Explore Properties at Southern California: New California Law now in place on Home Foreclosures

As of January 1, 2010, new California law is in place on home foreclosures.

Previously the law required that, upon a breach of the obligation of a mortgage or transfer of an interest in property, the trustee, mortgagee, or beneficiary record a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mail the notice of default to the mortgagor or trustor. Furthermore, until January 1, 2013, the prior law prohibited a mortgagee, trustee, beneficiary, or authorized agent from filing a notice of default for an additional 30 days on loans made between January 1, 2003, to December 31, 2007, that secures residential real property.

This portion of the law is now limited to owner-occupied residential real property containing no more than 4 dwelling units.

Previously the law required a trustee or authorized agent, upon posting a notice of sale, to post and mail a specified notice addressed to residents of property subject to foreclosure upon posting a notice of sale. Existing law required a notice of sale to be recorded in the county in which the property, or some part of it, is situated at least 14 days prior to the date of sale.

The new law specifies how and when this notice is to be mailed. It also extends the time from 14 to 20 days prior to the date of sale.

This law also requires that until January 1, 2014 a beneficiary, within 21 days of the receipt of a short payoff request (assuming the short payoff has already been approved by the lender) to prepare and deliver a short-pay demand statement, that is prepared in response to a request from an entitled person or authorized agent, setting forth an amount less than the outstanding debt, together with any terms and conditions, under which the beneficiary would execute and deliver a reconveyance of the deed of trust securing the note that is the subject of the short payoff demand statement.

The law also permits a beneficiary that elects not to proceed with the transaction that is the subject of the short payoff request to refuse to provide a short payoff demand statement, but would require that he or she provide a written statement, indicating that the beneficiary has elected not to proceed.

The law provides that if the terms and conditions of the short payoff agreement require approval by the beneficiary of a closing statement prepared by an escrowholder, approval or disapproval shall be provided not more than 4 days after receipt by the beneficiary of the closing statement, or the closing statement shall be deemed approved. The new law does not bind a lender to a short payoff amount that differs from what the lender has previously approved.

This law also contains a provision dealing with escrow agents regulated by the DOC.

Amends Sections 2923.5, 2923.6, 2924.8, and 2924f of, and amends, repeals, and adds Section 2943 of, the CA Civil Code, and amends Section 17312 of the CA Financial Code.

Source: California Association of Realtors. See California Senate Bill 306 - SB 306
(eff. 1-1-10)
Notice of Default, Notice of Sale, Short Payoffs, and Escrow Issues

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Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA. CA DRE #01410855. ExploreProperties@gmail.com. Lawyer member of the California State Bar Association - State Bar number 69137. National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors. Now serving as Chairperson of Local Government Relations south committee at OCAR.