Pre-Foreclosure – Required Notice and Duty to Confer with Borrower –

1 Oct

Pre-Foreclosure – Required Notice and Duty to Confer with Borrower –
2923.5.
(a) (1) A mortgagee, trustee, beneficiary, or authorized
agent may not file a notice of default pursuant to Section 2924 until 30 days after initial contact is made
as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in
subdivision (g).
(2) 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. During the initial 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 notice of default filed pursuant to Section 2924 shall
include a declaration that the mortgagee, beneficiary, or authorized agent has contacted the borrower,
has tried with due diligence to contact the borrower as required by this section, or that no contact was
required pursuant to subdivision (h).
(c) If a mortgagee, trustee, beneficiary, or authorized agent had already filed the notice of default prior to
the enactment of this section 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 either:
(1) States that the borrower was contacted to assess the borrower’s financial situation and to explore
options for the borrower to avoid foreclosure.
(2) Lists the efforts made, if any, to contact the borrower in the
event no contact was made.
(d) A mortgagee’s, beneficiary’s, or authorized agent’s loss
mitigation personnel may participate by telephone during any contact required by this section.
(e) For purposes of this section, a “borrower” shall include a
mortgagor or trustor.
(f) 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 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 (a). Any loan modification or workout plan
offered at the meeting by the mortgagee, beneficiary, or authorized agent is subject to approval by the
borrower.
(g) A notice of default may be filed pursuant to Section 2924 when a mortgagee, beneficiary, or
authorized agent has not contacted a borrower as required by paragraph (2) of subdivision (a) provided
that the failure to contact the borrower occurred despite the due diligence of the mortgagee,
beneficiary, or authorized agent. For purposes of this section, “due diligence” shall require and mean
all of the following:
(1) A mortgagee, beneficiary, or authorized agent shall first
attempt to contact a borrower by sending a first-class letter that
includes the toll-free telephone number made available by HUD to find a HUD-certified housing
counseling agency.
(2) (A) After the letter has been sent, the mortgagee,
beneficiary, or authorized agent shall attempt to contact the
borrower by telephone at least three times at different hours and on different days. Telephone calls
shall be made to the primary telephone number on file.
(B) 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.
(C) 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 primary telephone number and secondary telephone number or
numbers on file, if any, have been disconnected.
(3) If the borrower does not respond within two weeks after the telephone call requirements of
paragraph (2) have been satisfied, the mortgagee, beneficiary, or authorized agent shall then send a
certified letter, with return receipt requested.
(4) 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.
(5) The mortgagee, beneficiary, or authorized agent has posted a prominent link on the homepage of its
Internet Web site, if any, to the following information:
(A) 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 steps to take to explore
those options.
(B) 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.
(C) A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure
with their mortgagee, beneficiary, or authorized agent.
(D) The toll-free telephone number made available by HUD to find a HUD-certified housing counseling
agency.
(h) Subdivisions (a), (c), and (g) shall not apply if any of the
following occurs:
(1) 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) 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) 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.
(i) This section shall apply only to mortgages or deeds of trust
recorded from January 1, 2003, to December 31, 2007, inclusive, 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.

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