BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Michael J. Machado, Chair
SB 926 (Perata) Hearing Date: January
16, 2008
As Amended January 7, 2008
Fiscal: Yes
Urgency: Yes
SUMMARY Would enact several changes to the procedures that
must be followed before the holder of a mortgage may issue a
notice of default or a notice of trustee sale, require the
holder of a mortgage to mail a specified notice to the tenant(s)
of a property on which foreclosure proceedings have begun, and
impose penalties on property owners who fail to adequately
maintain foreclosed properties, as specified.
DIGEST
Existing law
1. Regulates the non-judicial foreclosure process pursuant to
the power of sale contained within a mortgage contract, and
provides that in order to commence the process, a trustee,
mortgagee, or beneficiary must record a Notice of Default
(NOD) and allow three months to lapse before setting a date
for sale of the property (Civil Code Sections 2924);
2. Further provides that the mortgagee, trustee or other
person authorized to take the sale must give notice of sale,
and requires notice of the sale to be made, as specified, at
least 20 days prior to the date of sale (Civil Code Section
2924f);
3. Permits a party to a residential rental agreement to
terminate a periodic tenancy by giving 30-days written
notice, unless the tenant has resided in the dwelling for
one year or more, in which case a 60-day notice is required,
as specified (Civil Code Sections 1946 and 1946.1);
4. Provides that tenants or subtenants in possession of a
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rental housing unit that has been sold due to foreclosure
shall be given written notice to vacate the property; notice
must be provided at least as far in advance as the term of
the lease, not to exceed 30 days (e.g., if the lease is
weekly, notice must be given one week before the person must
vacate; if the lease is monthly or longer, notice must be
given 30 days prior; Code of Civil Procedure Section 1161a);
5. Provides that anything which is injurious to health,
indecent, or offensive to the senses, obstructs the free use
of property, or unlawfully obstructs free passage is a
nuisance (Civil Code Section 3479).
This bill
1. Would provide that notwithstanding any other provision of
law, an entity (unspecified in the bill but presumably the
mortgagee, trustee, servicer, or beneficiary) must mail a
notice of projected change in mortgage payment amount to the
borrower, as follows:
a. Would require separate notices to be mailed 120
days, 90 days, and 45 days prior to any projected change
in mortgage payment amount;
b. Would require each notice to include the current
mortgage interest rate; projected interest rate after the
change, if any, in the interest rate; an estimate of the
payment after the projected change in payment amount; the
difference between the current payment due and the
estimated payment due after the change; and the start
date of the projected change in monthly payment;
c. Would require each notice to be provided by
first-class mail, in plain language, at a reading level
no higher than grade 6;
d. Would require each notice to be provided in the
language in which the mortgage was negotiated. If the
entity required to mail the notice does not know the
language in which the mortgage was negotiated, the notice
must be provided in English and the five languages
specified in Civil Code Section 1632 (Spanish, Chinese,
Tagalog, Vietnamese, and Korean);
SB 926 (Perata), Page 3
2. Would provide that before a mortgagee, trustee, servicer,
or beneficiary may file an NOD, that entity must conduct an
in-person meeting with the borrower, as follows:
a. Would specify that, during the meeting, the
mortgagee, trustee, servicer, or beneficiary must assess
the borrower's financial situation, provide the borrower
with a list of U.S. Department of Housing and Urban
Development (HUD)-certified credit counselors in the
borrower's geographic region, and explore options for the
borrower to avoid foreclosure;
b. Would further require the mortgagee, trustee,
servicer, or beneficiary to offer, during the meeting,
and where feasible, restructuring or other options,
including forbearance of loan modification, consistent
with the mortgagee's, trustee's, servicer's or
beneficiary's authority to mitigate losses. The
modification shall only be offered if it would serve the
best interest of the investors, based upon a finding that
the borrower is able and willing to pay under the
modified terms, and that significant financial loss to
investors is likely to occur without a restructuring or
modification;
c. Would provide that the mortgagee, trustee, servicer,
or beneficiary may not file an NOD until 30 days after
that in-person meeting;
d. Would provide that upon filing an NOD, a mortgagee,
trustee, servicer, or beneficiary shall include a
declaration, which must state that the mortgagee,
trustee, servicer, or beneficiary has met with the
borrower or has tried with due diligence to contact the
borrower for an in-person meeting, and which must include
the terms of the existing loan and the restructuring
options that were offered to the borrower;
e. Would provide specified civil penalties, and would
grant authority to specified parties to bring a civil
action against, a mortgagee, trustee, servicer, or
beneficiary for making a statement on the declaration
that entity knows to be false;
f. Would provide that if a mortgagee, trustee,
SB 926 (Perata), Page 4
servicer, or beneficiary had already filed an NOD prior
to enactment of the bill, the requirements to hold an
in-person meeting and offer restructuring or other
options during that meeting must be met before the
mortgagee, trustee, servicer, or beneficiary may issue a
notice of sale on the property;
g. Would require all communications and negotiations
related to the in-person meeting and provision of
restructuring options to be conducted in the language in
which the loan was originally negotiated. If the
mortgagee, trustee, servicer, or beneficiary is not the
entity that originally negotiated the loan and does not
know the language used to negotiate the loan, the
mortgagee, trustee, servicer, or beneficiary must send a
notice to the borrower in English, Spanish, Chinese,
Tagalog, Vietnamese, and Korean;
h. Would require the notice sent to the borrower,
informing him of the meeting, to read as follows: "Your
home may be subject to foreclosure, which could result in
you losing your home. Please contact us at (insert
telephone number) to discuss possible options to avoid
the foreclosure."
3. Would require any mortgagee, trustee, servicer or
beneficiary who files an NOD to additionally mail, at the
same time, a notice addressed to the "resident" of the
property, and would require the outside of the envelope
containing that notice to prominently state the following in
English, Spanish, Chinese, Tagalog, Vietnamese, and Korean:
"IMPORTANT: Foreclosure process has begun on this property,
which may affect your ability to continue to live in this
property. You may wish to contact a lawyer or your local
legal aid or credit counseling organizations to discuss any
rights you may have."
4. Would provide that failure to maintain a foreclosed
property shall constitute a nuisance and shall subject the
violator to civil fines and penalties of up to $1,000 each
day, which shall be directed to local nuisance abatement
programs.
a. For purposes of this provision, "failure to
maintain" includes failure to adequately care for the
property, including, but not limited to, permitting
SB 926 (Perata), Page 5
excessive foliage growth that diminishes the value of
surrounding properties, allowing incursions by
trespassers, or permitting mosquito larva to grow in
standing water;
b. Would state that this provision shall not preempt
any local ordinance that contains any greater standards
or protections;
5. Would provide that notwithstanding existing law, a tenant
or subtenant in possession of a rental housing unit that has
been sold due to foreclosure shall be given 90 days' written
notice to leave the property before that tenant may be
removed from the property;
6. Would make findings and declarations about the nature of
the mortgage crisis in California and of the importance of
enacting an urgency statute to address the threats to the
state economy and local economies that the current mortgage
market troubles are creating;
7. Would provide that its provisions are severable and that
they sunset on January 1, 2013.
COMMENTS
1. Purpose of the bill To reduce the number of foreclosures
in California, ensure that foreclosed properties do not
become a source of blight to the communities in which they
are located, and provide increased protections to
individuals who rent properties that ultimately go into
foreclosure.
2. Background California is currently suffering the effects
of a severe housing crisis, which has not only negatively
affected borrowers who have lost their homes to foreclosure,
but has also had significant negative ripple effects on
housing values, local economies, and the state economy.
Although many other states across the United States have
been affected by what has colloquially become known as "the
subprime mortgage crisis," California is suffering more than
most others.
During the third quarter of 2007, according to RealtyTrac, one
quarter of the nation's foreclosure filings - nearly 150,000
homes - were in California. Seven of the top sixteen
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metropolitan areas with the highest rates of foreclosure
nationwide are in California, in the Stockton, Riverside/San
Bernardino, Sacramento, Bakersfield, Oakland, Fresno, and
San Diego metropolitan areas. The Mortgage Bankers
Association (MBA) has also reported that California is among
only four states nationwide (the others being Nevada,
Florida, and Arizona) that are driving historically high
nationwide rates of default and foreclosure. According to
MBA, third quarter 2007 national delinquency rates were at
their highest levels in 21 years; the rate of foreclosure
starts and the percentage of loans in the process of
foreclosure were at their highest levels ever during that
same quarter. While delinquencies are occurring at
higher-than-normal levels on all types of loans, the loans
on which the greatest percentage of problems are subprime
adjustable rate mortgages (ARMs).
To date, efforts to help mitigate the subprime housing crisis
have focused on the importance of responsiveness and
flexibility by the financial institutions that hold and
service mortgages toward their borrowers. Many of the
nation's financial institutions have publicly stated that
they view foreclosure only as a last resort, but these same
institutions have also run into significant challenges in
their efforts to review the loans in their portfolios for
possible modification or refinance.
In November 2007, Governor Schwarzenegger reached an agreement
with several state-regulated financial institutions to
engage in streamlined modifications of certain types of
subprime ARMs. In December 2007, President Bush and U.S.
Secretary of the Treasury Henry Paulson announced the HOPE
NOW Alliance plan, an industry-led plan intended to
facilitate streamlined modifications of selected subprime
ARMs. The American Securitization Forum has also published
guidance documents intended to facilitate loan modifications
by servicers, pursuant to the contractual terms specified in
pooling and servicing agreements. Despite the existence of
these voluntary initiatives, many anticipate that upcoming
interest rate resets, combined with depressed housing
prices, will cause defaults and foreclosures to increase in
2008 relative to their already high 2007 levels.
This bill is a response to the expectation that defaults and
foreclosures will continue to grow in number in California
through 2008, and out of concern over the negative impact
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they will have on California homeowners, California's local
economies, and the state economy.
3. Support . Senator Perata introduced this bill to help
people affected by the subprime mortgage crisis stay in
their homes and prevent neighborhoods afflicted with
foreclosures from becoming areas of blight. According to
Senator Perata, "The mortgage crisis is taking a terrible
toll on Oakland and the rest of California. It is crucial
that we give homeowners the tools they need to avoid
foreclosure when possible because that's the best outcome
for everybody."
When he introduced the bill, Senator Perata noted that seven of
the nation's 16 metropolitan areas with the highest rates of
foreclosure are in California. He stated that foreclosures
are not only devastating for the families who are forced
from their homes, but for the neighborhoods and communities
surrounding them that can see vacancies increase, properties
fall into disrepair, and housing values decline.
The Center for Responsible Lending (CRL) supports SB 926 and
believes the bill takes several important steps to reduce
the number of foreclosure sales. It accomplishes this goal
by requiring enhanced notice to borrowers, in English and
other languages, as appropriate; requiring lenders to hold
face-to-face meetings with borrowers to provide
restructuring options; and taking steps to ensure that
foreclosed properties do not contribute to neighborhood
blight.
Last December, CRL estimated that nearly 500,000 borrowers in
California would lose their homes to foreclosure, due to
reckless lending practices in the subprime market.
Foreclosures are already at extremely high levels, and CRL
expects the worst is still to come. Based on the timing of
rate resets for subprime adjustable rate mortgages, CRL
expects the highest volume of resets to occur in the Spring
and in October of 2008. CRL supports SB 926 as an important
part of the effort to stem the tide of foreclosures and to
ameliorate the effects of the current crisis on households,
communities, and the California economy as a whole.
CRL specifically commends the in-person meeting provision of
the bill and the requirements that the notice of rate reset
and any NOD be provided in the language in which the
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mortgage was negotiated. CRL notes that lenders or
affiliated brokers typically met face-to-face with borrowers
to place them into the problem loans; it is reasonable,
then, to require a face-to-face meeting with borrowers
before foreclosing on the loan and taking away their home.
Consumers Union (CU) supports SB 926, and believes that by
creating sensible stop-gap protections for borrowers before
they lose their homes, SB 926 will help preserve
homeownership by preventing unnecessary home foreclosures
from occurring. SB 926 encourages early contact and
communication between borrowers and lenders to protect
against unnecessary mortgage loan foreclosures. It does so
at multiple stages of the lending process, by requiring
notification of rate resets at 120, 90, and 45 days before
they occur. In some cases, based on borrower stories CU has
heard, the early notification that is required by this bill
might serve as the first indication to many borrowers that
they hold an adjustable rate loan, rather than a fixed rate
loan. The early and repeated notifications required by the
bill will serve to alert borrowers to act to avert a
foreclosure.
CU also supports the provisions that require notices to be
provided in plain language at a reading level no higher than
grade 6 and in multiple languages. CU believes that these
provisions will increase the likelihood that borrowers will
act promptly and appropriately to protect themselves from a
loan default.
CU believes that borrowers will benefit greatly from the bill's
requirement of an in-person meeting. By requiring that
borrowers be offered counseling resource information and
loan workout options prior to the issuance of an NOD, early
intervention can lead to a more favorable outcome for all
involved.
CU believes that SB 926 will help protect neighboring
properties around foreclosed-upon properties. The
imposition of fines and penalties on those who allow a
foreclosed property to become a nuisance will help protect
community integrity and support existing homeownership. The
anti-nuisance provisions will also help guard against
potential public safety concerns, such as squatting and
abandoned properties becoming havens for illegal activities.
SB 926 (Perata), Page 9
Finally, CU believes that SB 926 will help protect innocent
tenants who are in danger of losing their homes as a result
of a landlord's failure to pay the mortgage on the property.
In many cases, tenants are not aware that the property they
occupy is threatened with foreclosure. This bill will help
ensure that all of those concerned, including innocent
tenants, receive adequate notice. It will also ensure that
tenants of rental housing that has been sold due to
foreclosure be given 90 days written notice before they may
be removed from the property. CU supports this provision to
the extent that it provides greater protection than local
rental ordinances that may apply in a particular locale.
The Western Center on Law and Poverty (WCLP) supports SB 926,
which it believes will enact immediate, vital changes to
address some elements of the state's foreclosure process.
WCLP's arguments in support of the in-person meeting is
virtually identical to the comments noted above. WCLP's
support letter notes that creative financing precipitated
this crisis; it is only fair that note-holders offer
creative re-financing. WCLP's arguments in support of the
bill's other provisions also echo the arguments cited above.
However, WCLP offers several technical amendments to
further the purposes of the bill, as follows: First, it
suggests that the language required to be printed on the
outside of the envelope to the resident of a property be
shortened. WCLP also believes that the bill needs to
specify exactly what information should be shared with the
resident inside the notice. Third, WCLP requests an
amendment clarifying that the bill does not affect any local
just cause eviction ordinances. Finally, WCLP notes that it
supports the section of the bill imposing penalties for
failure to maintain a foreclosed property, but has technical
concerns that the section should include more specificity,
particularly as to the length of time that the provisions
apply after foreclosure.
The California Reinvestment Coalition (CRC) and 49 other
organizations listed on CRC's letter (and listed below under
"support") wrote to express their qualified support for SB
926, which they believe would implement important
foreclosure process reforms to protect the hundreds of
thousands of Californians in danger of losing their homes
due to the mortgage crisis. CRC and the other signatories
support all of the provisions of the bill and urge the
SB 926 (Perata), Page 10
inclusion of additional items they believe would further the
goals of the bill.
CRC cites the CRL numbers cited above, regarding the number of
Californians at risk of losing their homes to foreclosure
and the expectation that things will worsen before they
improve. CRC also notes that it recently surveyed 33 of
California's 80 HUD-certified housing counselors. Among the
key survey findings: lenders are not being responsive to
borrowers; borrowers are receiving short-term modifications
that only delay the problem for a year, instead of
sustainable, long-term modifications; lenders are not
reaching out to borrowers early enough; counselors do not
perceive that lenders' actions are matching the lenders'
assertions that they wish to avoid foreclosure; and
counselors are much more likely to see borrowers in
foreclosure or short-sale situations than they are to see
borrowers who receive beneficial loan modifications or
refinancings.
CRC and the other groups signing onto its letter believe that
SB 926 can change the dynamic being encountered by housing
counselors by requiring a meeting to discuss loss mitigation
options before an NOD is filed, requiring those
communications to be in the language of the negotiation, and
requiring that the servicer attest to which restructuring
options were offered to the borrower. Additional provisions
relating to ensuring that foreclosed properties do not
contribute to neighborhood blight and providing additional
protections to tenants living in investor-owned properties
will go a long way towards mitigating the broad impact of
foreclosures on communities.
CRC and the others request that the bill be amended as follows:
a. Delete the language that restricts loss
mitigation to those scenarios which "serve the best
interests of the investors." CRC believes that this
provision will only provide a justification for de
facto noncompliance. It may also be that all of the
investors do not have the same interests.
Furthermore, servicing companies have routinely
reported to the press, regulators, and community
groups that avoiding foreclosure through loss
mitigation for which a borrower qualifies is in the
best interest of investors.
SB 926 (Perata), Page 11
b. Clarify what due diligence is required by a
servicer to secure a meeting with a borrower. At a
minimum repeated mailings, phone calls, and visits to
the home should be required. It should be permissible
and desirable for nonprofit counseling agencies to be
engaged by servicers to make these contacts, if
mutually agreeable.
c. Clarify that the declaration required to be
filed upon NOD include any and all reasons why
restructuring options were not offered, if they were
not.
d. Clarify and/or extend the notice provisions to
tenants to include all NODs that may be issued, as
well as any notices of trustee sale and any other
formal notices submitted to the owner of the property.
e. Expand the definition of "failure to maintain"
a foreclosed property to include the failure to
provide utilities that are reasonably necessary for
tenants to enjoy quiet enjoyment of habitable
premises.
4. Opposition The United Trustees Association (UTA) is
concerned with several of the bill's provisions, but focused
on the in-person meeting in its letter of opposition.
According to UTA, this provision presents a host of
operational problems. First, it applies to all real
estate-secured loans, including commercial loans,
multi-family loans, construction loans, and equity loans.
It is therefore not limited to borrowers who were
particularly affected by the recent subprime lending crisis.
Second, the provision makes no allowance for situations in
which the borrower is out of state or out of the country.
It is unclear who is responsible for attempting to bring the
borrower back to California for the meeting. It is also
unclear what happens if the borrower, who is already behind
on his or her loan payments, indicates he or she is unable
to shoulder the travel costs to return to California for the
meeting. The bill is also unclear on what happens on loans
with multiple borrowers. Must they all attend the in person
meeting? What if some can attend and others cannot? Third,
no provision is made for situations in which the borrower
cannot be located or simply delays or refuses to attend the
SB 926 (Perata), Page 12
in-person meeting. UTA notes that borrowers facing
foreclosure are often in denial about their financial
condition, and do not answer their phones or open their
mail. This bill could encourage them to avoid the in-person
meeting, to ensure that the lender or servicer is unable to
initiate foreclosure proceedings. Fourth, UTA believes that
the requirement to offer feasible restructuring options is
vague and will give borrowers an automatic defense to
foreclosure. They will seek a court stay of the foreclosure
proceedings, arguing that there were no feasible options
offered to them. Fifth, UTA notes that the provision of
the bill which requires lenders to include in their
declarations the list of restructuring options they offered
a borrower is extremely dangerous, because it will indicate
to prospective equity purchasers what terms the lender might
be willing to accept. Armed with this information,
prospective equity purchasers may be able to prey off of
borrowers in distress. UTA concludes by noting that, while
well-intentioned, SB 926 introduces such massive uncertainty
into the process that non-judicial foreclosure would cease
to be a practical option for lenders. This, in turn, would
amount to a major disincentive to real estate lending in
California, exacerbating the current real estate and lending
crisis.
A coalition comprised of nine members of the financial services
industry signed on to a joint opposition letter that raises
concerns about multiple provisions of the bill. Signatories
to "the industry coalition letter" include the California
Bankers Association, California Chamber of Commerce,
California Financial Services Association, California
Independent Bankers, California Land Title Association,
California Mortgage Association, California Mortgage Bankers
Association, Securities Industry and Financial Markets
Association, and UTA. First, the industry coalition notes
that the provisions of the bill which require notice to be
provided to a borrower prior to a rate reset are unworkable
and likely to cause confusion for consumers rather than
provide the intended assistance. It is impossible to
predict the interest rate four months ahead of an interest
rate change. While it is possible to tell a borrower at a
specific point in time what interest rate adjustment would
occur based on the interest rate on that given day,
requiring lenders to predict future interest rates would
inevitably cause inaccuracies, at best causing confusion for
the borrower, and at worst unintentionally misleading the
SB 926 (Perata), Page 13
borrower as to what the actual changes will be four months
in the future. The industry coalition also believes that
borrower confusion will be compounded by the requirement to
send three separate notices, one each at 180, 90, and 45
days prior to the payment change, because the contents of
these notices may be different, as interest rates and
payment amounts change.
The industry coalition also notes that in many cases,
particularly those in which the lender or servicer did not
originate the loan, it is impossible to determine the
language in which the loan was negotiated. For that reason,
the provision bill of the bill which requires that the
notice be provided in the language in which the loan was
negotiated (or, if that language is not known, in English,
Spanish, Tagalog, Vietnamese, Chinese, and Korean) will
result in every notice having to be sent in all six
languages. Furthermore, the industry coalition is unsure
how a lender would demonstrate that the notice was written
at a level not exceeding grade level six. Uncertainty over
these points could open a lender or servicer up to
significant liability.
With respect to the in-person meeting requirement in the bill,
the industry coalition raises all of the same concerns
already raised by UTA, but raises two more. First, the
coalition states that for national or out-of-state lenders
or servicers without a California presence, it will be
impractical to conduct in-person meetings in the state. The
coalition also states that the in-person meetings
contemplated by the bill need to be conducted by a lender's
loss mitigation staff (i.e., by people trained to resolve
the many complicated issues that arise in any loan workout).
Loss mitigation staff often work from central locations and
are not typically dispersed throughout the state, thus
complicating the ability to travel throughout the state for
the meetings.
The industry coalition believes that the section of the bill
which requires notice to be mailed to a property resident,
with a warning that the foreclosure process has begun on a
property, violates privacy laws in general, and specifically
the federal Fair Debt Collection Practices Act. That
federal law prohibits a debt collector (such as a lender)
from using any language or symbol other than the debt
collector's business name and address on an envelope sent to
SB 926 (Perata), Page 14
a party by mail or telegram.
The provision of the bill that imposes monetary penalties for
failure to maintain a foreclosed property has several
problems. First, the industry coalition notes that the bill
only subjects a mortgagee, trustee, servicer, or beneficiary
to the penalty, not a borrower. Borrowers who have no
incentive to maintain the property may cause damage to or
fail to adequately maintain the property, resulting in a
nuisance that becomes the responsibility of the mortgagee,
trustee, servicer, or beneficiary. In addition, as it
relates to violations associated with incursions by
trespass, the measure unfairly exposes a mortgagee, trustee,
servicer, or beneficiary to liability for the criminal
activities of another.
The measure is also unclear as to when fines begin, and what,
if any, notice would be required by the local government to
inform the mortgagee, trustee, servicer, or beneficiary that
fines were being assessed. Industry is concerned that civil
penalties could accumulate without the mortgagee, trustee,
servicer, or beneficiary ever being noticed about the
existence of a problem. The industry coalition notes that
extensive local property management ordinances already
exist. SB 926 fails to limit or preempt local standards,
thus creating a set of non-uniform standards, and
complicating compliance by industry. Mortgagees, trustees,
servicers, or beneficiaries are already motivated to
maintain the property, since it is their interest to sell
the property as soon as possible. Once a loan goes into
default, the lender is typically the only party with an
economic interest in maintaining the property.
Finally, the industry coalition is opposed to the provision of
the bill that gives a tenant or subtenant of a rental
housing unit that has been sold due to foreclosure
additional time in which to move out. This provision will
delay a lender's ability to resell the property and
frustrate the lender's ability to repair the property.
Tenants would have no incentive to maintain the property
during that time, complicating matters further.
The California Association of Realtors (CAR) is opposed unless
the bill is amended to address CAR's concerns with two of
the bill's provisions - the in-person meeting requirement
and the additional time given a tenant or subtenant to move
SB 926 (Perata), Page 15
out of a property after foreclosure. With respect to the
in-person meeting, CAR echoes the concerns of others stated
earlier. Specifically, it believes that the bill creates a
roadblock that may prevent legitimate foreclosures. There
is no provision for a lender's compliance with the in-person
meeting requirement through a good faith effort to initiate
such a meeting, nor any provision for the bad faith
avoidance of a meeting by a borrower.
CAR recommends an amendment to the provision of the bill that
requires a tenant or subtenant of a rental housing unit
subject to a foreclosure to receive 90 days notice before
being forced to move out. Specifically, CAR suggests that
such a requirement more closely track the foreclosure
process, by requiring that the tenant or subtenant receive
the Notice of Sale at the same time it is delivered to the
mortgagee, and that the existing tenancy termination notice
requirements in Sections 1946 and 1946.1 of the Civil Code
be used. This will provide the tenant with no less than 50,
and often in excess of 80 days of notice that the tenancy
might be terminated. It will also facilitate early
knowledge on the part of the tenant that the landlord's
ownership of the rental property is in jeopardy and allow
the tenant to plan for alternate housing arrangements, as
well as ensure that on-going rent payments are made to the
appropriate person.
Many of CAR's concerns are echoed by the Apartment Association,
California Southern Cities (Apartment Association). The
Apartment Association believes that most residential rentals
will remain rentals, regardless of ownership. It opposes
the provision of the bill that would require notice to be
mailed to a property resident, with a warning that the
foreclosure process has begun on a property. It believes
that this provision will encourage tenants to stop paying
rent, because they will be led to believe that the current
owner will lose the property. Failure of the tenant to pay
rent will, in turn, hamper landlords in their ability to
continue to maintain the property or enter into a workout
arrangement with a lender. The Apartment Association
believes that this provision will promote economic and
financial havoc and will result in increases in unlawful
detainer actions.
The Apartment Association is also opposed to the provision of
the bill giving tenants and subtenants more time to move out
SB 926 (Perata), Page 16
of a foreclosure property. It believes that the only
situation in which this provision may be needed is on a
single-family rental unit, because the rest of the dwelling
units that are rented will remain rental units. However, to
the degree that the bill focuses on single-family rental
property, the Apartment Association believes that this
provision will adversely affect the marketability,
desirability and price of the property. This provision will
also encourage tenants to stop paying rent after they
receive their 90-day notice.
POSITIONS
Support
Center for Responsible Lending
Consumers Union
Western Center on Law & Poverty
California Reinvestment Coalition
AARP
AnewAmerica Community Corporation
ByDesign Financial Solutions
Cabrillo Economic Development Corporation
California Coalition for Rural Housing
California Reinvestment Coalition
Center for California Homeowner Association Law
Chrysalis Consulting
Coalition for Quality Credit Counseling
Community Action Agency of Butte County, Inc.
Community Housing Council of Fresno
Community Housing Development Corporation of North Richmond
Community Legal Services in East Palo Alto
Consumer Action
Consumer Federation of California
Council on Aging Silicon Valley
EPACT Education Fund
Fair Housing Council of San Diego
Fair Housing Council of the San Fernando Valley
Fair Housing of Marin
HelpIsOnTheWay
Home Ownership Using Supportive Education
Housing Authority of the County of Monterey
Inland Fair Housing and Mediation Board
La Raza Centro Legal
LULAC National Housing Commission, a subsidy of LULAC and the
SB 926 (Perata), Page 17
California LULAC Housing Commission
Mission Community Financial Assistance
National Fair Housing Alliance
Nehemiah Community Reinvestment Fund, Inc.
Neighborhood Housing Services of the Inland Empire, Inc.
Neighborhood Housing Services Silicon Valley
Neighborhood Partnership Housing Services, Inc.
NeighborWorks Homeownership Center
Pacific Asian Consortium in Employment
PODER
Project Sentinel
Sacramento Human Rights/Fair Housing Commission
Sacramento Mutual Housing Association
San Diego City County Reinvestment Task Force
SCANPH
Self-Help Enterprises
Sierra Planning and Housing Alliance, Inc.
Tri-Valley Housing Opportunities Center
Unity Council
Visionary HomeBuilders
Phil Ting, Assessor-Recorder, City & County of San Francisco
Ed Donaldson, San Francisco Housing Development Corporation
Aaron Myers, Attorney
Fair Housing Napa Valley
California Alliance for Retired Americans
ACORN
SB 926 (Perata), Page 18
Oppose
California Association of Realtors (oppose unless amended)
Apartment Association, California Southern Cities
United Trustees Association
California Bankers Association
California Chamber of Commerce
California Financial Services Association
California Independent Bankers
California Land Title Association
California Mortgage Association
California Mortgage Bankers Association
Securities Industry and Financial Markets Association
Consultant: Eileen Newhall (916) 651-4102