Tag Archives: 2924.12

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 rRepeal 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

6 Jan

 

CALIFORNIA HOMEOWNER BILL OF RIGHTS

Kamala D. Harris, Attorney General of California

The 2012 California Homeowner Bill of Rights is a legislative package designed to bring fairness, accountability and transparency to the state’s mortgage and foreclosure process.

More than one million California homes were lost to foreclosure between 2008 and 2011—with an additional 500,000 currently in the foreclosure pipeline. Seven of the nation’s 10 hardest-hit cities by foreclosure rate in 2011 were in California.

The California Homeowner Bill of Rights marks the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The first step was to create the Mortgage Fraud Strike Force, which has been investigating and prosecuting misconduct at all stages of the mortgage process. The second step was to extract a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers. The settlement contained thoughtful reforms but are only applicable for three years, and only to loans serviced by the settling banks.

Two key bills contain significant mortgage and foreclosure reforms. AB 278 (Eng/Feuer/Mitchell/Pérez) and SB 900 (Leno/Evans/Corbett/DeSaulnier/Pavley/Steinberg) have been thoroughly considered by a legislative conference committee. The major provisions of the bills include:

Dual track foreclosure ban – The legislation would require a mortgage servicer to render a decision on a loan modification application before advancing the foreclosure process by filing a notice of default or notice of sale, or by conducting a trustee’s sale. The foreclosure process is essentially paused upon the completion of a loan modification application for the duration of the lender’s review of that application.

 

Single point of contact – The legislation would require a mortgage servicer to designate a “single point of contact” for borrowers who are potentially eligible for a federal or proprietary loan modification application. The single point of contact is an individual or team which must have knowledge of the borrower’s status and foreclosure prevention alternatives, access to decision makers, and the responsibility to coordinate the flow of documentation between borrower and mortgage servicer.

 

Enforceability – Includes authority for borrowers to seek redress of “material” violations of the legislation. Injunctive relief would be available prior to a foreclosure sale and recovery of damages would be available following a sale.

 

Verification of documents – The legislation would subject the recording and filing of multiple unverified documents to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. It would also allow enforcement under a violator’s licensing statute by the Department of Corporations, Department of Real Estate or Department of Financial Institutions.

v v v v

The other bills in the California Homeowner Bill of Rights are:

BLIGHT PREVENTION LEGISLATION: AB 2314 (Carter) & SB 1472 (Pavley and DeSaulnier) to help combat the blight and crime associated with foreclosed properties.

v AB 2314: Passed out of Assembly (71-0). It was passed out of Senate Judiciary on June 26 (4-0). It will be heard next on the Senate floor.

v SB 1472: Passed out of Senate (36-0). It passed out of Assembly Housing and Community Development (7-0) on June 27, and will be heard next in Assembly Judiciary Committee on July 3.

 

TENANT PROTECTION LEGISLATION: AB 2610 (Skinner) and SB 1473 (Hancock) to help protect tenants in foreclosed properties.

v AB 2610: Passed out of Assembly (56-14). It will be heard next in Senate Judiciary on July 3.

v SB 1473: Passed out of Senate (25-13). It passed out the Assembly Housing and Community Development on June 27 (6-1) and will be heard next in Assembly Judiciary on July 3.

 

ENHANCEMENT OF ATTORNEY GENERAL ENFORCEMENT ACT: AB 1950 (Davis) to strengthen the law enforcement response to mortgage and foreclosure fraud.

v AB 1950: Passed out of Assembly (56-22). It passed out of Senate Banking (5-0) on June 27 and will be heard next in the Senate Judiciary, July 3, 2012.

 

ATTORNEY GENERAL SPECIAL GRAND JURY ACT: AB 1763 (Davis) and SB 1474 (Hancock) to strengthen prosecutions of complex, multi-jurisdictional fraud and crimes.

v SB 1474: Passed out of Senate (38-0). Passed out of Assembly Public Safety (4-0) and will be heard next in Assembly Appropriations.

v AB 1763: Passed out of Assembly (78-0). Passed out of Senate Public Safety on June 26 (7-0). It will be heard next in Senate Appropriations.

 

 

 

 

Assembly Bill No. 278

CHAPTER 86

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.

[Approved by Governor July 11, 2012. Filed with

Secretary of State July 11, 2012.]

legislative counsel’s digest

AB 278, Eng. Mortgages and deeds of trust: foreclosure.

(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

94

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,

94

Ch. 86 2

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.

The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares all of the following:

(a) California is still reeling from the economic impacts of a wave of

residential property foreclosures that began in 2007. From 2007 to 2011

alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of

the top 100 hardest hit ZIP Codes in the nation were in California, and the

current wave of foreclosures continues apace. All of this foreclosure activity

has adversely affected property values and resulted in less money for schools,

public safety, and other public services. In addition, according to the Urban

Institute, every foreclosure imposes significant costs on local governments,

including an estimated nineteen thousand two hundred twenty-nine dollars

($19,229) in local government costs. And the foreclosure crisis is not over;

there remain more than two million “underwater” mortgages in California.

(b) It is essential to the economic health of this state to mitigate the

negative effects on the state and local economies and the housing market

that are the result of continued foreclosures by modifying the foreclosure

process to ensure that borrowers who may qualify for a foreclosure

alternative are considered for, and have a meaningful opportunity to obtain,

available loss mitigation options. These changes to the state’s foreclosure

process are essential to ensure that the current crisis is not worsened by

unnecessarily adding foreclosed properties to the market when an alternative

to foreclosure may be available. Avoiding foreclosure, where possible, will

94

3 Ch. 86

help stabilize the state’s housing market and avoid the substantial,

corresponding negative effects of foreclosures on families, communities,

and the state and local economy.

(c) This act is necessary to provide stability to California’s statewide and

regional economies and housing market by facilitating opportunities for

borrowers to pursue loss mitigation options.

SEC. 2. Section 2920.5 is added to the Civil Code, to read:

2920.5. For purposes of this article, the following definitions apply:

(a) “Mortgage servicer” means a person or entity who directly services

a loan, or who is responsible for interacting with the borrower, managing

the loan account on a daily basis including collecting and crediting periodic

loan payments, managing any escrow account, or enforcing the note and

security instrument, either as the current owner of the promissory note or

as the current owner’s authorized agent. “Mortgage servicer” also means a

subservicing agent to a master servicer by contract. “Mortgage servicer”

shall not include a trustee, or a trustee’s authorized agent, acting under a

power of sale pursuant to a deed of trust.

(b) “Foreclosure prevention alternative” means a first lien loan

modification or another available loss mitigation option.

(c) (1) Unless otherwise provided and for purposes of Sections 2923.4,

2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, 2924.18, and

2924.19, “borrower” means any natural person who is a mortgagor or trustor

and who is potentially eligible for any federal, state, or proprietary

foreclosure prevention alternative program offered by, or through, his or

her mortgage servicer.

(2) For purposes of the sections listed in paragraph (1), “borrower” shall

not include any of the following:

(A) An individual who has surrendered the secured 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.

(B) An individual who 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.

(C) An individual who has filed a case 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.

(d) “First lien” means the most senior mortgage or deed of trust on the

property that is the subject of the notice of default or notice of sale.

SEC. 3. Section 2923.4 is added to the Civil Code, to read:

2923.4. (a) The purpose of the act that added this section is to ensure

that, as part of the nonjudicial foreclosure process, borrowers are considered

for, and have a meaningful opportunity to obtain, available loss mitigation

options, if any, offered by or through the borrower’s mortgage servicer,

such as loan modifications or other alternatives to foreclosure. Nothing in

94

Ch. 86 4

the act that added this section, however, shall be interpreted to require a

particular result of that process.

(b) Nothing in this article obviates or supersedes the obligations of the

signatories to the consent judgment entered in the case entitled United States

of America et al. v. Bank of America Corporation et al., filed in the United

States District Court for the District of Columbia, case number

1:12-cv-00361 RMC.

SEC. 4. Section 2923.5 of the Civil Code is amended to read:

2923.5. (a) (1) A mortgage servicer, mortgagee, trustee, beneficiary,

or authorized agent may not record a notice of default pursuant to Section

2924 until both of the following:

(A) Either 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 (e).

(B) The mortgage servicer complies with paragraph (1) of subdivision

(a) of Section 2924.18, if the borrower has provided a complete application

as defined in subdivision (d) of Section 2924.18.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

(c) A mortgage servicer’s loss mitigation personnel may participate by

telephone during any contact required by this section.

(d) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other adviser to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

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 mortgage servicer is subject to

approval by the borrower.

(e) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer has not contacted a borrower as required by paragraph

(2) of subdivision (a) provided that the failure to contact the borrower

94

5 Ch. 86

occurred despite the due diligence of the mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer 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 mortgage servicer 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 mortgage servicer 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 mortgage

servicer.

(C) A mortgage servicer 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 mortgage servicer

shall then send a certified letter, with return receipt requested.

(4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options for

avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgage servicer.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall apply only to entities described in subdivision (b)

of Section 2924.18.

(h) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 5. Section 2923.5 is added to the Civil Code, to read:

2923.5. (a) (1) A mortgage servicer, mortgagee, trustee, beneficiary,

or authorized agent may not record a notice of default pursuant to Section

2924 until both of the following:

94

Ch. 86 6

(A) Either 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 (e).

(B) The mortgage servicer complies with subdivision (a) of Section

2924.11, if the borrower has provided a complete application as defined in

subdivision (f) of Section 2924.11.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

(c) A mortgage servicer’s loss mitigation personnel may participate by

telephone during any contact required by this section.

(d) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other adviser to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

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 mortgage servicer is subject to

approval by the borrower.

(e) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer 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 mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer 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 mortgage servicer 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 mortgage servicer may attempt to contact a borrower using an

automated system to dial borrowers, provided that, if the telephone call is

94

7 Ch. 86

answered, the call is connected to a live representative of the mortgage

servicer.

(C) A mortgage servicer 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 mortgage servicer

shall then send a certified letter, with return receipt requested.

(4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options for

avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgage servicer.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall become operative on January 1, 2018.

SEC. 6. Section 2923.55 is added to the Civil Code, to read:

2923.55. (a) A mortgage servicer, mortgagee, trustee, beneficiary, or

authorized agent may not record a notice of default pursuant to Section 2924

until all of the following:

(1) The mortgage servicer has satisfied the requirements of paragraph

(1) of subdivision (b).

(2) Either 30 days after initial contact is made as required by paragraph

(2) of subdivision (b) or 30 days after satisfying the due diligence

requirements as described in subdivision (f).

(3) The mortgage servicer complies with subdivision (c) of Section

2923.6, if the borrower has provided a complete application as defined in

subdivision (h) of Section 2923.6.

(b) (1) As specified in subdivision (a), a mortgage servicer shall send

the following information in writing to the borrower:

(A) A statement that if the borrower is a servicemember or a dependent

of a servicemember, he or she may be entitled to certain protections under

the federal Servicemembers Civil Relief Act (50 U.S.C. Sec. 501 et seq.)

regarding the servicemember’s interest rate and the risk of foreclosure, and

counseling for covered servicemembers that is available at agencies such

as Military OneSource and Armed Forces Legal Assistance.

94

Ch. 86 8

(B) A statement that the borrower may request the following:

(i) A copy of the borrower’s promissory note or other evidence of

indebtedness.

(ii) A copy of the borrower’s deed of trust or mortgage.

(iii) A copy of any assignment, if applicable, of the borrower’s mortgage

or deed of trust required to demonstrate the right of the mortgage servicer

to foreclose.

(iv) A copy of the borrower’s payment history since the borrower was

last less than 60 days past due.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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.

(c) A notice of default recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

(d) A mortgage servicer’s loss mitigation personnel may participate by

telephone during any contact required by this section.

(e) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other adviser to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

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 (b). Any foreclosure prevention

alternative offered at the meeting by the mortgage servicer is subject to

approval by the borrower.

(f) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer has not contacted a borrower as required by paragraph

(2) of subdivision (b), provided that the failure to contact the borrower

occurred despite the due diligence of the mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer 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 mortgage servicer shall attempt

to contact the borrower by telephone at least three times at different hours

94

9 Ch. 86

and on different days. Telephone calls shall be made to the primary telephone

number on file.

(B) A mortgage servicer 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 mortgage

servicer.

(C) A mortgage servicer 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 mortgage servicer

shall then send a certified letter, with return receipt requested, that includes

the toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options for

avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgage servicer.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(g) This section shall not apply to entities described in subdivision (b)

of Section 2924.18.

(h) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(i) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 7. Section 2923.6 of the Civil Code is amended to read:

2923.6. (a) The Legislature finds and declares that any duty that

mortgage servicers may have to maximize net present value under their

pooling and servicing agreements is owed to all parties in a loan pool, or to

all investors under a pooling and servicing agreement, not to any particular

party in the loan pool or investor under a pooling and servicing agreement,

and that a mortgage servicer acts in the best interests of all parties to the

loan pool or investors in the pooling and servicing agreement if it agrees to

or implements a loan modification or workout plan for which both of the

following apply:

94

Ch. 86 10

(1) The loan is in payment default, or payment default is reasonably

foreseeable.

(2) Anticipated recovery under the loan modification or workout plan

exceeds the anticipated recovery through foreclosure on a net present value

basis.

(b) It is the intent of the Legislature that the mortgage servicer offer the

borrower a loan modification or workout plan if such a modification or plan

is consistent with its contractual or other authority.

(c) If a borrower submits a complete application for a first lien loan

modification offered by, or through, the borrower’s mortgage servicer, a

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall

not record a notice of default or notice of sale, or conduct a trustee’s sale,

while the complete first lien loan modification application is pending. A

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall

not record a notice of default or notice of sale or conduct a trustee’s sale

until any of the following occurs:

(1) The mortgage servicer makes a written determination that the borrower

is not eligible for a first lien loan modification, and any appeal period

pursuant to subdivision (d) has expired.

(2) The borrower does not accept an offered first lien loan modification

within 14 days of the offer.

(3) The borrower accepts a written first lien loan modification, but

defaults on, or otherwise breaches the borrower’s obligations under, the

first lien loan modification.

(d) If the borrower’s application for a first lien loan modification is

denied, the borrower shall have at least 30 days from the date of the written

denial to appeal the denial and to provide evidence that the mortgage

servicer’s determination was in error.

(e) If the borrower’s application for a first lien loan modification is

denied, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized

agent shall not record a notice of default or, if a notice of default has already

been recorded, record a notice of sale or conduct a trustee’s sale until the

later of:

(1) Thirty-one days after the borrower is notified in writing of the denial.

(2) If the borrower appeals the denial pursuant to subdivision (d), the

later of 15 days after the denial of the appeal or 14 days after a first lien

loan modification is offered after appeal but declined by the borrower, or,

if a first lien loan modification is offered and accepted after appeal, the date

on which the borrower fails to timely submit the first payment or otherwise

breaches the terms of the offer.

(f) Following the denial of a first lien loan modification application, the

mortgage servicer shall send a written notice to the borrower identifying

the reasons for denial, including the following:

(1) The amount of time from the date of the denial letter in which the

borrower may request an appeal of the denial of the first lien loan

modification and instructions regarding how to appeal the denial.

94

11 Ch. 86

(2) If the denial was based on investor disallowance, the specific reasons

for the investor disallowance.

(3) If the denial is the result of a net present value calculation, the monthly

gross income and property value used to calculate the net present value and

a statement that the borrower may obtain all of the inputs used in the net

present value calculation upon written request to the mortgage servicer.

(4) If applicable, a finding that the borrower was previously offered a

first lien loan modification and failed to successfully make payments under

the terms of the modified loan.

(5) If applicable, a description of other foreclosure prevention alternatives

for which the borrower may be eligible, and a list of the steps the borrower

must take in order to be considered for those options. If the mortgage servicer

has already approved the borrower for another foreclosure prevention

alternative, information necessary to complete the foreclosure prevention

alternative.

(g) In order to minimize the risk of borrowers submitting multiple

applications for first lien loan modifications for the purpose of delay, the

mortgage servicer shall not be obligated to evaluate applications from

borrowers who have already been evaluated or afforded a fair opportunity

to be evaluated for a first lien loan modification prior to January 1, 2013,

or who have been evaluated or afforded a fair opportunity to be evaluated

consistent with the requirements of this section, unless there has been a

material change in the borrower’s financial circumstances since the date of

the borrower’s previous application and that change is documented by the

borrower and submitted to the mortgage servicer.

(h) For purposes of this section, an application shall be deemed

“complete” when a borrower has supplied the mortgage servicer with all

documents required by the mortgage servicer within the reasonable

timeframes specified by the mortgage servicer.

(i) Subdivisions (c) to (h), inclusive, shall not apply to entities described

in subdivision (b) of Section 2924.18.

(j) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(k) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 8. Section 2923.6 is added to the Civil Code, to read:

2923.6. (a) The Legislature finds and declares that any duty mortgage

servicers may have to maximize net present value under their pooling and

servicing agreements is owed to all parties in a loan pool, or to all investors

under a pooling and servicing agreement, not to any particular party in the

loan pool or investor under a pooling and servicing agreement, and that a

mortgage servicer acts in the best interests of all parties to the loan pool or

investors in the pooling and servicing agreement if it agrees to or implements

a loan modification or workout plan for which both of the following apply:

(1) The loan is in payment default, or payment default is reasonably

foreseeable.

94

Ch. 86 12

(2) Anticipated recovery under the loan modification or workout plan

exceeds the anticipated recovery through foreclosure on a net present value

basis.

(b) It is the intent of the Legislature that the mortgage servicer offer the

borrower a loan modification or workout plan if such a modification or plan

is consistent with its contractual or other authority.

(c) This section shall become operative on January 1, 2018.

SEC. 9. Section 2923.7 is added to the Civil Code, to read:

2923.7. (a) Upon request from a borrower who requests a foreclosure

prevention alternative, the mortgage servicer shall promptly establish a

single point of contact and provide to the borrower one or more direct means

of communication with the single point of contact.

(b) The single point of contact shall be responsible for doing all of the

following:

(1) Communicating the process by which a borrower may apply for an

available foreclosure prevention alternative and the deadline for any required

submissions to be considered for these options.

(2) Coordinating receipt of all documents associated with available

foreclosure prevention alternatives and notifying the borrower of any missing

documents necessary to complete the application.

(3) Having access to current information and personnel sufficient to

timely, accurately, and adequately inform the borrower of the current status

of the foreclosure prevention alternative.

(4) Ensuring that a borrower is considered for all foreclosure prevention

alternatives offered by, or through, the mortgage servicer, if any.

(5) Having access to individuals with the ability and authority to stop

foreclosure proceedings when necessary.

(c) The single point of contact shall remain assigned to the borrower’s

account until the mortgage servicer determines that all loss mitigation options

offered by, or through, the mortgage servicer have been exhausted or the

borrower’s account becomes current.

(d) The mortgage servicer shall ensure that a single point of contact refers

and transfers a borrower to an appropriate supervisor upon request of the

borrower, if the single point of contact has a supervisor.

(e) For purposes of this section, “single point of contact” means an

individual or team of personnel each of whom has the ability and authority

to perform the responsibilities described in subdivisions (b) to (d), inclusive.

The mortgage servicer shall ensure that each member of the team is

knowledgeable about the borrower’s situation and current status in the

alternatives to foreclosure process.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) (1) This section shall not apply to a depository institution chartered

under state or federal law, a person licensed pursuant to Division 9

(commencing with Section 22000) or Division 20 (commencing with Section

50000) of the Financial Code, or a person licensed pursuant to Part 1

(commencing with Section 10000) of Division 4 of the Business and

94

13 Ch. 86

Professions Code, that, during its immediately preceding annual reporting

period, as established with its primary regulator, foreclosed on 175 or fewer

residential real properties, containing no more than four dwelling units, that

are located in California.

(2) Within three months after the close of any calendar year or annual

reporting period as established with its primary regulator during which an

entity or person described in paragraph (1) exceeds the threshold of 175

specified in paragraph (1), that entity shall notify its primary regulator, in

a manner acceptable to its primary regulator, and any mortgagor or trustor

who is delinquent on a residential mortgage loan serviced by that entity of

the date on which that entity will be subject to this section, which date shall

be the first day of the first month that is six months after the close of the

calendar year or annual reporting period during which that entity exceeded

the threshold.

SEC. 10. Section 2924 of the Civil Code, as amended by Section 1 of

Chapter 180 of the Statutes of 2010, is amended to read:

2924. (a) Every transfer of an interest in property, other than in trust,

made only as a security for the performance of another act, is to be deemed

a mortgage, except when in the case of personal property it is accompanied

by actual change of possession, in which case it is to be deemed a pledge.

Where, by a mortgage created after July 27, 1917, of any estate in real

property, other than an estate at will or for years, less than two, or in any

transfer in trust made after July 27, 1917, of a like estate to secure the

performance of an obligation, a power of sale is conferred upon the

mortgagee, trustee, or any other person, to be exercised after a breach of

the obligation for which that mortgage or transfer is a security, the power

shall not be exercised except where the mortgage or transfer is made pursuant

to an order, judgment, or decree of a court of record, or to secure the payment

of bonds or other evidences of indebtedness authorized or permitted to be

issued by the Commissioner of Corporations, or is made by a public utility

subject to the provisions of the Public Utilities Act, until all of the following

apply:

(1) The trustee, mortgagee, or beneficiary, or any of their authorized

agents shall first file for record, in the office of the recorder of each county

wherein the mortgaged or trust property or some part or parcel thereof is

situated, a notice of default. That notice of default shall include all of the

following:

(A) A statement identifying the mortgage or deed of trust by stating the

name or names of the trustor or trustors and giving the book and page, or

instrument number, if applicable, where the mortgage or deed of trust is

recorded or a description of the mortgaged or trust property.

(B) A statement that a breach of the obligation for which the mortgage

or transfer in trust is security has occurred.

(C) A statement setting forth the nature of each breach actually known

to the beneficiary and of his or her election to sell or cause to be sold the

property to satisfy that obligation and any other obligation secured by the

deed of trust or mortgage that is in default.

94

Ch. 86 14

(D) If the default is curable pursuant to Section 2924c, the statement

specified in paragraph (1) of subdivision (b) of Section 2924c.

(2) Not less than three months shall elapse from the filing of the notice

of default.

(3) Except as provided in paragraph (4), after the lapse of the three months

described in paragraph (2), the mortgagee, trustee, or other person authorized

to take the sale shall give notice of sale, stating the time and place thereof,

in the manner and for a time not less than that set forth in Section 2924f.

(4) Notwithstanding paragraph (3), the mortgagee, trustee, or other person

authorized to take sale may record a notice of sale pursuant to Section 2924f

up to five days before the lapse of the three-month period described in

paragraph (2), provided that the date of sale is no earlier than three months

and 20 days after the recording of the notice of default.

(5) Until January 1, 2018, whenever a sale is postponed for a period of

at least 10 business days pursuant to Section 2924g, a mortgagee, beneficiary,

or authorized agent shall provide written notice to a borrower regarding the

new sale date and time, within five business days following the

postponement. Information provided pursuant to this paragraph shall not

constitute the public declaration required by subdivision (d) of Section

2924g. Failure to comply with this paragraph shall not invalidate any sale

that would otherwise be valid under Section 2924f. This paragraph shall be

inoperative on January 1, 2018.

(6) No entity shall record or cause a notice of default to be recorded or

otherwise initiate the foreclosure process unless it is the holder of the

beneficial interest under the mortgage or deed of trust, the original trustee

or the substituted trustee under the deed of trust, or the designated agent of

the holder of the beneficial interest. No agent of the holder of the beneficial

interest under the mortgage or deed of trust, original trustee or substituted

trustee under the deed of trust may record a notice of default or otherwise

commence the foreclosure process except when acting within the scope of

authority designated by the holder of the beneficial interest.

(b) In performing acts required by this article, the trustee shall incur no

liability for any good faith error resulting from reliance on information

provided in good faith by the beneficiary regarding the nature and the amount

of the default under the secured obligation, deed of trust, or mortgage. In

performing the acts required by this article, a trustee shall not be subject to

Title 1.6c (commencing with Section 1788) of Part 4.

(c) A recital in the deed executed pursuant to the power of sale of

compliance with all requirements of law regarding the mailing of copies of

notices or the publication of a copy of the notice of default or the personal

delivery of the copy of the notice of default or the posting of copies of the

notice of sale or the publication of a copy thereof shall constitute prima

facie evidence of compliance with these requirements and conclusive

evidence thereof in favor of bona fide purchasers and encumbrancers for

value and without notice.

(d) All of the following shall constitute privileged communications

pursuant to Section 47:

94

15 Ch. 86

(1) The mailing, publication, and delivery of notices as required by this

section.

(2) Performance of the procedures set forth in this article.

(3) Performance of the functions and procedures set forth in this article

if those functions and procedures are necessary to carry out the duties

described in Sections 729.040, 729.050, and 729.080 of the Code of Civil

Procedure.

(e) There is a rebuttable presumption that the beneficiary actually knew

of all unpaid loan payments on the obligation owed to the beneficiary and

secured by the deed of trust or mortgage subject to the notice of default.

However, the failure to include an actually known default shall not invalidate

the notice of sale and the beneficiary shall not be precluded from asserting

a claim to this omitted default or defaults in a separate notice of default.

SEC. 11. Section 2924 of the Civil Code, as amended by Section 2 of

Chapter 180 of the Statutes of 2010, is repealed.

SEC. 12. Section 2924.9 is added to the Civil Code, to read:

2924.9. (a) Unless a borrower has previously exhausted the first lien

loan modification process offered by, or through, his or her mortgage servicer

described in Section 2923.6, within five business days after recording a

notice of default pursuant to Section 2924, a mortgage servicer that offers

one or more foreclosure prevention alternatives shall send a written

communication to the borrower that includes all of the following information:

(1) That the borrower may be evaluated for a foreclosure prevention

alternative or, if applicable, foreclosure prevention alternatives.

(2) Whether an application is required to be submitted by the borrower

in order to be considered for a foreclosure prevention alternative.

(3) The means and process by which a borrower may obtain an application

for a foreclosure prevention alternative.

(b) This section shall not apply to entities described in subdivision (b)

of Section 2924.18.

(c) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(d) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 13. Section 2924.10 is added to the Civil Code, to read:

2924.10. (a) When a borrower submits a complete first lien modification

application or any document in connection with a first lien modification

application, the mortgage servicer shall provide written acknowledgment

of the receipt of the documentation within five business days of receipt. In

its initial acknowledgment of receipt of the loan modification application,

the mortgage servicer shall include the following information:

(1) A description of the loan modification process, including an estimate

of when a decision on the loan modification will be made after a complete

application has been submitted by the borrower and the length of time the

borrower will have to consider an offer of a loan modification or other

foreclosure prevention alternative.

94

Ch. 86 16

(2) Any deadlines, including deadlines to submit missing documentation,

that would affect the processing of a first lien loan modification application.

(3) Any expiration dates for submitted documents.

(4) Any deficiency in the borrower’s first lien loan modification

application.

(b) For purposes of this section, a borrower’s first lien loan modification

application shall be deemed to be “complete” when a borrower has supplied

the mortgage servicer with all documents required by the mortgage servicer

within the reasonable timeframes specified by the mortgage servicer.

(c) This section shall not apply to entities described in subdivision (b)

of Section 2924.18.

(d) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(e) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 14. Section 2924.11 is added to the Civil Code, to read:

2924.11. (a) If a foreclosure prevention alternative is approved in writing

prior to the recordation of a notice of default, a mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent shall not record a notice of default

under either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(b) If a foreclosure prevention alternative is approved in writing after

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of sale or conduct

a trustee’s sale under either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(c) When a borrower accepts an offered first lien loan modification or

other foreclosure prevention alternative, the mortgage servicer shall provide

the borrower with a copy of the fully executed loan modification agreement

or agreement evidencing the foreclosure prevention alternative following

receipt of the executed copy from the borrower.

(d) A mortgagee, beneficiary, or authorized agent shall record a rescission

of a notice of default or cancel a pending trustee’s sale, if applicable, upon

the borrower executing a permanent foreclosure prevention alternative. In

the case of a short sale, the rescission or cancellation of the pending trustee’s

sale shall occur when the short sale has been approved by all parties and

94

17 Ch. 86

proof of funds or financing has been provided to the mortgagee, beneficiary,

or authorized agent.

(e) The mortgage servicer shall not charge any application, processing,

or other fee for a first lien loan modification or other foreclosure prevention

alternative.

(f) The mortgage servicer shall not collect any late fees for periods during

which a complete first lien loan modification application is under

consideration or a denial is being appealed, the borrower is making timely

modification payments, or a foreclosure prevention alternative is being

evaluated or exercised.

(g) If a borrower has been approved in writing for a first lien loan

modification or other foreclosure prevention alternative, and the servicing

of that borrower’s loan is transferred or sold to another mortgage servicer,

the subsequent mortgage servicer shall continue to honor any previously

approved first lien loan modification or other foreclosure prevention

alternative, in accordance with the provisions of the act that added this

section.

(h) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(i) This section shall not apply to entities described in subdivision (b) of

Section 2924.18.

(j) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 15. Section 2924.11 is added to the Civil Code, to read:

2924.11. (a) If a borrower submits a complete application for a

foreclosure prevention alternative offered by, or through, the borrower’s

mortgage servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or

authorized agent shall not record a notice of sale or conduct a trustee’s sale

while the complete foreclosure prevention alternative application is pending,

and until the borrower has been provided with a written determination by

the mortgage servicer regarding that borrower’s eligibility for the requested

foreclosure prevention alternative.

(b) Following the denial of a first lien loan modification application, the

mortgage servicer shall send a written notice to the borrower identifying

with specificity the reasons for the denial and shall include a statement that

the borrower may obtain additional documentation supporting the denial

decision upon written request to the mortgage servicer.

(c) If a foreclosure prevention alternative is approved in writing prior to

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of default under

either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

94

Ch. 86 18

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(d) If a foreclosure prevention alternative is approved in writing after

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of sale or conduct

a trustee’s sale under either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(e) This section applies only to mortgages or deeds of trust as described

in Section 2924.15.

(f) For purposes of this section, an application shall be deemed “complete”

when a borrower has supplied the mortgage servicer with all documents

required by the mortgage servicer within the reasonable timeframes specified

by the mortgage servicer.

(g) This section shall become operative on January 1, 2018.

SEC. 16. Section 2924.12 is added to the Civil Code, to read:

2924.12. (a) (1) If a trustee’s deed upon sale has not been recorded, a

borrower may bring an action for injunctive relief to enjoin a material

violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or

2924.17.

(2) Any injunction shall remain in place and any trustee’s sale shall be

enjoined until the court determines that the mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent has corrected and remedied the

violation or violations giving rise to the action for injunctive relief. An

enjoined entity may move to dissolve an injunction based on a showing that

the material violation has been corrected and remedied.

(b) After a trustee’s deed upon sale has been recorded, a mortgage

servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable

to a borrower for actual economic damages pursuant to Section 3281,

resulting from a material violation of Section 2923.55, 2923.6, 2923.7,

2924.9, 2924.10, 2924.11, or 2924.17 by that mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent where the violation was not corrected

and remedied prior to the recordation of the trustee’s deed upon sale. If the

court finds that the material violation was intentional or reckless, or resulted

from willful misconduct by a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent, the court may award the borrower the

greater of treble actual damages or statutory damages of fifty thousand

dollars ($50,000).

(c) A mortgage servicer, mortgagee, trustee, beneficiary, or authorized

agent shall not be liable for any violation that it has corrected and remedied

prior to the recordation of a trustee’s deed upon sale, or that has been

corrected and remedied by third parties working on its behalf prior to the

recordation of a trustee’s deed upon sale.

94

19 Ch. 86

(d) A violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10,

2924.11, or 2924.17 by a person licensed by the Department of Corporations,

Department of Financial Institutions, or Department of Real Estate shall be

deemed to be a violation of that person’s licensing law.

(e) No violation of this article shall affect the validity of a sale in favor

of a bona fide purchaser and any of its encumbrancers for value without

notice.

(f) A third-party encumbrancer shall not be relieved of liability resulting

from violations of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10,

2924.11, or 2924.17 committed by that third-party encumbrancer, that

occurred prior to the sale of the subject property to the bona fide purchaser.

(g) A signatory to a consent judgment entered in the case entitled United

States of America et al. v. Bank of America Corporation et al., filed in the

United States District Court for the District of Columbia, case number

1:12-cv-00361 RMC, that is in compliance with the relevant terms of the

Settlement Term Sheet of that consent judgment with respect to the borrower

who brought an action pursuant to this section while the consent judgment

is in effect shall have no liability for a violation of Section 2923.55, 2923.6,

2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.

(h) The rights, remedies, and procedures provided by this section are in

addition to and independent of any other rights, remedies, or procedures

under any other law. Nothing in this section shall be construed to alter, limit,

or negate any other rights, remedies, or procedures provided by law.

(i) A court may award a prevailing borrower reasonable attorney’s fees

and costs in an action brought pursuant to this section. A borrower shall be

deemed to have prevailed for purposes of this subdivision if the borrower

obtained injunctive relief or was awarded damages pursuant to this section.

(j) This section shall not apply to entities described in subdivision (b) of

Section 2924.18.

(k) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 17. Section 2924.12 is added to the Civil Code, to read:

2924.12. (a) (1) If a trustee’s deed upon sale has not been recorded, a

borrower may bring an action for injunctive relief to enjoin a material

violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.

(2) Any injunction shall remain in place and any trustee’s sale shall be

enjoined until the court determines that the mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent has corrected and remedied the

violation or violations giving rise to the action for injunctive relief. An

enjoined entity may move to dissolve an injunction based on a showing that

the material violation has been corrected and remedied.

(b) After a trustee’s deed upon sale has been recorded, a mortgage

servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable

to a borrower for actual economic damages pursuant to Section 3281,

resulting from a material violation of Section 2923.5, 2923.7, 2924.11, or

2924.17 by that mortgage servicer, mortgagee, trustee, beneficiary, or

94

Ch. 86 20

authorized agent where the violation was not corrected and remedied prior

to the recordation of the trustee’s deed upon sale. If the court finds that the

material violation was intentional or reckless, or resulted from willful

misconduct by a mortgage servicer, mortgagee, trustee, beneficiary, or

authorized agent, the court may award the borrower the greater of treble

actual damages or statutory damages of fifty thousand dollars ($50,000).

(c) A mortgage servicer, mortgagee, trustee, beneficiary, or authorized

agent shall not be liable for any violation that it has corrected and remedied

prior to the recordation of the trustee’s deed upon sale, or that has been

corrected and remedied by third parties working on its behalf prior to the

recordation of the trustee’s deed upon sale.

(d) A violation of Section 2923.5, 2923.7, 2924.11, or 2924.17 by a

person licensed by the Department of Corporations, Department of Financial

Institutions, or Department of Real Estate shall be deemed to be a violation

of that person’s licensing law.

(e) No violation of this article shall affect the validity of a sale in favor

of a bona fide purchaser and any of its encumbrancers for value without

notice.

(f) A third-party encumbrancer shall not be relieved of liability resulting

from violations of Section 2923.5, 2923.7, 2924.11, or 2924.17 committed

by that third-party encumbrancer, that occurred prior to the sale of the subject

property to the bona fide purchaser.

(g) The rights, remedies, and procedures provided by this section are in

addition to and independent of any other rights, remedies, or procedures

under any other law. Nothing in this section shall be construed to alter, limit,

or negate any other rights, remedies, or procedures provided by law.

(h) A court may award a prevailing borrower reasonable attorney’s fees

and costs in an action brought pursuant to this section. A borrower shall be

deemed to have prevailed for purposes of this subdivision if the borrower

obtained injunctive relief or was awarded damages pursuant to this section.

(i) This section shall become operative on January 1, 2018.

SEC. 18. Section 2924.15 is added to the Civil Code, to read:

2924.15. (a) Unless otherwise provided, paragraph (5) of subdivision

(a) of Section 2924, and Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9,

2924.10, 2924.11, and 2924.18 shall apply only to first lien mortgages or

deeds of trust that are secured by owner-occupied residential real property

containing no more than four dwelling units. For these purposes,

“owner-occupied” means that the property is the principal residence of the

borrower and is security for a loan made for personal, family, or household

purposes.

(b) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 19. Section 2924.15 is added to the Civil Code, to read:

2924.15. (a) Unless otherwise provided, Sections 2923.5, 2923.7, and

2924.11 shall apply only to first lien mortgages or deeds of trust that are

secured by owner-occupied residential real property containing no more

94

21 Ch. 86

than four dwelling units. For these purposes, “owner-occupied” means that

the property is the principal residence of the borrower and is security for a

loan made for personal, family, or household purposes.

(b) This section shall become operative on January 1, 2018.

SEC. 20. Section 2924.17 is added to the Civil Code, to read:

2924.17. (a) A declaration recorded pursuant to Section 2923.5 or, until

January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of

sale, assignment of a deed of trust, or substitution of trustee recorded by or

on behalf of a mortgage servicer in connection with a foreclosure subject

to the requirements of Section 2924, or a declaration or affidavit filed in

any court relative to a foreclosure proceeding shall be accurate and complete

and supported by competent and reliable evidence.

(b) Before recording or filing any of the documents described in

subdivision (a), 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.

(c) Until January 1, 2018, any mortgage servicer that engages in multiple

and repeated uncorrected violations of subdivision (b) in recording

documents or filing documents in any court relative to a foreclosure

proceeding shall be liable for a civil penalty of up to seven thousand five

hundred dollars ($7,500) per mortgage or deed of trust in an action brought

by a government entity identified in Section 17204 of the Business and

Professions Code, or in an administrative proceeding brought by the

Department of Corporations, the Department of Real Estate, or the

Department of Financial Institutions against a respective licensee, in addition

to any other remedies available to these entities. This subdivision shall be

inoperative on January 1, 2018.

SEC. 21. Section 2924.18 is added to the Civil Code, to read:

2924.18. (a) (1) If a borrower submits a complete application for a first

lien loan modification offered by, or through, the borrower’s mortgage

servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or authorized

agent shall not record a notice of default, notice of sale, or conduct a trustee’s

sale while the complete first lien loan modification application is pending,

and until the borrower has been provided with a written determination by

the mortgage servicer regarding that borrower’s eligibility for the requested

loan modification.

(2) If a foreclosure prevention alternative has been approved in writing

prior to the recordation of a notice of default, a mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent shall not record a notice of default

under either of the following circumstances:

(A) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(B) A foreclosure prevention alternative has been approved in writing

by all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

94

Ch. 86 22

(3) If a foreclosure prevention alternative is approved in writing after

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of sale or conduct

a trustee’s sale under either of the following circumstances:

(A) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(B) A foreclosure prevention alternative has been approved in writing

by all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(b) This section shall apply only to a depository institution chartered

under state or federal law, a person licensed pursuant to Division 9

(commencing with Section 22000) or Division 20 (commencing with Section

50000) of the Financial Code, or a person licensed pursuant to Part 1

(commencing with Section 10000) of Division 4 of the Business and

Professions Code, that, during its immediately preceding annual reporting

period, as established with its primary regulator, foreclosed on 175 or fewer

residential real properties, containing no more than four dwelling units, that

are located in California.

(c) Within three months after the close of any calendar year or annual

reporting period as established with its primary regulator during which an

entity or person described in subdivision (b) exceeds the threshold of 175

specified in subdivision (b), that entity shall notify its primary regulator, in

a manner acceptable to its primary regulator, and any mortgagor or trustor

who is delinquent on a residential mortgage loan serviced by that entity of

the date on which that entity will be subject to Sections 2923.55, 2923.6,

2923.7, 2924.9, 2924.10, 2924.11, and 2924.12, which date shall be the first

day of the first month that is six months after the close of the calendar year

or annual reporting period during which that entity exceeded the threshold.

(d) For purposes of this section, an application shall be deemed

“complete” when a borrower has supplied the mortgage servicer with all

documents required by the mortgage servicer within the reasonable

timeframes specified by the mortgage servicer.

(e) If a borrower has been approved in writing for a first lien loan

modification or other foreclosure prevention alternative, and the servicing

of the borrower’s loan is transferred or sold to another mortgage servicer,

the subsequent mortgage servicer shall continue to honor any previously

approved first lien loan modification or other foreclosure prevention

alternative, in accordance with the provisions of the act that added this

section.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 22. Section 2924.19 is added to the Civil Code, to read:

94

23 Ch. 86

2924.19. (a) (1) If a trustee’s deed upon sale has not been recorded, a

borrower may bring an action for injunctive relief to enjoin a material

violation of Section 2923.5, 2924.17, or 2924.18.

(2) Any injunction shall remain in place and any trustee’s sale shall be

enjoined until the court determines that the mortgage servicer, mortgagee,

beneficiary, or authorized agent has corrected and remedied the violation

or violations giving rise to the action for injunctive relief. An enjoined entity

may move to dissolve an injunction based on a showing that the material

violation has been corrected and remedied.

(b) After a trustee’s deed upon sale has been recorded, a mortgage

servicer, mortgagee, beneficiary, or authorized agent shall be liable to a

borrower for actual economic damages pursuant to Section 3281, resulting

from a material violation of Section 2923.5, 2924.17, or 2924.18 by that

mortgage servicer, mortgagee, beneficiary, or authorized agent where the

violation was not corrected and remedied prior to the recordation of the

trustee’s deed upon sale. If the court finds that the material violation was

intentional or reckless, or resulted from willful misconduct by a mortgage

servicer, mortgagee, beneficiary, or authorized agent, the court may award

the borrower the greater of treble actual damages or statutory damages of

fifty thousand dollars ($50,000).

(c) A mortgage servicer, mortgagee, beneficiary, or authorized agent

shall not be liable for any violation that it has corrected and remedied prior

to the recordation of the trustee’s deed upon sale, or that has been corrected

and remedied by third parties working on its behalf prior to the recordation

of the trustee’s deed upon sale.

(d) A violation of Section 2923.5, 2924.17, or 2917.18 by a person

licensed by the Department of Corporations, the Department of Financial

Institutions, or the Department of Real Estate shall be deemed to be a

violation of that person’s licensing law.

(e) No violation of this article shall affect the validity of a sale in favor

of a bona fide purchaser and any of its encumbrancers for value without

notice.

(f) A third-party encumbrancer shall not be relieved of liability resulting

from violations of Section 2923.5, 2924.17 or 2924.18, committed by that

third-party encumbrancer, that occurred prior to the sale of the subject

property to the bona fide purchaser.

(g) The rights, remedies, and procedures provided by this section are in

addition to and independent of any other rights, remedies, or procedures

under any other law. Nothing in this section shall be construed to alter, limit,

or negate any other rights, remedies, or procedures provided by law.

(h) A court may award a prevailing borrower reasonable attorney’s fees

and costs in an action brought pursuant to this section. A borrower shall be

deemed to have prevailed for purposes of this subdivision if the borrower

obtained injunctive relief or damages pursuant to this section.

(i) This section shall apply only to entities described in subdivision (b)

of Section 2924.18.

94

Ch. 86 24

(j) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 23. Section 2924.20 is added to the Civil Code, to read:

2924.20. Consistent with their general regulatory authority, and

notwithstanding subdivisions (b) and (c) of Section 2924.18, the Department

of Corporations, the Department of Financial Institutions, and the Department

of Real Estate may adopt regulations applicable to any entity or person

under their respective jurisdictions that are necessary to carry out the

purposes of the act that added this section. A violation of the regulations

adopted pursuant to this section shall only be enforceable by the regulatory

agency.

SEC. 24. The provisions of this act are severable. If any provision of

this act or its application is held invalid, that invalidity shall not affect other

provisions or applications that can be given effect without the invalid

provision or application.

SEC. 25. No reimbursement is required by this act pursuant to Section

6 of Article XIII B of the California Constitution because the only costs that

may be incurred by a local agency or school district will be incurred because

this act creates a new crime or infraction, eliminates a crime or infraction,

or changes the penalty for a crime or infraction, within the meaning of

Section 17556 of the Government Code, or changes the definition of a crime

within the meaning of Section 6 of Article XIII B of the California

Constitution.

Senate Bill No. 900

CHAPTER 87

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.

[Approved by Governor July 11, 2012. Filed with

Secretary of State July 11, 2012.]

legislative counsel’s digest

SB 900, Leno. Mortgages and deeds of trust: foreclosure.

(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, 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

93

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

93

Ch. 87 2

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.

The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares all of the following:

(a) California is still reeling from the economic impacts of a wave of

residential property foreclosures that began in 2007. From 2007 to 2011

alone, there were over 900,000 completed foreclosure sales. In 2011, 38 of

the top 100 hardest hit ZIP Codes in the nation were in California, and the

current wave of foreclosures continues apace. All of this foreclosure activity

has adversely affected property values and resulted in less money for schools,

public safety, and other public services. In addition, according to the Urban

Institute, every foreclosure imposes significant costs on local governments,

including an estimated nineteen thousand two hundred twenty-nine dollars

($19,229) in local government costs. And the foreclosure crisis is not over;

there remain more than two million “underwater” mortgages in California.

(b) It is essential to the economic health of this state to mitigate the

negative effects on the state and local economies and the housing market

that are the result of continued foreclosures by modifying the foreclosure

process to ensure that borrowers who may qualify for a foreclosure

alternative are considered for, and have a meaningful opportunity to obtain,

available loss mitigation options. These changes to the state’s foreclosure

process are essential to ensure that the current crisis is not worsened by

unnecessarily adding foreclosed properties to the market when an alternative

to foreclosure may be available. Avoiding foreclosure, where possible, will

93

3 Ch. 87

help stabilize the state’s housing market and avoid the substantial,

corresponding negative effects of foreclosures on families, communities,

and the state and local economy.

(c) This act is necessary to provide stability to California’s statewide and

regional economies and housing market by facilitating opportunities for

borrowers to pursue loss mitigation options.

SEC. 2. Section 2920.5 is added to the Civil Code, to read:

2920.5. For purposes of this article, the following definitions apply:

(a) “Mortgage servicer” means a person or entity who directly services

a loan, or who is responsible for interacting with the borrower, managing

the loan account on a daily basis including collecting and crediting periodic

loan payments, managing any escrow account, or enforcing the note and

security instrument, either as the current owner of the promissory note or

as the current owner’s authorized agent. “Mortgage servicer” also means a

subservicing agent to a master servicer by contract. “Mortgage servicer”

shall not include a trustee, or a trustee’s authorized agent, acting under a

power of sale pursuant to a deed of trust.

(b) “Foreclosure prevention alternative” means a first lien loan

modification or another available loss mitigation option.

(c) (1) Unless otherwise provided and for purposes of Sections 2923.4,

2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, 2924.18, and

2924.19, “borrower” means any natural person who is a mortgagor or trustor

and who is potentially eligible for any federal, state, or proprietary

foreclosure prevention alternative program offered by, or through, his or

her mortgage servicer.

(2) For purposes of the sections listed in paragraph (1), “borrower” shall

not include any of the following:

(A) An individual who has surrendered the secured 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.

(B) An individual who 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.

(C) An individual who has filed a case 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.

(d) “First lien” means the most senior mortgage or deed of trust on the

property that is the subject of the notice of default or notice of sale.

SEC. 3. Section 2923.4 is added to the Civil Code, to read:

2923.4. (a) The purpose of the act that added this section is to ensure

that, as part of the nonjudicial foreclosure process, borrowers are considered

for, and have a meaningful opportunity to obtain, available loss mitigation

options, if any, offered by or through the borrower’s mortgage servicer,

such as loan modifications or other alternatives to foreclosure. Nothing in

93

Ch. 87 4

the act that added this section, however, shall be interpreted to require a

particular result of that process.

(b) Nothing in this article obviates or supersedes the obligations of the

signatories to the consent judgment entered in the case entitled United States

of America et al. v. Bank of America Corporation et al., filed in the United

States District Court for the District of Columbia, case number

1:12-cv-00361 RMC.

SEC. 4. Section 2923.5 of the Civil Code is amended to read:

2923.5. (a) (1) A mortgage servicer, mortgagee, trustee, beneficiary,

or authorized agent may not record a notice of default pursuant to Section

2924 until both of the following:

(A) Either 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 (e).

(B) The mortgage servicer complies with paragraph (1) of subdivision

(a) of Section 2924.18, if the borrower has provided a complete application

as defined in subdivision (d) of Section 2924.18.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

(c) A mortgage servicer’s loss mitigation personnel may participate by

telephone during any contact required by this section.

(d) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other advisor to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

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 mortgage servicer is subject to

approval by the borrower.

(e) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer has not contacted a borrower as required by paragraph

(2) of subdivision (a) provided that the failure to contact the borrower

93

5 Ch. 87

occurred despite the due diligence of the mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer 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 mortgage servicer 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 mortgage servicer 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 mortgage

servicer.

(C) A mortgage servicer 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 mortgage servicer

shall then send a certified letter, with return receipt requested.

(4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options for

avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgage servicer.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall apply only to entities described in subdivision (b)

of Section 2924.18.

(h) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 5. Section 2923.5 is added to the Civil Code, to read:

2923.5. (a) (1) A mortgage servicer, mortgagee, trustee, beneficiary,

or authorized agent may not record a notice of default pursuant to Section

2924 until both of the following:

93

Ch. 87 6

(A) Either 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 (e).

(B) The mortgage servicer complies with subdivision (a) of Section

2924.11, if the borrower has provided a complete application as defined in

subdivision (f) of Section 2924.11.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

(c) A mortgage servicer’s loss mitigation personnel may participate by

telephone during any contact required by this section.

(d) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other advisor to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

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 mortgage servicer is subject to

approval by the borrower.

(e) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer 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 mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer 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 mortgage servicer 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 mortgage servicer may attempt to contact a borrower using an

automated system to dial borrowers, provided that, if the telephone call is

93

7 Ch. 87

answered, the call is connected to a live representative of the mortgage

servicer.

(C) A mortgage servicer 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 mortgage servicer

shall then send a certified letter, with return receipt requested.

(4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options for

avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgage servicer.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall become operative on January 1, 2018.

SEC. 6. Section 2923.55 is added to the Civil Code, to read:

2923.55. (a) A mortgage servicer, mortgagee, trustee, beneficiary, or

authorized agent may not record a notice of default pursuant to Section 2924

until all of the following:

(1) The mortgage servicer has satisfied the requirements of paragraph

(1) of subdivision (b).

(2) Either 30 days after initial contact is made as required by paragraph

(2) of subdivision (b) or 30 days after satisfying the due diligence

requirements as described in subdivision (f).

(3) The mortgage servicer complies with subdivision (c) of Section

2923.6, if the borrower has provided a complete application as defined in

subdivision (h) of Section 2923.6.

(b) (1) As specified in subdivision (a), a mortgage servicer shall send

the following information in writing to the borrower:

(A) A statement that if the borrower is a servicemember or a dependent

of a servicemember, he or she may be entitled to certain protections under

the federal Servicemembers Civil Relief Act (50 U.S.C. Sec. 501 et seq.)

regarding the servicemember’s interest rate and the risk of foreclosure, and

counseling for covered servicemembers that is available at agencies such

as Military OneSource and Armed Forces Legal Assistance.

93

Ch. 87 8

(B) A statement that the borrower may request the following:

(i) A copy of the borrower’s promissory note or other evidence of

indebtedness.

(ii) A copy of the borrower’s deed of trust or mortgage.

(iii) A copy of any assignment, if applicable, of the borrower’s mortgage

or deed of trust required to demonstrate the right of the mortgage servicer

to foreclose.

(iv) A copy of the borrower’s payment history since the borrower was

last less than 60 days past due.

(2) A mortgage servicer 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

mortgage servicer shall advise the borrower that he or she has the right to

request a subsequent meeting and, if requested, the mortgage servicer 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.

(c) A notice of default recorded pursuant to Section 2924 shall include

a declaration that the mortgage servicer has contacted the borrower, has

tried with due diligence to contact the borrower as required by this section,

or that no contact was required because the individual did not meet the

definition of “borrower” pursuant to subdivision (c) of Section 2920.5.

(d) A mortgage servicer’s loss mitigation personnel may participate by

telephone during any contact required by this section.

(e) A borrower may designate, with consent given in writing, a

HUD-certified housing counseling agency, attorney, or other advisor to

discuss with the mortgage servicer, on the borrower’s behalf, the borrower’s

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 (b). Any foreclosure prevention

alternative offered at the meeting by the mortgage servicer is subject to

approval by the borrower.

(f) A notice of default may be recorded pursuant to Section 2924 when

a mortgage servicer has not contacted a borrower as required by paragraph

(2) of subdivision (b), provided that the failure to contact the borrower

occurred despite the due diligence of the mortgage servicer. For purposes

of this section, “due diligence” shall require and mean all of the following:

(1) A mortgage servicer 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 mortgage servicer shall attempt

to contact the borrower by telephone at least three times at different hours

93

9 Ch. 87

and on different days. Telephone calls shall be made to the primary telephone

number on file.

(B) A mortgage servicer 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 mortgage

servicer.

(C) A mortgage servicer 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 mortgage servicer

shall then send a certified letter, with return receipt requested, that includes

the toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options for

avoiding foreclosure.

(C) A toll-free telephone number for borrowers who wish to discuss

options for avoiding foreclosure with their mortgage servicer.

(D) The toll-free telephone number made available by HUD to find a

HUD-certified housing counseling agency.

(g) This section shall not apply to entities described in subdivision (b)

of Section 2924.18.

(h) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(i) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 7. Section 2923.6 of the Civil Code is amended to read:

2923.6. (a) The Legislature finds and declares that any duty that

mortgage servicers may have to maximize net present value under their

pooling and servicing agreements is owed to all parties in a loan pool, or to

all investors under a pooling and servicing agreement, not to any particular

party in the loan pool or investor under a pooling and servicing agreement,

and that a mortgage servicer acts in the best interests of all parties to the

loan pool or investors in the pooling and servicing agreement if it agrees to

or implements a loan modification or workout plan for which both of the

following apply:

93

Ch. 87 10

(1) The loan is in payment default, or payment default is reasonably

foreseeable.

(2) Anticipated recovery under the loan modification or workout plan

exceeds the anticipated recovery through foreclosure on a net present value

basis.

(b) It is the intent of the Legislature that the mortgage servicer offer the

borrower a loan modification or workout plan if such a modification or plan

is consistent with its contractual or other authority.

(c) If a borrower submits a complete application for a first lien loan

modification offered by, or through, the borrower’s mortgage servicer, a

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall

not record a notice of default or notice of sale, or conduct a trustee’s sale,

while the complete first lien loan modification application is pending. A

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall

not record a notice of default or notice of sale or conduct a trustee’s sale

until any of the following occurs:

(1) The mortgage servicer makes a written determination that the borrower

is not eligible for a first lien loan modification, and any appeal period

pursuant to subdivision (d) has expired.

(2) The borrower does not accept an offered first lien loan modification

within 14 days of the offer.

(3) The borrower accepts a written first lien loan modification, but

defaults on, or otherwise breaches the borrower’s obligations under, the

first lien loan modification.

(d) If the borrower’s application for a first lien loan modification is

denied, the borrower shall have at least 30 days from the date of the written

denial to appeal the denial and to provide evidence that the mortgage

servicer’s determination was in error.

(e) If the borrower’s application for a first lien loan modification is

denied, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized

agent shall not record a notice of default or, if a notice of default has already

been recorded, record a notice of sale or conduct a trustee’s sale until the

later of:

(1) Thirty-one days after the borrower is notified in writing of the denial.

(2) If the borrower appeals the denial pursuant to subdivision (d), the

later of 15 days after the denial of the appeal or 14 days after a first lien

loan modification is offered after appeal but declined by the borrower, or,

if a first lien loan modification is offered and accepted after appeal, the date

on which the borrower fails to timely submit the first payment or otherwise

breaches the terms of the offer.

(f) Following the denial of a first lien loan modification application, the

mortgage servicer shall send a written notice to the borrower identifying

the reasons for denial, including the following:

(1) The amount of time from the date of the denial letter in which the

borrower may request an appeal of the denial of the first lien loan

modification and instructions regarding how to appeal the denial.

93

11 Ch. 87

(2) If the denial was based on investor disallowance, the specific reasons

for the investor disallowance.

(3) If the denial is the result of a net present value calculation, the monthly

gross income and property value used to calculate the net present value and

a statement that the borrower may obtain all of the inputs used in the net

present value calculation upon written request to the mortgage servicer.

(4) If applicable, a finding that the borrower was previously offered a

first lien loan modification and failed to successfully make payments under

the terms of the modified loan.

(5) If applicable, a description of other foreclosure prevention alternatives

for which the borrower may be eligible, and a list of the steps the borrower

must take in order to be considered for those options. If the mortgage servicer

has already approved the borrower for another foreclosure prevention

alternative, information necessary to complete the foreclosure prevention

alternative.

(g) In order to minimize the risk of borrowers submitting multiple

applications for first lien loan modifications for the purpose of delay, the

mortgage servicer shall not be obligated to evaluate applications from

borrowers who have already been evaluated or afforded a fair opportunity

to be evaluated for a first lien loan modification prior to January 1, 2013,

or who have been evaluated or afforded a fair opportunity to be evaluated

consistent with the requirements of this section, unless there has been a

material change in the borrower’s financial circumstances since the date of

the borrower’s previous application and that change is documented by the

borrower and submitted to the mortgage servicer.

(h) For purposes of this section, an application shall be deemed

“complete” when a borrower has supplied the mortgage servicer with all

documents required by the mortgage servicer within the reasonable

timeframes specified by the mortgage servicer.

(i) Subdivisions (c) to (h), inclusive, shall not apply to entities described

in subdivision (b) of Section 2924.18.

(j) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(k) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 8. Section 2923.6 is added to the Civil Code, to read:

2923.6. (a) The Legislature finds and declares that any duty mortgage

servicers may have to maximize net present value under their pooling and

servicing agreements is owed to all parties in a loan pool, or to all investors

under a pooling and servicing agreement, not to any particular party in the

loan pool or investor under a pooling and servicing agreement, and that a

mortgage servicer acts in the best interests of all parties to the loan pool or

investors in the pooling and servicing agreement if it agrees to or implements

a loan modification or workout plan for which both of the following apply:

(1) The loan is in payment default, or payment default is reasonably

foreseeable.

93

Ch. 87 12

(2) Anticipated recovery under the loan modification or workout plan

exceeds the anticipated recovery through foreclosure on a net present value

basis.

(b) It is the intent of the Legislature that the mortgage servicer offer the

borrower a loan modification or workout plan if such a modification or plan

is consistent with its contractual or other authority.

(c) This section shall become operative on January 1, 2018.

SEC. 9. Section 2923.7 is added to the Civil Code, to read:

2923.7. (a) Upon request from a borrower who requests a foreclosure

prevention alternative, the mortgage servicer shall promptly establish a

single point of contact and provide to the borrower one or more direct means

of communication with the single point of contact.

(b) The single point of contact shall be responsible for doing all of the

following:

(1) Communicating the process by which a borrower may apply for an

available foreclosure prevention alternative and the deadline for any required

submissions to be considered for these options.

(2) Coordinating receipt of all documents associated with available

foreclosure prevention alternatives and notifying the borrower of any missing

documents necessary to complete the application.

(3) Having access to current information and personnel sufficient to

timely, accurately, and adequately inform the borrower of the current status

of the foreclosure prevention alternative.

(4) Ensuring that a borrower is considered for all foreclosure prevention

alternatives offered by, or through, the mortgage servicer, if any.

(5) Having access to individuals with the ability and authority to stop

foreclosure proceedings when necessary.

(c) The single point of contact shall remain assigned to the borrower’s

account until the mortgage servicer determines that all loss mitigation options

offered by, or through, the mortgage servicer have been exhausted or the

borrower’s account becomes current.

(d) The mortgage servicer shall ensure that a single point of contact refers

and transfers a borrower to an appropriate supervisor upon request of the

borrower, if the single point of contact has a supervisor.

(e) For purposes of this section, “single point of contact” means an

individual or team of personnel each of whom has the ability and authority

to perform the responsibilities described in subdivisions (b) to (d), inclusive.

The mortgage servicer shall ensure that each member of the team is

knowledgeable about the borrower’s situation and current status in the

alternatives to foreclosure process.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) (1) This section shall not apply to a depository institution chartered

under state or federal law, a person licensed pursuant to Division 9

(commencing with Section 22000) or Division 20 (commencing with Section

50000) of the Financial Code, or a person licensed pursuant to Part 1

(commencing with Section 10000) of Division 4 of the Business and

93

13 Ch. 87

Professions Code, that, during its immediately preceding annual reporting

period, as established with its primary regulator, foreclosed on 175 or fewer

residential real properties, containing no more than four dwelling units, that

are located in California.

(2) Within three months after the close of any calendar year or annual

reporting period as established with its primary regulator during which an

entity or person described in paragraph (1) exceeds the threshold of 175

specified in paragraph (1), that entity shall notify its primary regulator, in

a manner acceptable to its primary regulator, and any mortgagor or trustor

who is delinquent on a residential mortgage loan serviced by that entity of

the date on which that entity will be subject to this section, which date shall

be the first day of the first month that is six months after the close of the

calendar year or annual reporting period during which that entity exceeded

the threshold.

SEC. 10. Section 2924 of the Civil Code, as amended by Section 1 of

Chapter 180 of the Statutes of 2010, is amended to read:

2924. (a) Every transfer of an interest in property, other than in trust,

made only as a security for the performance of another act, is to be deemed

a mortgage, except when in the case of personal property it is accompanied

by actual change of possession, in which case it is to be deemed a pledge.

Where, by a mortgage created after July 27, 1917, of any estate in real

property, other than an estate at will or for years, less than two, or in any

transfer in trust made after July 27, 1917, of a like estate to secure the

performance of an obligation, a power of sale is conferred upon the

mortgagee, trustee, or any other person, to be exercised after a breach of

the obligation for which that mortgage or transfer is a security, the power

shall not be exercised except where the mortgage or transfer is made pursuant

to an order, judgment, or decree of a court of record, or to secure the payment

of bonds or other evidences of indebtedness authorized or permitted to be

issued by the Commissioner of Corporations, or is made by a public utility

subject to the provisions of the Public Utilities Act, until all of the following

apply:

(1) The trustee, mortgagee, or beneficiary, or any of their authorized

agents shall first file for record, in the office of the recorder of each county

wherein the mortgaged or trust property or some part or parcel thereof is

situated, a notice of default. That notice of default shall include all of the

following:

(A) A statement identifying the mortgage or deed of trust by stating the

name or names of the trustor or trustors and giving the book and page, or

instrument number, if applicable, where the mortgage or deed of trust is

recorded or a description of the mortgaged or trust property.

(B) A statement that a breach of the obligation for which the mortgage

or transfer in trust is security has occurred.

(C) A statement setting forth the nature of each breach actually known

to the beneficiary and of his or her election to sell or cause to be sold the

property to satisfy that obligation and any other obligation secured by the

deed of trust or mortgage that is in default.

93

Ch. 87 14

(D) If the default is curable pursuant to Section 2924c, the statement

specified in paragraph (1) of subdivision (b) of Section 2924c.

(2) Not less than three months shall elapse from the filing of the notice

of default.

(3) Except as provided in paragraph (4), after the lapse of the three months

described in paragraph (2), the mortgagee, trustee, or other person authorized

to take the sale shall give notice of sale, stating the time and place thereof,

in the manner and for a time not less than that set forth in Section 2924f.

(4) Notwithstanding paragraph (3), the mortgagee, trustee, or other person

authorized to take sale may record a notice of sale pursuant to Section 2924f

up to five days before the lapse of the three-month period described in

paragraph (2), provided that the date of sale is no earlier than three months

and 20 days after the recording of the notice of default.

(5) Until January 1, 2018, whenever a sale is postponed for a period of

at least 10 business days pursuant to Section 2924g, a mortgagee, beneficiary,

or authorized agent shall provide written notice to a borrower regarding the

new sale date and time, within five business days following the

postponement. Information provided pursuant to this paragraph shall not

constitute the public declaration required by subdivision (d) of Section

2924g. Failure to comply with this paragraph shall not invalidate any sale

that would otherwise be valid under Section 2924f. This paragraph shall be

inoperative on January 1, 2018.

(6) No entity shall record or cause a notice of default to be recorded or

otherwise initiate the foreclosure process unless it is the holder of the

beneficial interest under the mortgage or deed of trust, the original trustee

or the substituted trustee under the deed of trust, or the designated agent of

the holder of the beneficial interest. No agent of the holder of the beneficial

interest under the mortgage or deed of trust, original trustee or substituted

trustee under the deed of trust may record a notice of default or otherwise

commence the foreclosure process except when acting within the scope of

authority designated by the holder of the beneficial interest.

(b) In performing acts required by this article, the trustee shall incur no

liability for any good faith error resulting from reliance on information

provided in good faith by the beneficiary regarding the nature and the amount

of the default under the secured obligation, deed of trust, or mortgage. In

performing the acts required by this article, a trustee shall not be subject to

Title 1.6c (commencing with Section 1788) of Part 4.

(c) A recital in the deed executed pursuant to the power of sale of

compliance with all requirements of law regarding the mailing of copies of

notices or the publication of a copy of the notice of default or the personal

delivery of the copy of the notice of default or the posting of copies of the

notice of sale or the publication of a copy thereof shall constitute prima

facie evidence of compliance with these requirements and conclusive

evidence thereof in favor of bona fide purchasers and encumbrancers for

value and without notice.

(d) All of the following shall constitute privileged communications

pursuant to Section 47:

93

15 Ch. 87

(1) The mailing, publication, and delivery of notices as required by this

section.

(2) Performance of the procedures set forth in this article.

(3) Performance of the functions and procedures set forth in this article

if those functions and procedures are necessary to carry out the duties

described in Sections 729.040, 729.050, and 729.080 of the Code of Civil

Procedure.

(e) There is a rebuttable presumption that the beneficiary actually knew

of all unpaid loan payments on the obligation owed to the beneficiary and

secured by the deed of trust or mortgage subject to the notice of default.

However, the failure to include an actually known default shall not invalidate

the notice of sale and the beneficiary shall not be precluded from asserting

a claim to this omitted default or defaults in a separate notice of default.

SEC. 11. Section 2924 of the Civil Code, as amended by Section 2 of

Chapter 180 of the Statutes of 2010, is repealed.

SEC. 12. Section 2924.9 is added to the Civil Code, to read:

2924.9. (a) Unless a borrower has previously exhausted the first lien

loan modification process offered by, or through, his or her mortgage servicer

described in Section 2923.6, within five business days after recording a

notice of default pursuant to Section 2924, a mortgage servicer that offers

one or more foreclosure prevention alternatives shall send a written

communication to the borrower that includes all of the following information:

(1) That the borrower may be evaluated for a foreclosure prevention

alternative or, if applicable, foreclosure prevention alternatives.

(2) Whether an application is required to be submitted by the borrower

in order to be considered for a foreclosure prevention alternative.

(3) The means and process by which a borrower may obtain an application

for a foreclosure prevention alternative.

(b) This section shall not apply to entities described in subdivision (b)

of Section 2924.18.

(c) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(d) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 13. Section 2924.10 is added to the Civil Code, to read:

2924.10. (a) When a borrower submits a complete first lien modification

application or any document in connection with a first lien modification

application, the mortgage servicer shall provide written acknowledgment

of the receipt of the documentation within five business days of receipt. In

its initial acknowledgment of receipt of the loan modification application,

the mortgage servicer shall include the following information:

(1) A description of the loan modification process, including an estimate

of when a decision on the loan modification will be made after a complete

application has been submitted by the borrower and the length of time the

borrower will have to consider an offer of a loan modification or other

foreclosure prevention alternative.

93

Ch. 87 16

(2) Any deadlines, including deadlines to submit missing documentation,

that would affect the processing of a first lien loan modification application.

(3) Any expiration dates for submitted documents.

(4) Any deficiency in the borrower’s first lien loan modification

application.

(b) For purposes of this section, a borrower’s first lien loan modification

application shall be deemed to be “complete” when a borrower has supplied

the mortgage servicer with all documents required by the mortgage servicer

within the reasonable timeframes specified by the mortgage servicer.

(c) This section shall not apply to entities described in subdivision (b)

of Section 2924.18.

(d) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(e) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 14. Section 2924.11 is added to the Civil Code, to read:

2924.11. (a) If a foreclosure prevention alternative is approved in writing

prior to the recordation of a notice of default, a mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent shall not record a notice of default

under either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(b) If a foreclosure prevention alternative is approved in writing after

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of sale or conduct

a trustee’s sale under either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(c) When a borrower accepts an offered first lien loan modification or

other foreclosure prevention alternative, the mortgage servicer shall provide

the borrower with a copy of the fully executed loan modification agreement

or agreement evidencing the foreclosure prevention alternative following

receipt of the executed copy from the borrower.

(d) A mortgagee, beneficiary, or authorized agent shall record a rescission

of a notice of default or cancel a pending trustee’s sale, if applicable, upon

the borrower executing a permanent foreclosure prevention alternative. In

the case of a short sale, the rescission or cancellation of the pending trustee’s

sale shall occur when the short sale has been approved by all parties and

93

17 Ch. 87

proof of funds or financing has been provided to the mortgagee, beneficiary,

or authorized agent.

(e) The mortgage servicer shall not charge any application, processing,

or other fee for a first lien loan modification or other foreclosure prevention

alternative.

(f) The mortgage servicer shall not collect any late fees for periods during

which a complete first lien loan modification application is under

consideration or a denial is being appealed, the borrower is making timely

modification payments, or a foreclosure prevention alternative is being

evaluated or exercised.

(g) If a borrower has been approved in writing for a first lien loan

modification or other foreclosure prevention alternative, and the servicing

of that borrower’s loan is transferred or sold to another mortgage servicer,

the subsequent mortgage servicer shall continue to honor any previously

approved first lien loan modification or other foreclosure prevention

alternative, in accordance with the provisions of the act that added this

section.

(h) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(i) This section shall not apply to entities described in subdivision (b) of

Section 2924.18.

(j) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 15. Section 2924.11 is added to the Civil Code, to read:

2924.11. (a) If a borrower submits a complete application for a

foreclosure prevention alternative offered by, or through, the borrower’s

mortgage servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or

authorized agent shall not record a notice of sale or conduct a trustee’s sale

while the complete foreclosure prevention alternative application is pending,

and until the borrower has been provided with a written determination by

the mortgage servicer regarding that borrower’s eligibility for the requested

foreclosure prevention alternative.

(b) Following the denial of a first lien loan modification application, the

mortgage servicer shall send a written notice to the borrower identifying

with specificity the reasons for the denial and shall include a statement that

the borrower may obtain additional documentation supporting the denial

decision upon written request to the mortgage servicer.

(c) If a foreclosure prevention alternative is approved in writing prior to

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of default under

either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

93

Ch. 87 18

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(d) If a foreclosure prevention alternative is approved in writing after

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of sale or conduct

a trustee’s sale under either of the following circumstances:

(1) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(2) A foreclosure prevention alternative has been approved in writing by

all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(e) This section applies only to mortgages or deeds of trust as described

in Section 2924.15.

(f) For purposes of this section, an application shall be deemed “complete”

when a borrower has supplied the mortgage servicer with all documents

required by the mortgage servicer within the reasonable timeframes specified

by the mortgage servicer.

(g) This section shall become operative on January 1, 2018.

SEC. 16. Section 2924.12 is added to the Civil Code, to read:

2924.12. (a) (1) If a trustee’s deed upon sale has not been recorded, a

borrower may bring an action for injunctive relief to enjoin a material

violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or

2924.17.

(2) Any injunction shall remain in place and any trustee’s sale shall be

enjoined until the court determines that the mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent has corrected and remedied the

violation or violations giving rise to the action for injunctive relief. An

enjoined entity may move to dissolve an injunction based on a showing that

the material violation has been corrected and remedied.

(b) After a trustee’s deed upon sale has been recorded, a mortgage

servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable

to a borrower for actual economic damages pursuant to Section 3281,

resulting from a material violation of Section 2923.55, 2923.6, 2923.7,

2924.9, 2924.10, 2924.11, or 2924.17 by that mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent where the violation was not corrected

and remedied prior to the recordation of the trustee’s deed upon sale. If the

court finds that the material violation was intentional or reckless, or resulted

from willful misconduct by a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent, the court may award the borrower the

greater of treble actual damages or statutory damages of fifty thousand

dollars ($50,000).

(c) A mortgage servicer, mortgagee, trustee, beneficiary, or authorized

agent shall not be liable for any violation that it has corrected and remedied

prior to the recordation of a trustee’s deed upon sale, or that has been

corrected and remedied by third parties working on its behalf prior to the

recordation of a trustee’s deed upon sale.

93

19 Ch. 87

(d) A violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10,

2924.11, or 2924.17 by a person licensed by the Department of Corporations,

Department of Financial Institutions, or Department of Real Estate shall be

deemed to be a violation of that person’s licensing law.

(e) No violation of this article shall affect the validity of a sale in favor

of a bona fide purchaser and any of its encumbrancers for value without

notice.

(f) A third-party encumbrancer shall not be relieved of liability resulting

from violations of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10,

2924.11, or 2924.17 committed by that third-party encumbrancer, that

occurred prior to the sale of the subject property to the bona fide purchaser.

(g) A signatory to a consent judgment entered in the case entitled United

States of America et al. v. Bank of America Corporation et al., filed in the

United States District Court for the District of Columbia, case number

1:12-cv-00361 RMC, that is in compliance with the relevant terms of the

Settlement Term Sheet of that consent judgment with respect to the borrower

who brought an action pursuant to this section while the consent judgment

is in effect shall have no liability for a violation of Section 2923.55, 2923.6,

2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.

(h) The rights, remedies, and procedures provided by this section are in

addition to and independent of any other rights, remedies, or procedures

under any other law. Nothing in this section shall be construed to alter, limit,

or negate any other rights, remedies, or procedures provided by law.

(i) A court may award a prevailing borrower reasonable attorney’s fees

and costs in an action brought pursuant to this section. A borrower shall be

deemed to have prevailed for purposes of this subdivision if the borrower

obtained injunctive relief or was awarded damages pursuant to this section.

(j) This section shall not apply to entities described in subdivision (b) of

Section 2924.18.

(k) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 17. Section 2924.12 is added to the Civil Code, to read:

2924.12. (a) (1) If a trustee’s deed upon sale has not been recorded, a

borrower may bring an action for injunctive relief to enjoin a material

violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.

(2) Any injunction shall remain in place and any trustee’s sale shall be

enjoined until the court determines that the mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent has corrected and remedied the

violation or violations giving rise to the action for injunctive relief. An

enjoined entity may move to dissolve an injunction based on a showing that

the material violation has been corrected and remedied.

(b) After a trustee’s deed upon sale has been recorded, a mortgage

servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable

to a borrower for actual economic damages pursuant to Section 3281,

resulting from a material violation of Section 2923.5, 2923.7, 2924.11, or

2924.17 by that mortgage servicer, mortgagee, trustee, beneficiary, or

93

Ch. 87 20

authorized agent where the violation was not corrected and remedied prior

to the recordation of the trustee’s deed upon sale. If the court finds that the

material violation was intentional or reckless, or resulted from willful

misconduct by a mortgage servicer, mortgagee, trustee, beneficiary, or

authorized agent, the court may award the borrower the greater of treble

actual damages or statutory damages of fifty thousand dollars ($50,000).

(c) A mortgage servicer, mortgagee, trustee, beneficiary, or authorized

agent shall not be liable for any violation that it has corrected and remedied

prior to the recordation of the trustee’s deed upon sale, or that has been

corrected and remedied by third parties working on its behalf prior to the

recordation of the trustee’s deed upon sale.

(d) A violation of Section 2923.5, 2923.7, 2924.11, or 2924.17 by a

person licensed by the Department of Corporations, Department of Financial

Institutions, or Department of Real Estate shall be deemed to be a violation

of that person’s licensing law.

(e) No violation of this article shall affect the validity of a sale in favor

of a bona fide purchaser and any of its encumbrancers for value without

notice.

(f) A third-party encumbrancer shall not be relieved of liability resulting

from violations of Section 2923.5, 2923.7, 2924.11, or 2924.17 committed

by that third-party encumbrancer, that occurred prior to the sale of the subject

property to the bona fide purchaser.

(g) The rights, remedies, and procedures provided by this section are in

addition to and independent of any other rights, remedies, or procedures

under any other law. Nothing in this section shall be construed to alter, limit,

or negate any other rights, remedies, or procedures provided by law.

(h) A court may award a prevailing borrower reasonable attorney’s fees

and costs in an action brought pursuant to this section. A borrower shall be

deemed to have prevailed for purposes of this subdivision if the borrower

obtained injunctive relief or was awarded damages pursuant to this section.

(i) This section shall become operative on January 1, 2018.

SEC. 18. Section 2924.15 is added to the Civil Code, to read:

2924.15. (a) Unless otherwise provided, paragraph (5) of subdivision

(a) of Section 2924, and Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9,

2924.10, 2924.11, and 2924.18 shall apply only to first lien mortgages or

deeds of trust that are secured by owner-occupied residential real property

containing no more than four dwelling units. For these purposes,

“owner-occupied” means that the property is the principal residence of the

borrower and is security for a loan made for personal, family, or household

purposes.

(b) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 19. Section 2924.15 is added to the Civil Code, to read:

2924.15. (a) Unless otherwise provided, Sections 2923.5, 2923.7, and

2924.11 shall apply only to first lien mortgages or deeds of trust that are

secured by owner-occupied residential real property containing no more

93

21 Ch. 87

than four dwelling units. For these purposes, “owner-occupied” means that

the property is the principal residence of the borrower and is security for a

loan made for personal, family, or household purposes.

(b) This section shall become operative on January 1, 2018.

SEC. 20. Section 2924.17 is added to the Civil Code, to read:

2924.17. (a) A declaration recorded pursuant to Section 2923.5 or, until

January 1, 2018, pursuant to Section 2923.55, a notice of default, notice of

sale, assignment of a deed of trust, or substitution of trustee recorded by or

on behalf of a mortgage servicer in connection with a foreclosure subject

to the requirements of Section 2924, or a declaration or affidavit filed in

any court relative to a foreclosure proceeding shall be accurate and complete

and supported by competent and reliable evidence.

(b) Before recording or filing any of the documents described in

subdivision (a), 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.

(c) Until January 1, 2018, any mortgage servicer that engages in multiple

and repeated uncorrected violations of subdivision (b) in recording

documents or filing documents in any court relative to a foreclosure

proceeding shall be liable for a civil penalty of up to seven thousand five

hundred dollars ($7,500) per mortgage or deed of trust in an action brought

by a government entity identified in Section 17204 of the Business and

Professions Code, or in an administrative proceeding brought by the

Department of Corporations, the Department of Real Estate, or the

Department of Financial Institutions against a respective licensee, in addition

to any other remedies available to these entities. This subdivision shall be

inoperative on January 1, 2018.

SEC. 21. Section 2924.18 is added to the Civil Code, to read:

2924.18. (a) (1) If a borrower submits a complete application for a first

lien loan modification offered by, or through, the borrower’s mortgage

servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or authorized

agent shall not record a notice of default, notice of sale, or conduct a trustee’s

sale while the complete first lien loan modification application is pending,

and until the borrower has been provided with a written determination by

the mortgage servicer regarding that borrower’s eligibility for the requested

loan modification.

(2) If a foreclosure prevention alternative has been approved in writing

prior to the recordation of a notice of default, a mortgage servicer, mortgagee,

trustee, beneficiary, or authorized agent shall not record a notice of default

under either of the following circumstances:

(A) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(B) A foreclosure prevention alternative has been approved in writing

by all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

93

Ch. 87 22

(3) If a foreclosure prevention alternative is approved in writing after

the recordation of a notice of default, a mortgage servicer, mortgagee, trustee,

beneficiary, or authorized agent shall not record a notice of sale or conduct

a trustee’s sale under either of the following circumstances:

(A) The borrower is in compliance with the terms of a written trial or

permanent loan modification, forbearance, or repayment plan.

(B) A foreclosure prevention alternative has been approved in writing

by all parties, including, for example, the first lien investor, junior lienholder,

and mortgage insurer, as applicable, and proof of funds or financing has

been provided to the servicer.

(b) This section shall apply only to a depository institution chartered

under state or federal law, a person licensed pursuant to Division 9

(commencing with Section 22000) or Division 20 (commencing with Section

50000) of the Financial Code, or a person licensed pursuant to Part 1

(commencing with Section 10000) of Division 4 of the Business and

Professions Code, that, during its immediately preceding annual reporting

period, as established with its primary regulator, foreclosed on 175 or fewer

residential real properties, containing no more than four dwelling units, that

are located in California.

(c) Within three months after the close of any calendar year or annual

reporting period as established with its primary regulator during which an

entity or person described in subdivision (b) exceeds the threshold of 175

specified in subdivision (b), that entity shall notify its primary regulator, in

a manner acceptable to its primary regulator, and any mortgagor or trustor

who is delinquent on a residential mortgage loan serviced by that entity of

the date on which that entity will be subject to Sections 2923.55, 2923.6,

2923.7, 2924.9, 2924.10, 2924.11, and 2924.12, which date shall be the first

day of the first month that is six months after the close of the calendar year

or annual reporting period during which that entity exceeded the threshold.

(d) For purposes of this section, an application shall be deemed

“complete” when a borrower has supplied the mortgage servicer with all

documents required by the mortgage servicer within the reasonable

timeframes specified by the mortgage servicer.

(e) If a borrower has been approved in writing for a first lien loan

modification or other foreclosure prevention alternative, and the servicing

of the borrower’s loan is transferred or sold to another mortgage servicer,

the subsequent mortgage servicer shall continue to honor any previously

approved first lien loan modification or other foreclosure prevention

alternative, in accordance with the provisions of the act that added this

section.

(f) This section shall apply only to mortgages or deeds of trust described

in Section 2924.15.

(g) This section shall remain in effect only until January 1, 2018, and

as of that date is repealed, unless a later enacted statute, that is enacted

before January 1, 2018, deletes or extends that date.

SEC. 22. Section 2924.19 is added to the Civil Code, to read:

93

23 Ch. 87

2924.19. (a) (1) If a trustee’s deed upon sale has not been recorded, a

borrower may bring an action for injunctive relief to enjoin a material

violation of Section 2923.5, 2924.17, or 2924.18.

(2) Any injunction shall remain in place and any trustee’s sale shall be

enjoined until the court determines that the mortgage servicer, mortgagee,

beneficiary, or authorized agent has corrected and remedied the violation

or violations giving rise to the action for injunctive relief. An enjoined entity

may move to dissolve an injunction based on a showing that the material

violation has been corrected and remedied.

(b) After a trustee’s deed upon sale has been recorded, a mortgage

servicer, mortgagee, beneficiary, or authorized agent shall be liable to a

borrower for actual economic damages pursuant to Section 3281, resulting

from a material violation of Section 2923.5, 2924.17, or 2924.18 by that

mortgage servicer, mortgagee, beneficiary, or authorized agent where the

violation was not corrected and remedied prior to the recordation of the

trustee’s deed upon sale. If the court finds that the material violation was

intentional or reckless, or resulted from willful misconduct by a mortgage

servicer, mortgagee, beneficiary, or authorized agent, the court may award

the borrower the greater of treble actual damages or statutory damages of

fifty thousand dollars ($50,000).

(c) A mortgage servicer, mortgagee, beneficiary, or authorized agent

shall not be liable for any violation that it has corrected and remedied prior

to the recordation of the trustee’s deed upon sale, or that has been corrected

and remedied by third parties working on its behalf prior to the recordation

of the trustee’s deed upon sale.

(d) A violation of Section 2923.5, 2924.17, or 2917.18 by a person

licensed by the Department of Corporations, the Department of Financial

Institutions, or the Department of Real Estate shall be deemed to be a

violation of that person’s licensing law.

(e) No violation of this article shall affect the validity of a sale in favor

of a bona fide purchaser and any of its encumbrancers for value without

notice.

(f) A third-party encumbrancer shall not be relieved of liability resulting

from violations of Section 2923.5, 2924.17 or 2924.18, committed by that

third-party encumbrancer, that occurred prior to the sale of the subject

property to the bona fide purchaser.

(g) The rights, remedies, and procedures provided by this section are in

addition to and independent of any other rights, remedies, or procedures

under any other law. Nothing in this section shall be construed to alter, limit,

or negate any other rights, remedies, or procedures provided by law.

(h) A court may award a prevailing borrower reasonable attorney’s fees

and costs in an action brought pursuant to this section. A borrower shall be

deemed to have prevailed for purposes of this subdivision if the borrower

obtained injunctive relief or damages pursuant to this section.

(i) This section shall apply only to entities described in subdivision (b)

of Section 2924.18.

93

Ch. 87 24

(j) This section shall remain in effect only until January 1, 2018, and as

of that date is repealed, unless a later enacted statute, that is enacted before

January 1, 2018, deletes or extends that date.

SEC. 23. Section 2924.20 is added to the Civil Code, to read:

2924.20. Consistent with their general regulatory authority, and

notwithstanding subdivisions (b) and (c) of Section 2924.18, the Department

of Corporations, the Department of Financial Institutions, and the Department

of Real Estate may adopt regulations applicable to any entity or person

under their respective jurisdictions that are necessary to carry out the

purposes of the act that added this section. A violation of the regulations

adopted pursuant to this section shall only be enforceable by the regulatory

agency.

SEC. 24. The provisions of this act are severable. If any provision of

this act or its application is held invalid, that invalidity shall not affect other

provisions or applications that can be given effect without the invalid

provision or application.

SEC. 25. No reimbursement is required by this act pursuant to Section

6 of Article XIII B of the California Constitution because the only costs that

may be incurred by a local agency or school district will be incurred because

this act creates a new crime or infraction, eliminates a crime or infraction,

or changes the penalty for a crime or infraction, within the meaning of

Section 17556 of the Government Code, or changes the definition of a crime

within the meaning of Section 6 of Article XIII B of the California

Constitution.

O

93

Predatory Lending and Predatory Servicing together at last Jan 1, 2013 Civil Code §2924.12(b)

10 Dec

Predatory Lending are abusive practices used in the mortgage industry that strip borrowers of home equity and threaten families with bankruptcy and foreclosure.

Predatory Lending can be broken down into three categories: Mortgage Origination, Mortgage Servicing; and Mortgage Collection and Foreclosure.

Mortgage Origination is the process by which you obtain your home loan from a mortgage broker or a bank.

Predatory lending practices in Mortgage Origination include:
# Excessive points;
# Charging fees not allowed or for services not delivered;
# Charging more than once for the same fee
# Providing a low teaser rate that adjusts to a rate you cannot afford;
# Successively refinancing your loan of “flipping;”
# “Steering” you into a loan that is more profitable to the Mortgage Originator;
# Changing the loan terms at closing or “bait & switch;”
# Closing in a location where you cannot adequately review the documents;
# Serving alcohol prior to closing;
# Coaching you to put minimum income or assets on you loan so that you will qualify for a certain amount;
# Securing an inflated appraisal;
# Receiving a kickback in money or favors from a particular escrow, title, appraiser or other service provider;
# Promising they will refinance your mortgage before your payment resets to a higher amount;
# Having you sign blank documents;
# Forging documents and signatures;
# Changing documents after you have signed them; and
# Loans with prepayment penalties or balloon payments.

Mortgage Servicing is the process of collecting loan payments and credit your loan.

Predatory lending practices in Mortgage Servicing include:
# Not applying payments on time;
# Applying payments to “Suspense;”
# “Jamming” illegal or improper fees;
# Creating an escrow or impounds account not allowed by the documents;
# Force placing insurance when you have adequate coverage;
# Improperly reporting negative credit history;
# Failing to provide you a detailed loan history; and
# Refusing to return your calls or letters.
#

Mortgage Collection & Foreclosure is the process Lenders use when you pay off your loan or when you house is repossessed for non-payment

Predatory lending practices in Mortgage Collection & Foreclosure include:
# Producing a payoff statement that includes improper charges & fees;
# Foreclosing in the name of an entity that is not the true owner of the mortgage;
# Failing to provide Default Loan Servicing required by all Fannie Mae mortgages;
# Failing to follow due process in foreclosure;
# Fraud on the court;
# Failing to provide copies of all documents and assignments; and
# Refusing to adequately communicate with you.

Abuses by Mortgage Service Companies

Although predatory lending has received far more attention than abusive servicing, a significant percentage of consumer complaints over loans involve servicing, not origination. For example, the director of the Nevada Fair Housing Center testified that of the hundreds of complaints of predatory lending issues her office received in 2002, about 42 percent involved servicing once the loan was transferred

Abusive Mortgage Servicing Defined:

Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.

Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.

There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .

Civil Code §2924.12(b) Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees. : )

5 Dec

prohabition-images

H. Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees

2013 is going to be a good year

One of the most important provisions of the Act from a lender’s perspective is that it provides borrowers with the right to sue mortgage servicers for injunctive relief before the trustee’s deed upon sale has recorded, or if it has already recorded, to sue for actual economic damages, if the mortgage servicer has not corrected any “material” violation of certain enumerated portions of the Act before the trustee’s deed upon sale recorded. (Civil Code §2924.12(a).) In an area that will certainly open up a Pandora’s Box of litigation, the Act does not define what constitutes a “material” violation of the Act. If a court finds that the violation was intentional, reckless or willful, the court can award the borrower the greater of treble (triple) damages or $50,000. (Civil Code §2924.12(b).) Furthermore, a violation of the enumerated provisions of the Act is also deemed to be a violation of the licensing laws if committed by a person licensed as a consumer or commercial finance lender or broker, a residential mortgage lender or servicer, or a licensed real estate broker or salesman. (Civil Code §2924.12(d).) Lastly, in a one-sided attorney’s fee provision that only benefits borrowers, the court may award a borrower who obtains an injunction or receives an award of economic damages as a result of the violation of the Act their reasonable attorney’s fees and costs as the prevailing party. (Civil Code §2924.12(i).) This provides all the more reason for lenders and mortgage servicers to comply with the terms of the Act. This provision for the recovery by only the borrower of their reasonable attorney’s fees makes it more likely that borrowers will file litigation against mortgage lenders or servicers than they otherwise would. Compliance is the lender’s or mortgage servicer’s best defense to litigation under the Act.

Significantly for lenders, as long as the mortgage servicer remedies the material violation of the Act before the trustee’s deed upon sale has recorded, the Act specifically provides that the mortgage servicer shall not be liable under the Act for any violation or damages. (Civil Code §2924.12(b) & (c).) The Act also clarifies that signatories to the National Mortgage Settlement who are in compliance with the terms of that settlement, as they relate to the terms of the Act, will not face liability under the Act. (Civil Code §2924.12(g).

Improper foreclosure or attempted foreclosure

Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.

Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.

Improper fees

Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.

Such fees are a crucial part of servicers’ income. For example, one servicer’s CEO reportedly stated that extra fees, such as late fees, appeared to be paying for all of the operating costs of the company’s entire servicing department, leaving the conventional servicing fee almost completely profit The pressure to collect such fees appears to be higher on subprime servicers than on prime servicers:

Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.

Some servicers have sent out late notices even when they have received timely payments and even before the end of a borrower’s grace period Worse yet, a servicer might pocket the payment, such as an extra payment of principal, and never credit it to the borrower Late fees on timely payments are a common problem when borrowers are making mortgage payments through a bankruptcy plan

Moreover, some servicers have also added false fees and charges not authorized by law or contract to their monthly payment demands, relying on borrowers’ ignorance of the exact amount owed. They can collect such fees or other unwarranted claims by submitting inaccurate payoff demands when a borrower refinances or sells the house). Or they can place the borrowers’ monthly payments in a suspense account and then charge late fees even though they received the payment Worse yet, some servicers pyramid their late fees, applying a portion of the current payment to a previous late fee and then charging an additional late fee even though the borrower has made a timely and full payment for the new month Pyramiding late fees allows servicers to charge late fees month after month even though the borrower made only one late payment

Servicers can turn their fees into a profit center by sending inaccurate monthly payment demands, demanding unearned fees or charges not owed, or imposing fees higher than the expenses for a panoply of actions For example, some servicers take advantage of borrowers’ ignorance by charging fees, such as prepayment penalties, where the note does not provide for them Servicers have sometimes imposed a uniform set of fees over an entire pool of loans, disregarding the fact that some of the loan documents did not provide for those particular fees. Or they charge more for attorneys’, property inspection, or appraisal fees than were actually incurred. Some servicers may add a fee by conducting unnecessary property inspections, having an agent drive by even when the borrower is not in default, or conducting multiple inspections during a single period of default to charge the resulting multiple fees

The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.

Improperly forced-placed insurance

Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.

Escrow Account Mismanagement

One of the benefits of servicing mortgages is controlling escrow accounts to pay for insurance, taxes, and the like and, in most states, keeping any interest earned on these accounts Borrowers have complained that servicers have failed to make tax or insurance payments when they were due or at all. The treasurer of the country’s second largest county estimated that this failure to make timely payments cost borrowers late fees of at least $2 million in that county over a two-year span, causing some to lose their homes. If servicers fail to make insurance payments and a policy lapses, borrowers may face much higher insurance costs even if they purchase their own, non-force-placed policy. Worse yet, borrowers may find themselves unable to buy insurance at all if they cannot find a new insurer willing to write them a policy

You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.

Many a client call me when its toooooo late however sometimes something can be done it would envolve an appeal and this application for a stay. Most likely you will have to pay the reasonable rental value till the case is decided. And … Yes we have had this motion granted. ex-parte-application-for-stay-of-judgment-or-unlawful-detainer3
When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case

BILL NUMBER: AB 278	CHAPTERED
	BILL TEXT

	CHAPTER  86
	FILED WITH SECRETARY OF STATE  JULY 11, 2012
	APPROVED BY GOVERNOR  JULY 11, 2012
	PASSED THE SENATE  JULY 2, 2012
	PASSED THE ASSEMBLY  JULY 2, 2012
	AMENDED IN SENATE  SEPTEMBER 1, 2011
	AMENDED IN SENATE  JUNE 23, 2011

INTRODUCED BY   Assembly Members Eng, Feuer, Mitchell, and John A.
Pérez
   (Principal coauthors: Assembly Members Davis, Carter, and Skinner)

   (Principal coauthors: Senators Leno, Evans, Calderon, Corbett,
DeSaulnier, Hancock, Pavley, and Steinberg)

                        FEBRUARY 8, 2011

   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.

	LEGISLATIVE COUNSEL'S DIGEST

   AB 278, Eng. Mortgages and deeds of trust: foreclosure.
   (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.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) California is still reeling from the economic impacts of a
wave of residential property foreclosures that began in 2007. From
2007 to 2011 alone, there were over 900,000 completed foreclosure
sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation
were in California, and the current wave of foreclosures continues
apace. All of this foreclosure activity has adversely affected
property values and resulted in less money for schools, public
safety, and other public services. In addition, according to the
Urban Institute, every foreclosure imposes significant costs on local
governments, including an estimated nineteen thousand two hundred
twenty-nine dollars ($19,229) in local government costs. And the
foreclosure crisis is not over; there remain more than two million
"underwater" mortgages in California.
   (b) It is essential to the economic health of this state to
mitigate the negative effects on the state and local economies and
the housing market that are the result of continued foreclosures by
modifying the foreclosure process to ensure that borrowers who may
qualify for a foreclosure alternative are considered for, and have a
meaningful opportunity to obtain, available loss mitigation options.
These changes to the state's foreclosure process are essential to
ensure that the current crisis is not worsened by unnecessarily
adding foreclosed properties to the market when an alternative to
foreclosure may be available. Avoiding foreclosure, where possible,
will help stabilize the state's housing market and avoid the
substantial, corresponding negative effects of foreclosures on
families, communities, and the state and local economy.
   (c) This act is necessary to provide stability to California's
statewide and regional economies and housing market by facilitating
opportunities for borrowers to pursue loss mitigation options.
  SEC. 2.  Section 2920.5 is added to the Civil Code, to read:
   2920.5.  For purposes of this article, the following definitions
apply:
   (a) "Mortgage servicer" means a person or entity who directly
services a loan, or who is responsible for interacting with the
borrower, managing the loan account on a daily basis including
collecting and crediting periodic loan payments, managing any escrow
account, or enforcing the note and security instrument, either as the
current owner of the promissory note or as the current owner's
authorized agent. "Mortgage servicer" also means a subservicing agent
to a master servicer by contract. "Mortgage servicer" shall not
include a trustee, or a trustee's authorized agent, acting under a
power of sale pursuant to a deed of trust.
   (b) "Foreclosure prevention alternative" means a first lien loan
modification or another available loss mitigation option.
   (c) (1) Unless otherwise provided and for purposes of Sections
2923.4, 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11,
2924.18, and 2924.19, "borrower" means any natural person who is a
mortgagor or trustor and who is potentially eligible for any federal,
state, or proprietary foreclosure prevention alternative program
offered by, or through, his or her mortgage servicer.
   (2) For purposes of the sections listed in paragraph (1),
"borrower" shall not include any of the following:
   (A) An individual who has surrendered the secured 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.
   (B) An individual who 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.
   (C) An individual who has filed a case 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.
   (d) "First lien" means the most senior mortgage or deed of trust
on the property that is the subject of the notice of default or
notice of sale.
  SEC. 3.  Section 2923.4 is added to the Civil Code, to read:
   2923.4.  (a) The purpose of the act that added this section is to
ensure that, as part of the nonjudicial foreclosure process,
borrowers are considered for, and have a meaningful opportunity to
obtain, available loss mitigation options, if any, offered by or
through the borrower's mortgage servicer, such as loan modifications
or other alternatives to foreclosure. Nothing in the act that added
this section, however, shall be interpreted to require a particular
result of that process.
   (b) Nothing in this article obviates or supersedes the obligations
of the signatories to the consent judgment entered in the case
entitled United States of America et al. v. Bank of America
Corporation et al., filed in the United States District Court for the
District of Columbia, case number 1:12-cv-00361 RMC.
  SEC. 4.  Section 2923.5 of the Civil Code is amended to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 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 (e).
   (B) The mortgage servicer complies with paragraph (1) of
subdivision (a) of Section 2924.18, if the borrower has provided a
complete application as defined in subdivision (d) of Section
2924.18.
   (2) A mortgage servicer 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 mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

    (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's 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 mortgage servicer is subject to approval by the borrower.
    (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer 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 mortgage
servicer. For purposes of this section, "due diligence" shall require
and mean all of the following:
   (1) A mortgage servicer 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 mortgage servicer
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 mortgage servicer 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 mortgage servicer.
   (C) A mortgage servicer 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
mortgage servicer shall then send a certified letter, with return
receipt requested.
   (4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
    (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
    (h) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 5.  Section 2923.5 is added to the Civil Code, to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 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 (e).
   (B) The mortgage servicer complies with subdivision (a) of Section
2924.11, if the borrower has provided a complete application as
defined in subdivision (f) of Section 2924.11.
   (2) A mortgage servicer 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 mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer 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 recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's 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 mortgage servicer is subject to approval by the borrower.
   (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer 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 mortgage
servicer. For purposes of this section, "due diligence" shall require
and mean all of the following:
   (1) A mortgage servicer 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 mortgage servicer
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 mortgage servicer 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 mortgage servicer.
   (C) A mortgage servicer 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
mortgage servicer shall then send a certified letter, with return
receipt requested.
   (4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall become operative on January 1, 2018.
  SEC. 6.  Section 2923.55 is added to the Civil Code, to read:
   2923.55.  (a) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until all of the following:
    (1) The mortgage servicer has satisfied the requirements of
paragraph (1) of subdivision (b).
   (2) Either 30 days after initial contact is made as required by
paragraph (2) of subdivision (b) or 30 days after satisfying the due
diligence requirements as described in subdivision (f).
   (3) The mortgage servicer complies with subdivision (c) of Section
2923.6, if the borrower has provided a complete application as
defined in subdivision (h) of Section 2923.6.
   (b) (1) As specified in subdivision (a), a mortgage servicer shall
send the following information in writing to the borrower:
   (A) A statement that if the borrower is a servicemember or a
dependent of a servicemember, he or she may be entitled to certain
protections under the federal Servicemembers Civil Relief Act (50
U.S.C. Sec. 501 et seq.) regarding the servicemember's interest rate
and the risk of foreclosure, and counseling for covered
servicemembers that is available at agencies such as Military
OneSource and Armed Forces Legal Assistance.
   (B) A statement that the borrower may request the following:
   (i) A copy of the borrower's promissory note or other evidence of
indebtedness.
   (ii) A copy of the borrower's deed of trust or mortgage.
   (iii) A copy of any assignment, if applicable, of the borrower's
mortgage or deed of trust required to demonstrate the right of the
mortgage servicer to foreclose.
   (iv) A copy of the borrower's payment history since the borrower
was last less than 60 days past due.
   (2) A mortgage servicer 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 mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer 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.
   (c) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (d) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (e) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's 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
(b). Any foreclosure prevention alternative offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
   (f) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (b), provided that the failure to
contact the borrower occurred despite the due diligence of the
mortgage servicer. For purposes of this section, "due diligence"
shall require and mean all of the following:
   (1) A mortgage servicer 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 mortgage servicer
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 mortgage servicer 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 mortgage servicer.
   (C) A mortgage servicer 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
mortgage servicer shall then send a certified letter, with return
receipt requested, that includes the toll-free telephone number made
available by HUD to find a HUD-certified housing counseling agency.
   (4) The mortgage servicer 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 mortgage servicer 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 mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (g) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (i)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 7.  Section 2923.6 of the Civil Code is amended to read:
   2923.6.  (a) The Legislature finds and declares that any duty that
mortgage servicers may have to maximize net present value under
their pooling and servicing agreements is owed to all parties in a
loan pool, or to all investors under a pooling and servicing
agreement, not to any particular party in the loan pool or investor
under a pooling and servicing agreement, and that a mortgage servicer
acts in the best interests of all parties to the loan pool or
investors in the pooling and servicing agreement if it agrees to or
implements a loan modification or workout plan for which both of the
following apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
   (c) If a borrower submits a complete application for a first lien
loan modification offered by, or through, the borrower's mortgage
servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not record a notice of default or notice of
sale, or conduct a trustee's sale, while the complete first lien loan
modification application is pending. A mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent shall not record a notice
of default or notice of sale or conduct a trustee's sale until any of
the following occurs:
   (1) The mortgage servicer makes a written determination that the
borrower is not eligible for a first lien loan modification, and any
appeal period pursuant to subdivision (d) has expired.
   (2) The borrower does not accept an offered first lien loan
modification within 14 days of the offer.
   (3) The borrower accepts a written first lien loan modification,
but defaults on, or otherwise breaches the borrower's obligations
under, the first lien loan modification.
   (d) If the borrower's application for a first lien loan
modification is denied, the borrower shall have at least 30 days from
the date of the written denial to appeal the denial and to provide
evidence that the mortgage servicer's determination was in error.
   (e) If the borrower's application for a first lien loan
modification is denied, the mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent shall not record a notice of default
or, if a notice of default has already been recorded, record a
notice of sale or conduct a trustee's sale until the later of:
   (1) Thirty-one days after the borrower is notified in writing of
the denial.
   (2) If the borrower appeals the denial pursuant to subdivision
(d), the later of 15 days after the denial of the appeal or 14 days
after a first lien loan modification is offered after appeal but
declined by the borrower, or, if a first lien loan modification is
offered and accepted after appeal, the date on which the borrower
fails to timely submit the first payment or otherwise breaches the
terms of the offer.
   (f) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying the reasons for denial, including the
following:
   (1) The amount of time from the date of the denial letter in which
the borrower may request an appeal of the denial of the first lien
loan modification and instructions regarding how to appeal the
denial.
   (2) If the denial was based on investor disallowance, the specific
reasons for the investor disallowance.
   (3) If the denial is the result of a net present value
calculation, the monthly gross income and property value used to
calculate the net present value and a statement that the borrower may
obtain all of the inputs used in the net present value calculation
upon written request to the mortgage servicer.
   (4) If applicable, a finding that the borrower was previously
offered a first lien loan modification and failed to successfully
make payments under the terms of the modified loan.

         (5) If applicable, a description of other foreclosure
prevention alternatives for which the borrower may be eligible, and a
list of the steps the borrower must take in order to be considered
for those options. If the mortgage servicer has already approved the
borrower for another foreclosure prevention alternative, information
necessary to complete the foreclosure prevention alternative.
   (g) In order to minimize the risk of borrowers submitting multiple
applications for first lien loan modifications for the purpose of
delay, the mortgage servicer shall not be obligated to evaluate
applications from borrowers who have already been evaluated or
afforded a fair opportunity to be evaluated for a first lien loan
modification prior to January 1, 2013, or who have been evaluated or
afforded a fair opportunity to be evaluated consistent with the
requirements of this section, unless there has been a material change
in the borrower's financial circumstances since the date of the
borrower's previous application and that change is documented by the
borrower and submitted to the mortgage servicer.
   (h) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (i) Subdivisions (c) to (h), inclusive, shall not apply to
entities described in subdivision (b) of Section 2924.18.
   (j) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
    (k)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 8.  Section 2923.6 is added to the Civil Code, to read:
   2923.6.  (a) The Legislature finds and declares that any duty
mortgage servicers may have to maximize net present value under their
pooling and servicing agreements is owed to all parties in a loan
pool, or to all investors under a pooling and servicing agreement,
not to any particular party in the loan pool or investor under a
pooling and servicing agreement, and that a mortgage servicer acts in
the best interests of all parties to the loan pool or investors in
the pooling and servicing agreement if it agrees to or implements a
loan modification or workout plan for which both of the following
apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
   (c) This section shall become operative on January 1, 2018.
  SEC. 9.  Section 2923.7 is added to the Civil Code, to read:
   2923.7.  (a) Upon request from a borrower who requests a
foreclosure prevention alternative, the mortgage servicer shall
promptly establish a single point of contact and provide to the
borrower one or more direct means of communication with the single
point of contact.
   (b) The single point of contact shall be responsible for doing all
of the following:
   (1) Communicating the process by which a borrower may apply for an
available foreclosure prevention alternative and the deadline for
any required submissions to be considered for these options.
   (2) Coordinating receipt of all documents associated with
available foreclosure prevention alternatives and notifying the
borrower of any missing documents necessary to complete the
application.
   (3) Having access to current information and personnel sufficient
to timely, accurately, and adequately inform the borrower of the
current status of the foreclosure prevention alternative.
   (4) Ensuring that a borrower is considered for all foreclosure
prevention alternatives offered by, or through, the mortgage
servicer, if any.
   (5) Having access to individuals with the ability and authority to
stop foreclosure proceedings when necessary.
   (c) The single point of contact shall remain assigned to the
borrower's account until the mortgage servicer determines that all
loss mitigation options offered by, or through, the mortgage servicer
have been exhausted or the borrower's account becomes current.
   (d) The mortgage servicer shall ensure that a single point of
contact refers and transfers a borrower to an appropriate supervisor
upon request of the borrower, if the single point of contact has a
supervisor.
   (e) For purposes of this section, "single point of contact" means
an individual or team of personnel each of whom has the ability and
authority to perform the responsibilities described in subdivisions
(b) to (d), inclusive. The mortgage servicer shall ensure that each
member of the team is knowledgeable about the borrower's situation
and current status in the alternatives to foreclosure process.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) (1) This section shall not apply to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
   (2) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in paragraph (1) exceeds
the threshold of 175 specified in paragraph (1), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to this section, which date shall
be the first day of the first month that is six months after the
close of the calendar year or annual reporting period during which
that entity exceeded the threshold.
  SEC. 10.  Section 2924 of the Civil Code, as amended by Section 1
of Chapter 180 of the Statutes of 2010, is amended to read:
   2924.  (a) Every transfer of an interest in property, other than
in trust, made only as a security for the performance of another act,
is to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until all of the following
apply:
   (1) The trustee, mortgagee, or beneficiary, or any of their
authorized agents shall first file for record, in the office of the
recorder of each county wherein the mortgaged or trust property or
some part or parcel thereof is situated, a notice of default. That
notice of default shall include all of the following:
   (A) A statement identifying the mortgage or deed of trust by
stating the name or names of the trustor or trustors and giving the
book and page, or instrument number, if applicable, where the
mortgage or deed of trust is recorded or a description of the
mortgaged or trust property.
   (B) A statement that a breach of the obligation for which the
mortgage or transfer in trust is security has occurred.
   (C) A statement setting forth the nature of each breach actually
known to the beneficiary and of his or her election to sell or cause
to be sold the property to satisfy that obligation and any other
obligation secured by the deed of trust or mortgage that is in
default.
   (D) If the default is curable pursuant to Section 2924c, the
statement specified in paragraph (1) of subdivision (b) of Section
2924c.
   (2) Not less than three months shall elapse from the filing of the
notice of default.
   (3) Except as provided in paragraph (4), after the lapse of the
three months described in paragraph (2), the mortgagee, trustee, or
other person authorized to take the sale shall give notice of sale,
stating the time and place thereof, in the manner and for a time not
less than that set forth in Section 2924f.
   (4) Notwithstanding paragraph (3), the mortgagee, trustee, or
other person authorized to take sale may record a notice of sale
pursuant to Section 2924f up to five days before the lapse of the
three-month period described in paragraph (2), provided that the date
of sale is no earlier than three months and 20 days after the
recording of the notice of default.
   (5) Until January 1, 2018, whenever a sale is postponed for a
period of at least 10 business days pursuant to Section 2924g, a
mortgagee, beneficiary, or authorized agent shall provide written
notice to a borrower regarding the new sale date and time, within
five business days following the postponement. Information provided
pursuant to this paragraph shall not constitute the public
declaration required by subdivision (d) of Section 2924g. Failure to
comply with this paragraph shall not invalidate any sale that would
otherwise be valid under Section 2924f. This paragraph shall be
inoperative on January 1, 2018.
   (6) No entity shall record or cause a notice of default to be
recorded or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the mortgage or deed of
trust, the original trustee or the substituted trustee under the deed
of trust, or the designated agent of the holder of the beneficial
interest. No agent of the holder of the beneficial interest under the
mortgage or deed of trust, original trustee or substituted trustee
under the deed of trust may record a notice of default or otherwise
commence the foreclosure process except when acting within the scope
of authority designated by the holder of the beneficial interest.
   (b) In performing acts required by this article, the trustee shall
incur no liability for any good faith error resulting from reliance
on information provided in good faith by the beneficiary regarding
the nature and the amount of the default under the secured
obligation, deed of trust, or mortgage. In performing the acts
required by this article, a trustee shall not be subject to Title
1.6c (commencing with Section 1788) of Part 4.
   (c) A recital in the deed executed pursuant to the power of sale
of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of default
or the posting of copies of the notice of sale or the publication of
a copy thereof shall constitute prima facie evidence of compliance
with these requirements and conclusive evidence thereof in favor of
bona fide purchasers and encumbrancers for value and without notice.
   (d) All of the following shall constitute privileged
communications pursuant to Section 47:
   (1) The mailing, publication, and delivery of notices as required
by this section.
   (2) Performance of the procedures set forth in this article.
   (3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out
the duties described in Sections 729.040, 729.050, and 729.080 of the
Code of Civil Procedure.
   (e) There is a rebuttable presumption that the beneficiary
actually knew of all unpaid loan payments on the obligation owed to
the beneficiary and secured by the deed of trust or mortgage subject
to the notice of default. However, the failure to include an actually
known default shall not invalidate the notice of sale and the
beneficiary shall not be precluded from asserting a claim to this
omitted default or defaults in a separate notice of default.
  SEC. 11.  Section 2924 of the Civil Code, as amended by Section 2
of Chapter 180 of the Statutes of 2010, is repealed.
  SEC. 12.  Section 2924.9 is added to the Civil Code, to read:
   2924.9.  (a) Unless a borrower has previously exhausted the first
lien loan modification process offered by, or through, his or her
mortgage servicer described in Section 2923.6, within five business
days after recording a notice of default pursuant to Section 2924, a
mortgage servicer that offers one or more foreclosure prevention
alternatives shall send a written communication to the borrower that
includes all of the following information:
   (1) That the borrower may be evaluated for a foreclosure
prevention alternative or, if applicable, foreclosure prevention
alternatives.
   (2) Whether an application is required to be submitted by the
borrower in order to be considered for a foreclosure prevention
alternative.
   (3) The means and process by which a borrower may obtain an
application for a foreclosure prevention alternative.
   (b) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (c) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (d)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 13.  Section 2924.10 is added to the Civil Code, to read:
   2924.10.  (a) When a borrower submits a complete first lien
modification application or any document in connection with a first
lien modification application, the mortgage servicer shall provide
written acknowledgment of the receipt of the documentation within
five business days of receipt. In its initial acknowledgment of
receipt of the loan modification application, the mortgage servicer
shall include the following information:
   (1) A description of the loan modification process, including an
estimate of when a decision on the loan modification will be made
after a complete application has been submitted by the borrower and
the length of time the borrower will have to consider an offer of a
loan modification or other foreclosure prevention alternative.
   (2) Any deadlines, including deadlines to submit missing
documentation, that would affect the processing of a first lien loan
modification application.
   (3) Any expiration dates for submitted documents.
   (4) Any deficiency in the borrower's first lien loan modification
application.
   (b) For purposes of this section, a borrower's first lien loan
modification application shall be deemed to be "complete" when a
borrower has supplied the mortgage servicer with all documents
required by the mortgage servicer within the reasonable timeframes
specified by the mortgage servicer.
   (c) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (d) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (e)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 14.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a foreclosure prevention alternative is approved
in writing prior to the recordation of a notice of default, a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (b) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (c) When a borrower accepts an offered first lien loan
modification or other foreclosure prevention alternative, the
mortgage servicer shall provide the borrower with a copy of the fully
executed loan modification agreement or agreement evidencing the
foreclosure prevention alternative following receipt of the executed
copy from the borrower.
   (d) A mortgagee, beneficiary, or authorized agent shall record a
rescission of a notice of default or cancel a pending trustee's sale,
if applicable, upon the borrower executing a permanent foreclosure
prevention alternative. In the case of a short sale, the rescission
or cancellation of the pending trustee's sale shall occur when the
short sale has been approved by all parties and proof of funds or
financing has been provided to the mortgagee, beneficiary, or
authorized agent.
   (e) The mortgage servicer shall not charge any application,
processing, or other fee for a first lien loan modification or other
foreclosure prevention alternative.
   (f) The mortgage servicer shall not collect any late fees for
periods during which a complete first lien loan modification
application is under consideration or a denial is being appealed, the
borrower is making timely modification payments, or a foreclosure
prevention alternative is being evaluated or exercised.
   (g) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of that borrower's loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
   (h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (i) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (j)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 15.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a borrower submits a complete application for a
foreclosure prevention alternative offered by, or through, the
borrower's mortgage servicer, a mortgage servicer, trustee,
mortgagee, beneficiary, or authorized agent shall not record a notice
of sale or conduct a trustee's sale while the complete foreclosure
prevention alternative application is pending, and until the borrower
has been provided with a written determination by the mortgage
servicer regarding that borrower's eligibility for the requested
foreclosure prevention alternative.
   (b) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying with specificity the reasons for the denial and
shall include a statement that the borrower may obtain additional
documentation supporting the denial decision upon written request to
the mortgage servicer.
   (c) If a foreclosure prevention alternative is approved in writing
prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (d) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (e) This section applies only to mortgages or deeds of trust as
described in Section 2924.15.
   (f) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (g) This section shall become operative on January 1, 2018.
  SEC. 16.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent where the violation was not corrected and remedied prior to the
recordation of the trustee's deed upon sale. If the court finds that
the material violation was intentional or reckless, or resulted from
willful misconduct by a mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent, the court may award the borrower
the greater of treble actual damages or statutory damages of fifty
thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of a trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of a trustee's deed
upon sale.
   (d) A violation of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 by a person licensed by the Department
of Corporations, Department of Financial Institutions, or Department
of Real Estate shall be deemed to be a violation of that person's
licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 committed by that third-party
encumbrancer, that occurred prior to the sale of the subject property
to the bona fide purchaser.
   (g) A signatory to a consent judgment entered in the case entitled
United States of America et al. v. Bank of America Corporation et
al., filed in the United States District Court for the District of
Columbia, case number 1:12-cv-00361 RMC, that is in compliance with
the relevant terms of the Settlement Term Sheet of that consent
judgment with respect to the borrower who brought an action pursuant
to this section while the consent judgment is in effect shall have no
liability for a violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (h) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (i) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (j) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (k)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 17.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a                                                 material
violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.5,
2923.7, 2924.11, or 2924.17 by that mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent where the violation was not
corrected and remedied prior to the recordation of the trustee's
deed upon sale. If the court finds that the material violation was
intentional or reckless, or resulted from willful misconduct by a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent, the court may award the borrower the greater of treble actual
damages or statutory damages of fifty thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of the trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of the trustee's deed
upon sale.
   (d) A violation of Section 2923.5, 2923.7, 2924.11, or 2924.17 by
a person licensed by the Department of Corporations, Department of
Financial Institutions, or Department of Real Estate shall be deemed
to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2923.7, 2924.11, or
2924.17 committed by that third-party encumbrancer, that occurred
prior to the sale of the subject property to the bona fide purchaser.

   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (i) This section shall become operative on January 1, 2018.
  SEC. 18.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, paragraph (5) of
subdivision (a) of Section 2924, and Sections 2923.5, 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply
only to first lien mortgages or deeds of trust that are secured by
owner-occupied residential real property containing no more than four
dwelling units. For these purposes, "owner-occupied" means that the
property is the principal residence of the borrower and is security
for a loan made for personal, family, or household purposes.
   (b)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 19.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, Sections 2923.5, 2923.7,
and 2924.11 shall apply only to first lien mortgages or deeds of
trust that are secured by owner-occupied residential real property
containing no more than four dwelling units. For these purposes,
"owner-occupied" means that the property is the principal residence
of the borrower and is security for a loan made for personal, family,
or household purposes.
   (b) This section shall become operative on January 1, 2018.
  SEC. 20.  Section 2924.17 is added to the Civil Code, to read:
   2924.17.  (a) A declaration recorded pursuant to Section 2923.5
or, until January 1, 2018, pursuant to Section 2923.55, a notice of
default, notice of sale, assignment of a deed of trust, or
substitution of trustee recorded by or on behalf of a mortgage
servicer in connection with a foreclosure subject to the requirements
of Section 2924, or a declaration or affidavit filed in any court
relative to a foreclosure proceeding shall be accurate and complete
and supported by competent and reliable evidence.
   (b) Before recording or filing any of the documents described in
subdivision (a), 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.
   (c) Until January 1, 2018, any mortgage servicer that engages in
multiple and repeated uncorrected violations of subdivision (b) in
recording documents or filing documents in any court relative to a
foreclosure proceeding shall be liable for a civil penalty of up to
seven thousand five hundred dollars ($7,500) per mortgage or deed of
trust in an action brought by a government entity identified in
Section 17204 of the Business and Professions Code, or in an
administrative proceeding brought by the Department of Corporations,
the Department of Real Estate, or the Department of Financial
Institutions against a respective licensee, in addition to any other
remedies available to these entities. This subdivision shall be
inoperative on January 1, 2018.
  SEC. 21.  Section 2924.18 is added to the Civil Code, to read:
   2924.18.  (a) (1) If a borrower submits a complete application for
a first lien loan modification offered by, or through, the borrower'
s mortgage servicer, a mortgage servicer, trustee, mortgagee,
beneficiary, or authorized agent shall not record a notice of
default, notice of sale, or conduct a trustee's sale while the
complete first lien loan modification application is pending, and
until the borrower has been provided with a written determination by
the mortgage servicer regarding that borrower's eligibility for the
requested loan modification.
   (2) If a foreclosure prevention alternative has been approved in
writing prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (3) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (b) This section shall apply only to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
   (c) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in subdivision (b) exceeds
the threshold of 175 specified in subdivision (b), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to Sections 2923.55, 2923.6,
2923.7, 2924.9, 2924.10, 2924.11, and 2924.12, which date shall be
the first day of the first month that is six months after the close
of the calendar year or annual reporting period during which that
entity exceeded the threshold.
   (d) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (e) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of the borrower's loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 22.  Section 2924.19 is added to the Civil Code, to read:
   2924.19.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.5, 2924.17, or 2924.18.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, beneficiary, or authorized agent has corrected
and remedied the violation or violations giving rise to the action
for injunctive relief. An enjoined entity may move to dissolve an
injunction based on a showing that the material violation has been
corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, beneficiary, or authorized agent shall be
liable to a borrower for actual economic damages pursuant to Section
3281, resulting from a material violation of Section 2923.5, 2924.17,
or 2924.18 by that mortgage servicer, mortgagee, beneficiary, or
authorized agent where the violation was not corrected and remedied
prior to the recordation of the trustee's deed upon sale. If the
court finds that the material violation was intentional or reckless,
or resulted from willful misconduct by a mortgage servicer,
mortgagee, beneficiary, or authorized agent, the court may award the
borrower the greater of treble actual damages or statutory damages of
fifty thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, beneficiary, or authorized
agent shall not be liable for any violation that it has corrected and
remedied prior to the recordation of the trustee's deed upon sale,
or that has been corrected and remedied by third parties working on
its behalf prior to the recordation of the trustee's deed upon sale.
   (d) A violation of Section 2923.5, 2924.17, or 2917.18 by a person
licensed by the Department of Corporations, the Department of
Financial Institutions, or the Department of Real Estate shall be
deemed to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2924.17 or 2924.18,
committed by that third-party encumbrancer, that occurred prior to
the sale of the subject property to the bona fide purchaser.
   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or damages
pursuant to this section.
   (i) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
   (j)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 23.  Section 2924.20 is added to the Civil Code, to read:
   2924.20.  Consistent with their general regulatory authority, and
notwithstanding subdivisions (b) and (c) of Section 2924.18, the
Department of Corporations, the Department of Financial Institutions,
and the Department of Real Estate may adopt regulations applicable
to any entity or person under their respective jurisdictions that are
necessary to carry out the purposes of the act that added this
section. A violation of the regulations adopted pursuant to this
section shall only be enforceable by the regulatory agency.
  SEC. 24.  The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
  SEC. 25.   No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
%d bloggers like this: