BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 1599 (Feuer and Fong)
As Amended April 30, 2012
Hearing Date: July 3, 2012
Fiscal: Yes
Urgency: No
BCP
SUBJECT
Mortgages and Deeds of Trust: Foreclosure: Languages
DESCRIPTION
This bill would require a foreclosing financial institution to
provide the borrower with a copy of a recorded Notice of Default
or recorded Notice of Sale that contains a summary of the
respective notice that is translated into Spanish, Chinese,
Tagalog, Vietnamese, and Korean. This bill would codify the
contents of that summary and require the Department of
Corporations to translate the summary and post the translation
on their Internet Web site.
(This analysis reflects author's amendments to be offered in
Committee.)
BACKGROUND
Foreclosures in California are generally nonjudicial, meaning
that they are accomplished without court involvement. The first
step in the foreclosure process is the filing of a Notice of
Default, which generally occurs after three or more months of
delinquency. The foreclosing entity must then generally wait at
least three months before noticing the sale of the property,
which must be posted, published, and filed with the county
recorder. The sale date contained in the Notice of Sale may be
postponed by public proclamation (given at the time and date of
sale) for a total of up to 365 days.
This bill would require a foreclosing entity to provide
borrowers with a copy of the recorded Notice of Default that
(more)
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includes a summary of the notice, and similarly, a copy of a
recorded Notice of Sale that also includes a summary. Those
summaries would be in English, Spanish, Chinese, Tagalog,
Vietnamese, and Korean, with the Department of Corporations
performing the translation.
CHANGES TO EXISTING LAW
Existing law regulates the nonjudicial foreclosure of properties
pursuant to the power of sale contained within a mortgage
contract. To commence the process, existing law requires the
trustee, mortgagee, or beneficiary to record a Notice of Default
and allow three months to lapse before setting a date for sale
of the property. A copy of the notice must be mailed to the
homeowner and any parties that have filed a request for notice
within 10 business days following recordation. (Civ. Code Secs.
2924, 2924f.)
Existing law requires a notice of nonjudicial foreclosure sale
to be officially noticed in a newspaper of general circulation,
posted on the property, and recorded at least 20 days before the
sale date. (Civ. Code Secs. 2924, 2924f.) Existing law permits
the sale to be postponed for any period of time not to exceed
365 days set forth in the Notice of Sale. The trustee must
postpone the sale in accordance with: (1) an order of the court;
(2) a stay by operation of law; (3) a mutual agreement of any
trustor and any beneficiary; or (4) the discretion of the
trustee. (Civ. Code Sec. 2924g.)
Existing law requires a person engaged in a trade or business
who negotiates primarily in Spanish, Chinese, Tagalog,
Vietnamese, or Korean, orally or in writing, to deliver to the
other party to the contract or agreement a translation of the
contract in the language in which the contract was negotiated.
(Civ. Code Sec. 1632.)
This bill would require the mortgagee, trustee, beneficiary or
authorized agent to provide the mortgagor or trustor with:
a copy of the recorded Notice of Default that contains a
summary of the Notice of Default in English and the languages
described in Civil Code Section 1632; and
a copy of the recorded Notice of Sale containing a summary of
the information required to be contained in the Notice of Sale
in English and the language described in Civil Code Section
1632.
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This bill would codify the contents of the summary in two parts
- a statement that must appear at the beginning of the Notice of
Default/Notice of Sale, and, a statutory summary that must
appear at the end of the Notice of Default/Notice of Sale.
This bill would require the Department of Corporations (DOC) to
translate the statutory summary of the Notice of Default and the
Notice of Sale into the languages described in Civil Code
Section 1632. Those documents must be made available, without
charge, on the DOC's Internet Web site. Any mortgagee, trustee,
beneficiary, or authorized agent who provides the DOC's summary
translation in the manner prescribed by this section shall be in
compliance with the bill.
This bill would state that the summaries are not required to be
recorded, and apply the above requirements to residential real
property containing no more than four dwelling units.
This bill would provide that the requirement to provide a Notice
of Default or Notice of Sale with the included summary would
become operative on April 1, 2013, or 90 days following the
issuance of summary translations by the DOC, whichever is later.
COMMENT
1. Stated need for the bill
According to the author:
The purpose of this bill is to the help more homeowners
obtain equal access to the basic information they need to
make an informed decision when they are hit with
foreclosure, regardless of whether they have become fully
proficient in English.
Unlike many other similarly important legal notices, home
foreclosure documents are issued only in English under
existing law in the prevailing non-judicial foreclosure
process. If the foreclosure process commonly took place
through the courts, as it does in other jurisdictions, state
and federal law would require language assistance for people
who need help with English.
2. Summary and translation of Notice of Default and Notice of
Sale
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As noted above, the "Notice of Default" is the first step in the
nonjudicial foreclosure process while the "Notice of Sale" is
one of the last things to occur before a house is sold at a
trustee's sale. This bill would require both notices to include
a summary of key information in English, Spanish, Chinese,
Tagalog, Vietnamese, and Korean. Regarding the need for the
translation, the author notes:
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.
While the foreclosure crisis is a systemic problem, 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 �percent]) of households
that have suffered foreclosures. But minorities have had
significantly higher foreclosure rates, studies show, being
70 �percent] more likely than white borrowers to lose their
homes to foreclosure.
It should be noted that while the summary would be at the end of
both the Notice of Default and Notice of Sale, the beginning of
the document would include the following statement: "NOTE: THERE
IS A SUMMARY OF THE INFORMATION IN THIS DOCUMENT AT THE END OF
THE ENGLISH SECTION." Since that sentence would be translated
as well, the first thing that non-English speakers will see when
receiving a Notice of Default or Notice of Sale is the sentence
informing them to look to the bottom of the document for a
summary in one of the five languages described in Civil Code
Section 1632.
3. Translation and recording
In order to provide uniformity for the translations, the
Department of Corporations (DOC) would be required to provide a
standard translation of the summaries codified by this bill.
Those summaries must be made available without charge on the
DOC's Internet Web site, and any mortgagee, trustee, beneficiary
or authorized agent who provides that summary translation in the
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manner required by this bill would be in compliance with the
requirements of this bill.
It should be noted that the requirement to include the summaries
in the Notice of Default and Notice of Sale would become
operative on April 1, 2013, or 90 days following the issuance of
summary translations by DOC, whichever is later. That delayed
enactment is similar to the process used for other bills (such
as SB 1137 (Perata, Corbett, Machado, Chapter 69, Statutes of
2008)), and ensures that the uniform translation is available
before the requirement takes effect. That uniformity is
important to ensure that homeowners in foreclosure receive both
an accurate summary, and an accurate translation performed by a
neutral party (DOC).
This bill would also provide that the summaries are not required
to be recorded. Since the summaries should theoretically be
identical on each document, allowing them not to be recorded
could arguably prevent the filing of numerous redundant
statements with the county recorder.
4. Unknown opposition
Prior to the author's amendments described in Comment 5, this
bill was opposed by the California Bankers Association,
California Association of Realtors, California Chamber of
Commerce, California Credit Union League, California Independent
Bankers, California Land Title Association, California Mortgage
Association, California Mortgage Bankers Association, and the
United Trustees Association. Those trade associations had
expressed concern about the specific content of the summary, the
requirement that DRE only produce a summary if private funds are
provided, and whether failure to comply would cloud title. The
amendments agreed to by the author in the Senate Committee on
Banking and Finance appear to address most of those issues, and
as a result, it is unclear whether the bill as proposed to be
amended has any opposition.
5. Author's amendments
Due to procedural timing constraints, the following author's
amendments were agreed to in the Senate Committee on Banking and
Finance with a commitment that they would be taken in this
Committee. The text of those amendments will be made available
and are described by the author as including the following:
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Author's amendments :
Delayed operative date;
Clarification that mortgagees and others have no
liability;
Limit to residential property from 1-4 dwelling units;
No recordation of the summary;
Specification of the contents of the summary;
Clarify that the summary is to come at the end of the
documents with a one-line notice to that effect at the
beginning of the documents indicating that a summary
appears at the end;
Shift standardized translation from DRE to DOC; and
Eliminate private funding requirement.
Support : American Civil Liberties Union; Asian Americans for
Civil Rights & Equality; California Communities United
Institute; California Immigrant Policy Center; California Labor
Federation, AFL-CIO; California Rural Legal Assistance
Foundation; Center for Responsible Lending; Central California
Legal Services; 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; Western Center on Law and Poverty
Opposition : Unknown
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation : SB 1137 (Perata, Corbett, Machado, Chapter
69, Statutes of 2008) See Comment 3.
Prior Vote :
Senate Banking & Financial Institutions Committee (Ayes 5, Noes
1)
Assembly Floor (Ayes 49, Noes 25)
Assembly Appropriations Committee (Ayes 12, Noes 5)
Assembly Judiciary Committee (Ayes 9, Noes 1)
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