, before  
              recording a NOD on a loan covered by the bill:

               a.     Provide a specified notice to borrowers, informing  
                 them of their foreclosure-related rights, and explaining  
                 various foreclosure avoidance options.  This notice would  
                 have to be made available by an unnamed state government  
                 entity, in English and each of the five foreign languages  
                 listed in Civil Code Section 1632 (Spanish, Tagalog,  
                 Korean, Vietnamese, and Chinese);  

               b.     Provide borrowers with an application for a loan  
                 modification and other options for avoiding foreclosure;

               c.     Evaluate the written request of any borrower who  
                 applies for a loan modification or other alternative to  
                 foreclosure;  

                     i.          If the servicer determines that a  
                      borrower is not eligible for a loan modification,  
                      the servicer must send the borrower a denial  
                      explanation letter, via certified mail, at least 15  
                      days before the servicer records a NOD.  This denial  
                      explanation letter must explain in detail when and  
                      why the borrower's application for a loan  




                                                 SB 1275 (Leno), Page 5




                      modification was denied, and whether the borrower  
                      was considered for any other alternative to  
                      foreclosure.  The denial explanation letter must  
                      also include the name and contact information of the  
                      holder of the note (an entity which is different  
                      than the servicer, if the loan has been  
                      securitized), and must include instructions  
                      regarding how the borrower may dispute the written  
                      decision(s) reflected in the denial explanation  
                      letter;

                     ii.         The bill is silent on the actions that  
                      must be taken by the servicer, if the borrower's  
                      request for an alternative to foreclosure is  
                      approved;  

           3.  Would require a mortgagee, beneficiary, or authorized agent  
              to do all of the following, concurrent with recordation of  
              an NOD on any mortgage or deed of trust, regardless of  
              whether the mortgage is secured by single-family or  
              multi-family residential real property or commercial  
              property:

               a.     Record a new document, called a Declaration of  
                 Compliance.  The Declaration of Compliance is a "check  
                 the box" document, which asks the mortgagee, beneficiary,  
                 or authorized agent to identify which of several specific  
                 provisions of law apply to the loan, which of several  
                 specific provisions of law were followed in connection  
                 with the loan, and which of several specific options the  
                 borrower elected, with respect to requesting a loan  
                 modification.  The Declaration of Compliance must be  
                 signed by an individual having personal knowledge of the  
                 information it contains;

           4.  Would provide that failure to record a Declaration of  
              Compliance, or recordation of a Declaration of Compliance  
              that fails to meet the requirements of the bill, is grounds  
              for either monetary damages or voiding the foreclosure sale,  
              depending on the entity to which the foreclosed home is sold  
              at the foreclosure sale, as follows:  

               a.     If the property that is the subject of the  
                 declaration is taken back by the financial institution  
                 that initiated the foreclosure, the borrower may bring an  
                 action to have the foreclosure sale voided;




                                                 SB 1275 (Leno), Page 6





               b.     If a bonafide third party acquires the property  
                 through foreclosure sale, the bill authorizes the  
                 borrower that previously owned the home to recover the  
                 greater of $10,000 or treble damages from the entity that  
                 failed to properly record a declaration;

           5.  Would provide an express exemption from its requirements,  
              in cases where a borrower has already surrendered the  
              property, has contracted with an organization or other  
              entity that advises borrowers on how to "game" the  
              foreclosure process, or has filed for a bankruptcy that is  
              still before a court;

           6.  Would sunset on January 1, 2013;

           7.  Would expand the coverage of SB 1137, to include mortgages  
              and deeds of trust recorded prior to January 1, 2009, which  
              are secured by single-family, owner-occupied, residential  
              real property;

           8.  Would require a mortgagee, beneficiary, or authorized agent  
              to do the following, concurrent with recordation of an NOD  
              on a loan that is subject to the requirements of SB 1137:

               a.     Mail the borrower a separate letter, via certified  
                 mail, which includes the dates and times of, and  
                 addresses and telephone numbers used to contact (or to  
                 attempt to contact) the borrower, pursuant to the  
                 requirements of SB 1137.  

           COMMENTS

            1.  Purpose of the bill   To improve the procedures and  
              processes under existing foreclosure prevention programs,  
              with the following goals: 1) avoid unnecessary or mistaken  
              foreclosures; 2) encourage fair treatment of borrowers and  
              more timely outcomes; 3) provide greater transparency to  
              borrowers about foreclosure prevention decisions and  
              outcomes; and 4) provide borrowers with a remedy against  
              servicers who fail to comply with the law.

             2.  Background   The language of SB 1275 was developed by staff  
              of Housing and Economic Rights Advocates (HERA), a  
              statewide, not-for-profit legal service and advocacy  
              organization.  HERA drafted the proposal that formed the  




                                                 SB 1275 (Leno), Page 7




              basis for SB 1275, in response to its frustrations over the  
              treatment received by borrowers from their servicers, and  
              their belief that many borrowers who are eligible for loan  
              modifications are failing to be offered those modifications,  
              before being foreclosed on by their lenders.  HERA, and many  
              other persons and organizations who advocate for borrowers,  
              has seen all of the following:  borrowers told that they  
              cannot be helped until they become delinquent, then told  
              they cannot be helped because they are delinquent; borrowers  
              put on hold by their servicers for lengthy periods of time;  
              borrowers disconnected after long waits on hold; servicers  
              losing or misplacing borrowers' loan modification paperwork,  
              sometimes repeatedly; servicers giving borrowers conflicting  
              answers regarding the status of their loan modification  
              application; servicers willing to provide borrowers verbal  
              denials regarding their eligibility for a loan modification,  
              but unwilling to provide a written denial letter; servicers  
              unwilling to explain to borrowers the reasons they were  
              denied a loan modification; servicers foreclosing on  
              borrowers who are still being considered for a loan  
              modification; and servicers unwilling to consider options  
              other than foreclosure, after a borrower is denied a loan  
              modification.  

            The federal Making Home Affordable Program was developed by  
              the U.S. Department of the Treasury (Treasury), at the  
              urging of President Obama, in an effort to help borrowers  
              avoid foreclosure.  The program includes several components,  
              such as the Home Affordable Modification Program (HAMP),  
              Home Affordable Refinancing Program (HARP), Second Lien  
              Modification Program (2MP), and Home Affordable Foreclosure  
              Alternatives (HAFA) Program.  

            Since its introduction in February 2009, HAMP has become the  
              cornerstone of most servicers' loss mitigation efforts.  Any  
              financial institution that received Troubled Asset Relief  
              Program (TARP) funding must comply with HAMP, as must any  
              financial institution that voluntarily agrees to participate  
              in the program (something that, to date, over 100 financial  
              institutions have agreed to do).   Furthermore, although  
              loans owned or guaranteed by Fannie Mae and Freddie Mac are  
              not required to be run through the HAMP program by their  
              servicers, both government-sponsored enterprises (GSEs) have  
              issued directives to their servicers that essentially  
              duplicate the HAMP program.  





                                                 SB 1275 (Leno), Page 8




            Thus, for all intents and purposes, nearly every borrower who  
              contacts their servicer to discuss options for avoiding  
              foreclosure must be run through the HAMP eligibility  
              process, before the servicer may consider that borrower for  
              other forms of loss mitigation or for foreclosure.  

            The primary exception to this general rule involves borrowers  
              whose loans are serviced by small depository institutions,  
              such as credit unions and community banks, or by other small  
              lenders.  Because very few of these institutions took TARP  
              money, and very few have signed up to participate in HAMP,  
              borrowers whose loans are serviced by these types of  
              institutions are often evaluated individually by their  
              lenders, using the lender's in-house loss mitigation  
              programs.  Staff notes, however, that the number of  
              borrowers who fit into this "non-HAMP" category is extremely  
              small.  The vast majority of borrowers in California, who  
              have mortgages, hold loans serviced by financial  
              institutions that are covered by HAMP or that are covered by  
              nearly identical GSE HAMP-like loss mitigation programs.  

            The Making Home Affordable Program has been modified,  
              augmented, and clarified several times since its  
              introduction, through the issuance of Supplemental  
              Directives.  Treasury issued ten Supplemental Directives  
              during 2009 (two of which were significantly modified during  
              2010), and has so far issued three Supplemental Directives  
              during 2010, the most recent of which were issued on March  
              26, 2010.  More Supplemental Directives, and more  
              modifications to existing Supplemental Directives, are  
              likely, as Treasury works with servicers and housing  
              advocates to help refine and improve its Home Affordable  
              programs.  

            Many of these Supplemental Directives are significant for SB  
              1275, because they share the same goal as this bill, and  
              require actions by servicers that are very similar to the  
              actions required by this bill.  Yet, because this bill was  
              drafted before the issuance of the most recent Supplemental  
              Directives, its language is now inconsistent with the  
              language of the recent Directives.  Further amendments to  
              this bill will be necessary, to avoid conflicts between  
              state law and the Making Home Affordable program.  

             3.  Support   SB 1275 is strongly supported by consumer groups,  
              housing counseling organizations, and organized labor.  All  




                                                 SB 1275 (Leno), Page 9




              of these groups see SB 1275 as a way to prevent unnecessary  
              foreclosures in California.  

            HERA, the group that drafted the proposal which formed the  
              basis for SB 1275, writes that a number of obstacles stand  
              in the way of achieving large-scale reductions in the number  
              of foreclosures in California.  One major obstacle is the  
              difficulty that homeowners in financial distress have in  
              getting reviewed for and receiving sustainable loan  
              modifications.  "Borrowers and housing counselors throughout  
              the State report that they regularly face seemingly  
              insurmountable obstacles when they contact loan servicers  
              for assistance.  These include delays of many months to over  
              a year in processing applications; financial and other  
              documentation lost by the servicer; repeated requests from  
              the servicer for the borrower to send in additional  
              documentation or to send in the same documentation over and  
              over again; miscalculations or misreading of borrower income  
              leading to mistaken denials; misapplication and  
              misrepresentation of investor guidelines and restrictions  
              leading to mistaken denials; inconsistent, inaccurate and  
              contradictory information provided to borrowers about their  
              rights and obligations; foreclosures conducted while a  
              modification application is pending (or while a trial plan  
              is in effect) because the servicer failed to instruct the  
              foreclosure trustee to postpone the sale; and unnecessary  
              foreclosures conducted after an erroneous denial.

            "In the vast majority of cases, borrowers and their advocates  
              are confronted with an overwhelming lack of information and  
              communication from the servicer - about the status of their  
              applications, the documentation they need to provide, and,  
              in the event a borrower is notified that an application has  
              been denied, about the reasons for the denial.  This lack of  
              transparency makes it nearly impossible for borrowers to  
              figure out where they are in the review process or assess  
              whether a denial is erroneous."  

            HERA believes that SB 1275 will ensure that no homes are  
              unnecessarily foreclosed on, if they can be saved from  
              foreclosure under existing programs.  If there has been a  
              mistake in a servicer's review of a borrower for a loan  
              modification, SB 1275 will give the borrower and servicer  
              enough time to correct those errors, before the borrower  
              loses his or her home.  HERA goes on to state, "SB 1275 will  
              not, however, require servicers to modify a loan where the  




                                                 SB 1275 (Leno), Page 10




              borrower does not qualify for assistance under an already  
              existing modification program.  It will not require  
              servicers to assist so called "strategic defaulters,"  
              borrowers who are not in financial distress but voluntarily  
              stop making payments on their mortgage because keeping the  
                                                  home is no longer in their financial best interest."

            Consumers Union (CU) writes, "By requiring servicers to screen  
              borrower's for eligibility for a federal HAMP loan  
              modification, or it's own modification program, before  
              filing a notice of default, eligible borrowers have an early  
              opportunity to enter into a loan modification to stay on  
              track with their mortgage payments before falling further  
              behind and entering the foreclosure pipeline."  CU also  
              supports the provisions of the bill that require clearer  
              notices to at-risk homeowners about the opportunity to apply  
              for a loan modification before the foreclosure process  
              begins; require detailed, clear, and timely denial  
              explanation letters to be sent to borrowers who are found  
              ineligible for a loan modification; and provide borrowers  
              with legal remedies to void foreclosure sales and/or obtain  
              statutory damages, if the provisions of the bill are  
              violated.  

            The Center for Responsible Lending (CRL) believes that SB 1275  
              "would fulfill the promise of prior foreclosure-prevention  
              legislation."  By providing more specific requirements and  
              transparency around existing requirements for  
              pre-foreclosure communications with homeowners, the bill  
              will ensure that borrowers are assessed for loan  
              modifications before entering the foreclosure process.   
              That, in turn, will result in more consistent treatment of  
              borrowers and fewer foreclosures.   

            CRL believes that placing the bill's requirements at the  
              pre-NOD stage is crucial to the bill's success, for several  
              reasons.  First, requiring the servicer to determine the  
              borrower's qualification for such options at the pre-NOD  
              stage is consistent with the original intent of SB 1137.   
              Requiring an evaluation of loan modification eligibility  
              pre-NOD also increases efficiency, by requiring servicers to  
              record only one set of documents with the county recorder's  
              office.  Second, requiring a servicer to complete its  
              foreclosure avoidance inquiry prior to filing a NOD reduces  
              costs, by avoiding needless filing fees and legal costs.   
              Third, by delaying the initiation of the foreclosure process  




                                                 SB 1275 (Leno), Page 11




              until after foreclosure alternatives are evaluated, the bill  
              provides a stronger incentive for servicers to process their  
              evaluations more efficiently.  Fourth, placing the bill's  
              requirements at a later stage in the foreclosure process  
              (such as prior to the notice of sale) would not provide the  
              homeowner with sufficient time to enforce their rights upon  
              a violation of the bill by a servicer.  Fifth, avoiding  
              unnecessary NOD filings is in the public interest, to  
              protect borrowers from scams.  NODs are public records that  
              have long been used by foreclosure rescue scammers and other  
              real estate scammers as a way to target stressed and  
              vulnerable homeowners.  

            Finally, while CRL strongly supports SB 1275, it supports two  
              amendments, to clarify and tighten the bill and further its  
              goals.  First, CRL would like the bill to include an  
              explicit requirement that the servicer send the borrower a  
              letter detailing the reasons for denying a loan modification  
              or other request.  The bill currently requires the servicer  
              to certify that it has sent such a letter, but does not  
              directly require the servicer to send the letter.  Second,  
              CRL believes that courts should be authorized to award  
              attorneys' fees and costs, upon a court finding that a  
              servicer has not materially complied with the substantive  
              requirements of the bill.

            Several housing counseling and consumer advocacy  
              organizations, including the California Reinvestment  
              Coalition, CALPIRG, Coalition for Quality Credit Counseling,  
              Consumer Credit Counseling Service of the North Coast,  
              Neighborhood Housing Services of Silicon Valley, Contra  
              Costa Interfaith Supporting Community, and many others, sent  
              very similar letters, in which they assert that existing law  
              has failed to prevent avoidable foreclosures in significant  
              numbers.  Stories abound regarding lost paperwork,  
              miscalculations of income leading to mistaken denials,  
              unclear, irrelevant, or inconsistent grounds for denials,  
              foreclosures occurring even while borrowers are under  
              consideration for a loan modification, and foreclosures  
              occurring even after borrowers have successfully completed a  
              trial modification.  "No one benefits - not the servicer,  
              not the investors, not the homeowners, not the community,  
              and not the economy -- when a home is sold in foreclosure  
              that was previously being saved through a loan  
              modification."





                                                 SB 1275 (Leno), Page 12




             4.  Opposition    The Civil Justice Association of California  
              (CJAC) opposes SB 1275, on the basis that the bill imposes a  
              host of detailed new requirements on lenders, creating new  
              obligations for them to fulfill before they foreclose.  Any  
              violation of the law by a lender, no matter how technical,  
              is enforceable by a lawsuit to stop the foreclosure.  CJAC  
              notes that California's nonjudicial foreclosure process is  
              already highly regulated.  There is no need to insert  
              lawyers and lawsuits into the process.  

            A coalition of financial services and building industry trade  
              groups, together with the California Chamber of Commerce,  
              sent a joint letter of opposition.  "While we endeavor to  
              understand the intricacies of this measure and its impact,  
              we argue that the bill exemplifies an overly complicated  
              formula that will be layered onto recently enacted borrower  
              outreach efforts to further frustrate and prolong existing  
              foreclosure and loss mitigation efforts."  The coalition  
              believes that SB 1275 will add to the complexity of the loss  
              mitigation process for servicers and create a series of  
              procedural traps that will lead to ever-increasing  
              litigation.  In addition, they observe that SB 1275 would  
              inappropriately intervene in pending litigation that has  
              resulted from enactment of SB 1137.

            The coalition also observes that, given recent changes to  
              HAMP, and given the likelihood of new changes to the program  
              in the near future, SB 1275 is unnecessary.  The coalition  
              cites recently-released Supplemental Directives, including  
              Directive 09-08, released in November 2009, which, effective  
              January 1, 2010, requires servicers to provide borrowers  
              with a written denial explanation letter, if they are found  
              ineligible for a HAMP modification; and Directive 10-02,  
              released on March 26, 2010, which, effective June 1, 2010,  
              prevents a servicer from foreclosing on a borrower until the  
              borrower has been evaluated, and eligibility has been  
              determined under HAMP.  

            Finally, the coalition concludes that, "how this measure  
              interacts mechanically and chronologically with recent state  
              and federal regulatory and statutory changes is unclear."   
              The bill will result in compliance hurdles and will be a  
              detrimental distraction to industry's efforts to help its  
              customers.  

             5.  Questions   




                                                 SB 1275 (Leno), Page 13





                  a.        Changes to the HAMP program and its sister  
                    programs (such as 2MP and HAFA) are being released  
                    frequently by the U.S. Department of the Treasury.   
                    How can the California Legislature ensure that this  
                    bill does not create a set of requirements, which end  
                    up in conflict with the rules of federal foreclosure  
                    avoidance programs?

             6.  Prior and Related Legislation:   

                  a.        Key prior legislation, including SB 1137  
                    (Perata), Chapter 69, Statutes of 2008, SB 7  
                    (Corbett), Chapter 4, 2009-2010 Second Extraordinary  
                    Session, and AB 7 (Lieu), Chapter 5, 2009-2010 Second  
                    Extraordinary Session are described in the Existing  
                    Law section of this analysis.  Related, pending  
                    legislation is summarized below;

                  b.        AB 1639 (Nava), 2009-2010 Legislative Session:  
                     Would establish the Mediated Mortgage Workout  
                    Program, as specified.  Pending a hearing in the  
                    Assembly Banking & Finance Committee;

                  c.        AB 2024 (Blumenfield), 2009-2010 Legislative  
                    Session:  Would require any lender or servicer that  
                    rejects a loan modification request to send a  
                    notification to the borrower via certified mail,  
                    specifically stating the reasons why the loan  
                    modification request was rejected.  Pending a hearing  
                    in the Assembly Banking & Finance Committee;

                  d.        AB 2236 (Monning), 2009-2010 Legislative  
                    Session:  Would require a mortgagee, trustee,  
                    beneficiary, or authorized agent to include the name  
                    and contact information of the entity that has the  
                    authority to modify the terms of a borrower's loan, on  
                    all notices informing a borrower that he or she either  
                    failed to make a required minimum payment or failed to  
                    make a payment when due.  Pending a hearing in the  
                    Assembly Banking & Finance Committee;

                  e.        AB 2678 (Fuentes), 2009-2010 Legislative  
                    Session:  Would prohibit a mortgagee, trustee,  
                    beneficiary, or authorized agent from giving notice of  
                    sale, if the mortgagee, trustee, beneficiary, or  




                                                 SB 1275 (Leno), Page 14




                    authorized agent is currently in negotiations to  
                    modify the loan that is the subject of the notice of  
                    sale.  Would also require borrowers to be informed,  
                    every time a foreclosure sale is postponed.  Pending a  
                    hearing in the Assembly Banking & Finance Committee.
           
          POSITIONS
          
          Support
           
          Alliance of Californians for Community Empowerment
          California Alliance for Retired Americans
          California Capital Financial Development Corporation
          California Coalition for Rural Housing
          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists
          California Human Development Corporation
          California Labor Federation
          California Reinvestment Coalition
          CALPIRG
          Causa Justa:Just Cause
          Center for Responsible Lending
          Coalition for Quality Credit Counseling
          Community Financial Resources
          Community Housing Works, San Diego
          Consumer Credit Counseling Service of the North Coast
          Consumer legal Services in East Palo Alto
          Consumers Union
          Contra Costa Interfaith Supporting Community Organization
          Council on Aging Silicon Valley
          East LA Community Corporation
          East Palo Alto Council of Tenants Education Fund
          Housing and Economic Rights Advocates
          Inland Fair housing and Mediation Board
          International Longshore and Warehouse Union
          JOLT, Coalition for Responsible Investing
          Law Foundation of Silicon Valley
          Neighborhood Housing Services of Orange County
          Neighborhood Housing Services of Silicon Valley
          Novadebt
          Oakland Community Organizations
          Opportunity Fund
          Orange County Fair Housing Council, Inc.
          Professional and Technical Engineers, IFPTE Local 20
          Public Counsel
          Rural Community Assistance Corporation




                                                 SB 1275 (Leno), Page 15




          Sacramento Gray Panthers
          Sacramento Housing Alliance
          Sacramento Mutual Housing Association
          Southern California housing Rights Center
          The Mission Economic Development Agency
          United Food & Commercial Workers Western States Council
          UNITE-HERE
          Vallejo Neighborhood Housing Services, Inc.
          Vermont Slauson Economic Development Corp.
          Yolo Mutual Housing Association
           
          Oppose
               
          California Bankers Association
          California Building Industry Association
          California Chamber of Commerce
          California Financial Services Association
          California Independent Bankers
          California Land Title Association
          California Mortgage Association
          California Mortgage Bankers Association
          Civil Justice Association of California
          Securities Industry and Financial Markets Association

          Consultant:  Eileen Newhall  (916) 651-4102