Communication Between Lender and Borrower
This week, the State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners, with owner-occupied loans secured from 2003 to 2007, to explore options for avoiding foreclosure at least 30 days before filing a notice of default. This requirement to contact borrowers applies to. Effective on or about September 8, 2008, a lender or their authorized agent has to contact a borrower, in person or by telephone, to assess the borrower's financial situation and explore options for avoiding foreclosure 30 days prior to filing a Notice of Default. During this initial contact
- The lender must inform the borrower of the right to request a meeting with the lender within 14 days
- The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.
The subsequent Notice of Default must include the lender's declaration of this initial borrower contact or verification of meeting their due diligence requirements for contacting a borrower. Lenders filing Notice of Default prior to the enactment of this law must include a similar declaration in the Notice of Sale.
Certain exemptions apply such as the borrower
- Filing for bankruptcy
- Surrendering the property
- Contracting with a person or entity whose primary business is advising people
60-Day Notice to Terminate Tenants
Effective July 8, 2008, the new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. However, a borrower who remains on the property after foreclosure may be served a 3-day notice to vacate.
When the borrower has a different billing address than the property address, effective September 8, 2008, the lender or authorized agent posting a Notice of Sale must also post and mail a Notice of a Tenant's Right along with a 60-day Eviction Notice from the new owner, unless other laws apply.
*This law does not affect rent-controlled properties with just-cause evictions.
Maintenance of Vacant Properties
Effective July 8, 2008, anyone who acquires property through foreclosure must maintain the vacant residential property. This law authorizes a governmental entity to impose civil penalties up to $1,000 per day. However, the owner must have been given notice and an opportunity to remedy the violation.
Typical violations include:
- Permitting excessive over growth that diminishes the value of surrounding properties
- Failing to take action against trespassers or squatters
- Failing to take action to prevent mosquitoes from breeding in green pools
Violators must be given at least 14 days to begin, and 30 days to complete, such remediation before a fine can be assessed.
These requirements will remain in effect until January 1, 2013. View the full text of Senate Bill 1137 (Perata) at www.leginfo.ca.gov.
It's good to see some safeguards being put in place. Do you think this will help folks. I certainly hope so.
It's a shame that the government has to pick up the carnage from the lenders that are partly (well mostly) responsible for this mess. I am curious to know what the government will propos for the hundreds of thousands of people that have already lost homes.
Hi Mykel;
Great Post and very informative, thank you for sharing.
Anthony
In May, California Foreclosures were up by 48% over a year ago; News sources reported that 1 in 183 California homes received a foreclosure notice during that month; That puts California on pace for over 150,000 foreclosures over the next year. This may just be the legislation that can help put the brakes on those staggering numbers . . . I can hope can't I?
Hello to you Anthony and Thanks!