BILL ANALYSIS �
AB 1599
Page 1
Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1599 (Feuer and Fong) - As Amended: April 11, 2012
As Proposed to be Amended
SUBJECT : FORECLOSURE NOTICES: LANGUAGE ACCESS
KEY ISSUE : SHOULD THE TWO KEY LEGAL NOTICES IN THE NON-JUDICIAL
FORECLOSURE PROCESS BE EQUALLY ACCESSIBLE TO CALIFORNIA'S
SUBSTANTIAL POPULATION OF ENGLISH LEARNERS?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
Home borrowers who are not proficient in English are entitled by
law to a summary translation of their mortgage loan when the
contract is negotiated in one of the five dominant languages in
California other than English. When that home is subject to
foreclosure, however, there is currently no translation
obligation. By contrast, tenants in foreclosure are entitled to
receive translations of important legal notices, as are
homeowners and tenants whose utilities are subject to shut-off.
This bill would rectify that surprising disparity by requiring
that the two key legal documents that constitute the
non-judicial foreclosure process - the notice of default at the
outset, and the notice of sale at the conclusion - be
accompanied by a summary translation.
SUMMARY : Provides greater language access for homeowners in the
non-judicial foreclosure process. Specifically, this bill :
1)Provides that a mortgagee, trustee, beneficiary, or authorized
agent shall provide to the mortgagor or trustor a summary of
the notice of default, attached to a copy of the recorded
notice of default, and a summary of the notice of sale,
attached to the copy of the recorded notice of sale, in
English and the languages described in Civil Code section 1632
in order for these documents to be properly recorded and
effective.
2)Provides that the Department of Real Estate shall make
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available a standard summary translation of a notice of
default and a notice of sale in the languages described in
Civil Code section 1632, and shall make those documents
available without charge on its Internet Web site if
sufficient private funds are provided to the Department of
Real Estate for this purpose. Further provides that any
mortgagee, trustee, beneficiary, or authorized agent who uses
the department summary translation shall not be liable for
errors in translation.
EXISTING LAW :
1)Requires that a supervised financial organization that
negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese,
or Korean in the course of entering into a contract or
agreement for a loan or extension of credit secured by
residential real property, shall deliver to the other party to
that contract or agreement prior to the execution of the
contract or agreement a form created by the Department of
Corporations and the Department of Financial Institutions to
be made available in each of the languages to summarize the
terms of a mortgage loan. (Civil Code section 1632.5.)
2)Provides that a licensing agency may, by order, after
appropriate notice and opportunity for hearing, levy
administrative penalties against a supervised financial
organization that violates the foregoing provision, and the
supervised financial organization may be liable for
administrative penalties, up to the amounts of two thousand
five hundred dollars ($2,500) for the first violation, five
thousand dollars ($5,000) for the second violation, and ten
thousand dollars ($10,000) for each subsequent violation.
(Civil Code section 1632.5.)
3)Provides that a notice of default shall be accompanied by a
specified notice translated into Spanish if the obligation
secured by the deed of trust or mortgage is a contract or
agreement described in Civil Code section 1632 and the
mortgagor or trustor so requests or if the obligation secured
by the deed of trust or mortgage is contained in a home
improvement contract. (Civil Code section 2924c.)
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4)Requires that tenants in foreclosed properties receive a
translated notice of the pending foreclosure sale and their
right to remain in the property for a specified period after
it is acquired by a new purchaser. (Civil Code section
2924.8.)
5)Requires electric, gas and water utilities to give notices in
the five languages specified in Civil Code section 1632 prior
to termination of service. (Pub. Util. Code sections 777.1,
1009.)
6)Provides that no person in the State of California shall, on
the basis of race, national origin, ethnic group
identification, religion, age, sex, sexual orientation, color,
genetic information, or disability, be unlawfully denied full
and equal access to the benefits of, or be unlawfully
subjected to discrimination under, any program or activity
that is conducted, operated, or administered by the state or
by any state agency, is funded directly by the state, or
receives any financial assistance from the state. National
origin includes discrimination on the basis of language.
(Government Code section 11135.)
7)Provides that no person in the United States shall, on the
ground of race, color, or national origin (including
language), be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any
program or activity receiving Federal financial assistance.
(42 U.S.C. section 2000d.)
COMMENTS : The author observes that virtually all home
foreclosures in California occur without court supervision. The
mortgage lender or servicer simply issues a notice of alleged
default to the homeowner to begin the process, followed by a
notice of sale when the property is about to be taken away.
These notices contain key information about the foreclosure
process and the homeowner's rights.
Unlike many other similar legal notices, however, these
foreclosure documents are issued only in English under existing
law. If the foreclosure process took place through the courts,
as it does in other states, state and federal law would require
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language assistance for people who need help with English.
Supporters of this bill argue that all homeowners should have
equal access to the basic information they need to make an
informed decision when they are hit with foreclosure.
According to Census Bureau data, California is the most
linguistically diverse state in the nation; nearly 7 million
Californians - 27 percent of the state's residents - were born
outside the United States, and 43 percent speak a language other
than English at home, over twice the national rate.
The author notes that under existing law when a mortgage is
negotiated in a language other than English, the borrower must
receive a translation of the loan contract. Just as it makes
sense to provide a translation to get someone into a mortgage,
the author argues, it makes equal sense to provide a translation
of the key legal documents by which their home is taken away
from them in foreclosure.
Similarly, the law requires that tenants who are evicted because
of foreclosure must receive a translation of their legal rights.
The author argues that homeowners who are foreclosed on should
be treated no less fairly than tenants. Indeed, the author
notes, utility customers cannot have their service shut off
without a translated notice under existing law. Just as utility
service to a home cannot be terminated without a translated
notice, the author argues, a homeowner's rights to the house
itself should not be terminated without a similar translation.
Impact Of The Foreclosure Crisis On Latinos, Asians and Other
Immigrants. The foreclosure crisis is a systemic problem, but
numerous studies have documented that foreclosures have hit
immigrants and communities of color especially hard, in large
part because these borrowers were targeted for the most risky
loans, and in part because these communities have sustained
greater employment losses in the recession. White borrowers
make up the majority (56%) of households that have suffered
foreclosures. But minorities have had significantly higher
foreclosure rates, studies show, being 70% more likely than
white borrowers to lose their homes to foreclosure.
Nationwide data reveal that areas with the highest numbers of
immigrants have experienced the highest rates of foreclosure.
In Los Angeles County, Neighborhood Legal Services reports that
nearly three-quarters of the clients seeking foreclosure
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assistance from legal aid are non-English speaking.
ARGUMENTS IN SUPPORT : Asian Americans for Civil Rights and
Equality (AACRE) argue that AB 1599 would ensure that all
Californians receive basic information about their rights when
their homes are subject to foreclosure. AACRE notes that
California is one of the states hardest hit by the foreclosure
crisis, citing a January 2010 report by MarketWatch showing the
country's 20 cities with the highest foreclosure rates, nearly
half of which are in California: Merced, Riverside-San
Bernardino, Stockton, Modesto, Vallejo-Fairfield, Bakersfield,
Sacramento, Fresno, and Salinas. The Central Valley is also
home to one of the largest concentrations of Southeast Asian
Americans in the country, AACRE states.
The Center for Responsible Lending argues, "Understanding the
terms of mortgage and servicing documents is essential for all
borrowers. A mortgage represents the largest financial
transaction that most Californians ever undertake, and the
language and terms can be confusing, even to the most
well-educated borrowers. That is why CRL sponsored AB 1160
(Fong) to ensure that non-English speaking borrowers would get a
summary of the key terms of their mortgage contracts. The need
for translated foreclosure documents is just as important as
translated mortgage contract documents for borrowers who are at
risk of losing their homes."
CRL goes on to note:
The foreclosure crisis has fallen most heavily on
communities with high proportions of non-English speakers,
particularly on Latino and Asian households.
Although the majority of borrowers who have been foreclosed
upon are white, California's Latino borrowers are more than
twice as likely as whites to have lost their homes to
foreclosure. Put another way, Latinos account for 22
percent of all loans made between 2004 and 2008, but
account for 35 percent of all completed foreclosures.
These higher rates reflect the fact that Latinos were
consistently more likely to receive loans with high-risk
features, even after accounting for income and credit
status.
As shown below, in many hard-hit Central Valley
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communities, similar disparities in foreclosure rates are
evident for Asian borrowers. These disparities are
particularly evident in Fresno, Modesto and Stockton.
----------------------------------------------------
| |Completed Foreclosure |
| | Rates |
| | 2004-2008 Loans |
|-----------------------------+----------------------|
|CA Metro Areas (MSA) | |
----------------------------------------------------
|-----------------------------+----+------+----+----|
| |Whit|Hispan|Blac|Asia|
| | e| ic| k| n|
|-----------------------------+----+------+----+----|
| Bakersfield, CA |9.6%| 16.1%|13.5|14.3|
| | | | %| %|
|-----------------------------+----+------+----+----|
| Fresno, CA |7.9%| 12.3%|10.8|16.9|
| | | | %| %|
|-----------------------------+----+------+----+----|
| Los Angeles-Long |4.7%| 9.7%|7.6%|6.4%|
|Beach-Glendale, CA | | | | |
|-----------------------------+----+------+----+----|
| Modesto, CA |13.5| 23.5%|21.4|23.2|
| | %| | %| %|
|-----------------------------+----+------+----+----|
| Oakland-Fremont-Hayward, CA |6.1%| 17.7%|12.7|7.2%|
| | | | %| |
|-----------------------------+----+------+----+----|
| Oxnard-Thousand |4.8%| 13.4%|8.3%|5.8%|
|Oaks-Ventura, CA | | | | |
|-----------------------------+----+------+----+----|
| Riverside-San |11.0| 17.0%|14.5|15.7|
|Bernardino-Ontario, CA | %| | %| %|
|-----------------------------+----+------+----+----|
| |9.7%| 20.7%|17.9|16.9|
|Sacramento--Arden-Arcade--Roseville, CA | | | %| %|
|-----------------------------+----+------+----+----|
| San Diego-Carlsbad-San |7.0%| 16.5%|11.6|10.1|
|Marcos, CA | | | %| %|
|-----------------------------+----+------+----+----|
| San Francisco-San |1.7%| 9.5%|4.0%|3.9%|
|Mateo-Redwood City, CA | | | | |
|-----------------------------+----+------+----+----|
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| San Jose-Sunnyvale-Santa |3.1%| 15.4%|6.6%|3.8%|
|Clara, CA | | | | |
|-----------------------------+----+------+----+----|
| Santa Ana-Anaheim-Irvine, |4.6%| 13.0%|8.9%|6.4%|
|CA | | | | |
|-----------------------------+----+------+----+----|
| Santa Rosa-Petaluma, CA |6.0%| 20.9%|13.3|8.9%|
| | | | %| |
---------------------------------------------------
| Stockton, CA |12.3| 22.9%|19.9|22.0|
| | %| | %| %|
|-----------------------------+----+------+----+----|
| Vallejo-Fairfield, CA |10.3| 20.2%|15.2|18.1|
| | %| | %|% |
---------------------------------------------------
The impact of the foreclosure crisis on Asian Americans in the
Central Valley is also highlighted in the support of this bill
by the Southeast Asia Resource Action Center (SEARAC).
According to a report compiled by SEARAC, "Southeast Asian
American homeowners in the Central Valley live in greater
concentrations in neighborhoods with high foreclosure rates and
are more likely to experience the direct and indirect impacts of
foreclosure. Our report also found that within a four-month
period in 2010, at least 840 Southeast Asian American homeowners
received a Notice of Default, representing, in many cases, a
higher percentage of foreclosures than South Asian Americans
represented in the county."
Author's Clarifying Amendment. In order to better convey the
intent of the bill to ensure that the required translation is
provided without the need for legal action, the author
appropriately proposes that the bill be amended to specify that
the covered documents are not effective unless accompanied by
the required translation, as is currently true of the other
statutory requirements of these documents.
REGISTERED SUPPORT / OPPOSITION :
Support
ACLU of California
Asian Americans for Civil Rights and Equality
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California Immigrant Policy Center
Center for Responsible Lending
Coalition for Humane Immigrant Rights of Los Angeles
Housing and Economic Rights Advocates
Law Foundation of Silicon Valley
National Housing Law Project
Southeast Asia Resource Action Center
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334