Signed by Governor Jerry Brown, Jr.

Vote Smart's Synopsis:

Vote to adopt a conference report that establishes regulations for foreclosure procedures on home loans.

Highlights:

• Prohibits a mortgage servicer from doing any of the following if a borrower has submitted a complete application for a first lien loan modification and that application is still pending (Sec. 7):
• Recording a notice of default;
• Recording a notice of sale; or
• Conducting a trustee's sale of the property.

• Requires a mortgage servicer to contact the borrower in person or by phone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure (Sec. 4).  

• Requires a mortgage servicer to attempt to contact a borrower as follows before filing a notice of default (Sec. 4):
• Sending a letter to the borrower;
• Attempting to contact the borrower at least 3 times at different hours on different days by telephone;
• Providing a toll-free number for the borrower to call regarding his or her mortgage; and
• Granting the borrower 2 weeks to respond to the mortgage servicer's contact attempts.

• Requires the mortgage servicer to establish a single point of contact and provide the borrower with 1 or more direct means of communication with that single point of contact (Sec. 9).

• Authorizes a mortgage servicer to record a notice of default or notice of sale, or conduct a trustee's sale when one of the following occurs (Sec. 7):
• The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification and the appeal period has expired;
• The borrower does not accept the offered first lien loan modification within 14 days; or
• The borrower accepts a first lien loan modification but defaults on it.

• Specifies that borrowers have at least 30 days after a first lien loan modification is denied to appeal the denial and provide evidence that the mortgage servicer's decision was made in error (Sec. 7).

• Prohibits the mortgage servicer from recording a notice of default or a notice of sale or conducting a trustee's sale until the later of the following dates (Sec. 7):
• 31 days after the borrower is notified in writing of the denial;
• 15 days after the denial of the appeal was issued;
• 14 days after the borrower declines a first lien loan modification after an appeal is granted; or
• When the borrower fails to submit the first payment after a first lien loan modification is accepted after an appeal.

• Requires a mortgage servicer to send a written notice to the borrower following the denial of a first lien loan modification application explaining the reasons for denial (Sec. 7).

• Authorizes a borrower to bring an action against the mortgage servicer to refrain from recording a notice of foreclosure for a violation of this chapter, if a trustee's deed of sale has not been recorded (Sec. 16).

• Requires any injunction to remain in place and the trustee's sale to be prohibited until the court determines whether the mortgage servicer has corrected the violation (Sec. 17).

• Requires any mortgage servicer engaged in multiple and repeated violations  in any court relative to a foreclosure proceeding to be held liable for a civil penalty of up to $7,500 per mortgage or deed of trust (Sec. 20).

Full Bill Text