AB 1043: Residential real property: foreclosure.

Existing law prescribes various requirements to be satisfied before the exercise of a power of sale under a mortgage or deed of trust and prescribes a procedure for the exercise of that power.

This bill would prohibit a person from contacting, soliciting, or initiating communication with an owner to claim the surplus funds from a foreclosure sale of the owners residence before 90 days after the trustees deed has been required.

In performing acts required by the provisions pertaining to the exercise of a power of sale under a mortgage or deed of trust, existing law provides that the trustee does not incur liability for specified errors and that the trustee is not subject to specified law.

This bill would add that a trustee does not incur liability or subject to that specified law when responding to requests for payoff or reinstatement information.

When some or all of the principal sum of an obligation secured by real property has become due prior to the maturity date by reason of default or other specified failure to pay and a power of sale is to be exercised, existing law authorizes a trustor or mortgagor, at any time prior to foreclosure, to pay to the beneficiary or mortgagee specified amounts, including specified amounts shown in the notice of default and reasonable costs and expenses that are actually incurred in enforcing the terms of the obligation, deed of trust, or mortgage, as specified. If the trustor or mortgagor cures the default pursuant to these provisions, existing law requires the beneficiary or mortgagee to execute and deliver to the trustee a notice of rescission, as specified. Existing law limits costs and expenses that may be charged pursuant to specified mortgage law. law to $50.

This bill would include reasonable costs and expenses that will be incurred as a direct result of the cure payment being tendered as part of the cure payment described above. This bill would include recording a notice of rescission pursuant as part of the costs and expenses that may be charged pursuant to specified mortgage law. law and raise the limit to $100.

Existing law specifies when a trustees sale is deemed final and perfected, and provides that, if an eligible bidder submits a written notice of intent to bid pursuant to (1), below, the trustees sale is deemed perfected as of 8 a.m. on the actual date of sale if a specified requirement is met.

This bill would recast that provision to provide that the trustees sale is deemed perfected as of 8 a.m. on the actual date of sale if a specified requirement is met if an eligible bidder submits a written notice of intent to bid under any of the provisions granting eligible bidders the rights and priorities to make bids on the property after the initial trustee sale described above.

Existing law, until January 1, 2031, grants eligible tenant buyers, as defined, and other eligible bidders, as defined, certain rights and priorities to make bids on the property after the initial trustee sale. Existing law provides that a trustees sale of property under a power of sale contained in a deed of trust or mortgage on specified real property until the earliest of, among other things, (1) the date upon which a representative of all of the eligible tenant buyers submits to the trustee a bid that meets specified requirements, including that the bid be limited to a single bid amount and not contain instructions for successive bid amounts; and (2) 45 days after the trustees sale, except if an eligible bidder submits to the trustee a bid meeting specified requirements. Existing law requires prospective owner-occupants, as defined, eligible tenant buyers, and eligible bidders to submit specified affidavits or declarations regarding bidder eligibility under certain circumstances. Existing law authorizes the trustee to reasonably rely on these affidavits and declarations regarding bidder eligibility, and requires these affidavits or declarations of the winning bidder to be attached as an exhibit to the trustees deed and recorded.

This bill would remove the requirement that the bid be limited to a single bid amount and not contain instructions for successive bid amounts from (1), above, and would add that requirement to (2), above. If the winning bidder is not required to submit an affidavit or declaration pursuant to the provisions described above, the bill would require the trustee to attach as an exhibit to the trustees deed a statement that no affidavit or declaration is required by these provisions, and would provide that the lack of an affidavit or declaration shall not prevent the deed from being recorded and shall not invalidate the transfer of title pursuant to the trustees deed.

Existing law requires, for trustees sales where the winning bidder is an eligible bidder under the provisions described above, the trustee or an authorized agent to electronically send specified information to the Attorney General within 15 days of the sale being deemed final, including a copy of the trustees deed, as recorded, as specified.

This bill would recast that provision to require the trustee to provide a copy of the trustees deed as executed instead of as recorded.

Existing law, the COVID-19 Small Landlord and Homeowner Relief Act of 2020, requires a mortgage servicer to provide a specified written notice to a borrower if the mortgage servicer denies forbearance during the effective time period that states the reasons for that denial if the borrower was both current on payments as of February 1, 2020, and is experiencing a financial hardship that prevents the borrower from making timely payments on the mortgage obligation due, directly or indirectly, to the COVID-19 emergency. The act defines various terms for these purposes. If a mortgage servicer denies a forbearance request, the act requires a specified declaration to include the written notice together with a statement as to whether forbearance was or was not subsequently provided.

This bill would clarify that the act requires that specified declaration to include that written notice if the mortgage servicer denied the forbearance request during the effective time period.