AB 278 - An Act to Amend and Add Sections 2923.5 and 2923.6 Of, to Amend and Repeal Section 2924 Of, to Add Sections 2920.5, 2923.4, 2923.7, 2924.17, and 2924.20 To, to Add and Repeal Sections 2923.55, 2924.9, 2924.10, 2924.18, and 2924.19 Of, and to Add, Repeal, and Add Sections 2924.11, 2924.12, and 2924.15 Of, the Civil Code, Relating to Mortgages.

An Act to Amend and Add Sections 2923.5 and 2923.6 Of, to Amend and Repeal Section 2924 Of, to Add Sections 2920.5, 2923.4, 2923.7, 2924.17, and 2924.20 To, to Add and Repeal Sections 2923.55, 2924.9, 2924.10, 2924.18, and 2924.19 Of, and to Add, Repeal, and Add Sections 2924.11, 2924.12, and 2924.15 Of, the Civil Code, Relating to Mortgages.

AB 278 — 2011-2012 Legislature

Summary

(1)Existing law, until January 1, 2013, requires a mortgagee, trustee, beneficiary, or authorized agent to contact the borrower prior to filing a notice of default to explore options for the borrower to avoid foreclosure, as specified. Existing law requires a notice of default or, in certain circumstances, a notice of sale, to include a declaration stating that the mortgagee, trustee, beneficiary, or authorized agent has contacted the borrower, or has tried with due diligence to contact the borrower, or that no contact was required for a specified reason.

This bill would add mortgage servicers, as defined, to these provisions and would extend the operation of these provisions indefinitely, except that it would delete the requirement with respect to a notice of sale. The bill would, until January 1, 2018, additionally require the borrower, as defined, to be provided with specified information in writing prior to recordation of a notice of default and, in certain circumstances, within 5 business days after recordation. The bill would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default or, until January 1,… More

(1)Existing law, until January 1, 2013, requires a mortgagee, trustee, beneficiary, or authorized agent to contact the borrower prior to filing a notice of default to explore options for the borrower to avoid foreclosure, as specified. Existing law requires a notice of default or, in certain circumstances, a notice of sale, to include a declaration stating that the mortgagee, trustee, beneficiary, or authorized agent has contacted the borrower, or has tried with due diligence to contact the borrower, or that no contact was required for a specified reason.

This bill would add mortgage servicers, as defined, to these provisions and would extend the operation of these provisions indefinitely, except that it would delete the requirement with respect to a notice of sale. The bill would, until January 1, 2018, additionally require the borrower, as defined, to be provided with specified information in writing prior to recordation of a notice of default and, in certain circumstances, within 5 business days after recordation. The bill would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default or, until January 1, 2018, recording a notice of sale or conducting a trustee’s sale while a complete first lien loan modification application is pending, under specified conditions. The bill would, until January 1, 2018, establish additional procedures to be followed regarding a first lien loan modification application, the denial of an application, and a borrower’s right to appeal a denial.

(2)Existing law imposes various requirements that must be satisfied prior to exercising a power of sale under a mortgage or deed of trust, including, among other things, recording a notice of default and a notice of sale.

The bill would, until January 1, 2018, require a written notice to the borrower after the postponement of a foreclosure sale in order to advise the borrower of any new sale date and time, as specified. The bill would provide that an entity shall not record a notice of default or otherwise initiate the foreclosure process unless it is the holder of the beneficial interest under the deed of trust, the original or substituted trustee, or the designated agent of the holder of the beneficial interest, as specified.

The bill would prohibit recordation of a notice of default or a notice of sale or the conduct of a trustee’s sale if a foreclosure prevention alternative has been approved and certain conditions exist and would, until January 1, 2018, require recordation of a rescission of those notices upon execution of a permanent foreclosure prevention alternative. The bill would, until January 1, 2018, prohibit the collection of application fees and the collection of late fees while a foreclosure prevention alternative is being considered, if certain criteria are met, and would require a subsequent mortgage servicer to honor any previously approved foreclosure prevention alternative.

The bill would authorize a borrower to seek an injunction and damages for violations of certain of the provisions described above, except as specified. The bill would authorize the greater of treble actual damages or $50,000 in statutory damages if a violation of certain provisions is found to be intentional or reckless or resulted from willful misconduct, as specified. The bill would authorize the awarding of attorneys’ fees for prevailing borrowers, as specified. Violations of these provisions by licensees of the Department of Corporations, the Department of Financial Institutions, and the Department of Real Estate would also be violations of those respective licensing laws. Because a violation of certain of those licensing laws is a crime, the bill would impose a state-mandated local program.

The bill would provide that the requirements imposed on mortgage servicers, and mortgagees, trustees, beneficiaries, and authorized agents, described above are applicable only to mortgages or deeds of trust secured by residential real property not exceeding 4 dwelling units that is owner-occupied, as defined, and, until January 1, 2018, only to those entities who conduct more than 175 foreclosure sales per year or annual reporting period, except as specified.

The bill would require, upon request from a borrower who requests a foreclosure prevention alternative, a mortgage servicer who conducts more than 175 foreclosure sales per year or annual reporting period to establish a single point of contact and provide the borrower with one or more direct means of communication with the single point of contact. The bill would specify various responsibilities of the single point of contact. The bill would define single point of contact for these purposes.

(3)Existing law prescribes documents that may be recorded or filed in court.

This bill would require that a specified declaration, notice of default, notice of sale, deed of trust, assignment of a deed of trust, substitution of trustee, or declaration or affidavit filed in any court relative to a foreclosure proceeding or recorded by or on behalf of a mortgage servicer shall be accurate and complete and supported by competent and reliable evidence. The bill would require that before recording or filing any of those documents, a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose, including the borrower’s loan status and loan information. The bill would, until January 1, 2018, provide that any mortgage servicer that engages in multiple and repeated violations of these requirements shall be liable for a civil penalty of up to $7,500 per mortgage or deed of trust, in an action brought by specified state and local government entities, and would also authorize administrative enforcement against licensees of the Department of Corporations, the Department of Financial Institutions, and the Department of Real Estate.

The bill would authorize the Department of Corporations, the Department of Financial Institutions, and the Department of Real Estate to adopt regulations applicable to persons and entities under their respective jurisdictions for purposes of the provisions described above. The bill would provide that a violation of those regulations would be enforceable only by the regulating agency.

(4)   The bill would state findings and declarations of the Legislature in relation to foreclosures in the state generally, and would state the purposes of the bill.

(5)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason. Hide

Learn More

At LegInfo.ca.gov

Title

An Act to Amend and Add Sections 2923.5 and 2923.6 Of, to Amend and Repeal Section 2924 Of, to Add Sections 2920.5, 2923.4, 2923.7, 2924.17, and 2924.20 To, to Add and Repeal Sections 2923.55, 2924.9, 2924.10, 2924.18, and 2924.19 Of, and to Add, Repeal, and Add Sections 2924.11, 2924.12, and 2924.15 Of, the Civil Code, Relating to Mortgages.

Author(s)

Mike Eng, Mike Feuer, Holly Mitchell, John Perez

Co-Authors

• Mike Davis
• Wilmer Amina Carter
• Nancy Skinner
• Mark Leno
• Noreen Evans
• Ron Calderon
• Ellen Corbett
• Mark DeSaulnier
• Loni Hancock
• Fran Pavley
• Darrell Steinberg

Subjects

• Mortgages and deeds of trust: foreclosure

Major Actions

Introduced	2/08/2011
Referred to Committee
Passed Assembly Committee on Business, Professions and Consumer Protection	5/03/2011
Passed Assembly Committee on Appropriations	5/18/2011
Passed Assembly	5/23/2011
Passed Senate Committee on Business, Professions and Economic Development	6/20/2011
Passed Senate	4/19/2012
Failed passage in Assembly	4/23/2012
Passed Assembly	7/02/2012
Passed Senate	7/02/2012
Presented to the governor (enrolled)	7/06/2012
Became law (chaptered).	7/11/2012

Bill History

• All Votes
• All Actions

	Chamber/Committee	Motion	Date	Result
select this vote	Assembly Committee on Business, Professions and Consumer Protection	Do pass and be re-referred to the Committee on Appropriations.	5/03/2011	This motion PASSED the Assembly Committee on Business, Professions and Consumer Protection 9 voted YES 0 voted NO 0 voted present/not voting
select this vote	Assembly Committee on Appropriations	Do pass.	5/18/2011	This motion PASSED the Assembly Committee on Appropriations 17 voted YES 0 voted NO 0 voted present/not voting
select this vote	Assembly	AB 278 HILL Assembly Third Reading	5/23/2011	This bill PASSED the Assembly 78 voted YES 0 voted NO 2 voted present/not voting
select this vote	Senate Committee on Business, Professions and Economic Development	Do pass as amended, and re-refer to the Committee on Appropriations.	6/20/2011	This motion PASSED the Senate Committee on Business, Professions and Economic Development 9 voted YES 0 voted NO 0 voted present/not voting
select this vote	Senate	Assembly 3rd Reading AB278 Hill By Vargas	4/19/2012	This bill PASSED the Senate 23 voted YES 13 voted NO 4 voted present/not voting
select this vote	Assembly	AB 278 HILL Concurrence in Senate Amendments	4/23/2012	This bill DID NOT PASS the Assembly 5 voted YES 57 voted NO 18 voted present/not voting
select this vote	Assembly	AB 278 ENG Conference Report	7/02/2012	This bill PASSED the Assembly 54 voted YES 26 voted NO 0 voted present/not voting
currently selected	Senate	Conference Reports AB278 Eng By Leno	7/02/2012	This bill PASSED the Senate 25 voted YES 13 voted NO 2 voted present/not voting

	Action	Date	Description
	Introduced	2/08/2011
		2/08/2011	Read first time. To print.
		2/09/2011	From printer. May be heard in committee March 11.
		2/24/2011	Referred to Com. on B., P. & C.P.
		4/05/2011	In committee: Hearing postponed by committee.
select this vote	Vote	5/03/2011	Do pass and be re-referred to the Committee on Appropriations.
		5/04/2011	From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (May 3). Re-referred to Com. on APPR.
		5/18/2011	From committee: Do pass. (Ayes 17. Noes 0.) (May 18).
select this vote	Vote	5/18/2011	Do pass.
		5/19/2011	Read second time. Ordered to third reading.
		5/23/2011	Read third time. Passed. Ordered to the Senate. (Ayes 78. Noes 0. Page 1505.)
		5/23/2011	In Senate. Read first time. To Com. on RLS. for assignment.
select this vote	Assembly Vote on Passage	5/23/2011	AB 278 HILL Assembly Third Reading
		6/02/2011	Referred to Com. on B., P. & E.D.
select this vote	Vote	6/20/2011	Do pass as amended, and re-refer to the Committee on Appropriations.
		6/22/2011	From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (June 21).
		6/23/2011	Read second time and amended. Re-referred to Com. on APPR.
		7/11/2011	From committee: Be placed on second reading file pursuant to Senate Rule 28.8.
		7/12/2011	Read second time. Ordered to third reading.
		9/01/2011	Read third time and amended. Ordered to second reading.
		9/02/2011	Read second time. Ordered to third reading.
		9/09/2011	Ordered to inactive file at the request of Senator Price.
		4/16/2012	From inactive file. Ordered to second reading.
		4/17/2012	Read second time. Ordered to third reading.
		4/19/2012	Read third time. Passed. Ordered to the Assembly. (Ayes 23. Noes 13. Page 3219.).
		4/19/2012	In Assembly. Concurrence in Senate amendments pending. May be considered on or after April 21 pursuant to Assembly Rule 77.
select this vote	Senate Vote on Passage	4/19/2012	Assembly 3rd Reading AB278 Hill By Vargas
		4/23/2012	Assembly refused to concur in Senate amendments. To Conference Committee. (Ayes 5. Noes 57. Page 4482.) Assembly Members Eng, Feuer, and Wagner appointed to Conference Committee.
select this vote	Assembly Vote on Passage	4/23/2012	AB 278 HILL Concurrence in Senate Amendments
		4/24/2012	Senators Evans, Vargas, and Blakeslee appointed to Conference Committee.
		5/02/2012	Senators Evans, Calderon, and Blakeslee appointed to Conference Committee.
		5/14/2012	In Assembly: Joint Rule 29.5(a) suspended. (Ayes 72. Noes 0. Page 4808.) In Senate: Joint Rule 29.5(a) suspended. (Ayes 37. Noes 0. Page 3498.)
		6/27/2012	From Conference Committee: Be adopted. Assembly (Ayes 2 (Eng and Feuer). Noes 1 (Wagner)). Senate (Ayes 2 (Evans and Calderon). Noes 0.)). To print.
		6/28/2012	From printer.
		7/02/2012	Assembly adopts Conference Committee report. (Ayes 54. Noes 26. Page 5549.).
		7/02/2012	Senate adopted Conference Committee report. (Ayes 25. Noes 13. Page 4221.)
		7/02/2012	Ordered to Engrossing and Enrolling.
select this vote	Assembly Vote on Passage	7/02/2012	AB 278 ENG Conference Report
currently selected	Senate Vote on Passage	7/02/2012	Conference Reports AB278 Eng By Leno
		7/06/2012	Enrolled and presented to the Governor at 2:15 p.m.
		7/11/2012	Approved by the Governor.
		7/11/2012	Chaptered by Secretary of State - Chapter 86, Statutes of 2012.