Bill Text: CA AB1770 | 2013-2014 | Regular Session | Chaptered
Bill Title: Real property liens: equity lines of credit: suspend and close.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-08-15 - Chaptered by Secretary of State - Chapter 206, Statutes of 2014. [AB1770 Detail]
Download: California-2013-AB1770-Chaptered.html
BILL NUMBER: AB 1770 CHAPTERED
BILL TEXT
CHAPTER 206
FILED WITH SECRETARY OF STATE AUGUST 15, 2014
APPROVED BY GOVERNOR AUGUST 15, 2014
PASSED THE SENATE JULY 3, 2014
PASSED THE ASSEMBLY AUGUST 4, 2014
AMENDED IN SENATE JULY 1, 2014
AMENDED IN SENATE JUNE 19, 2014
AMENDED IN SENATE JUNE 9, 2014
AMENDED IN ASSEMBLY MAY 8, 2014
AMENDED IN ASSEMBLY MARCH 28, 2014
INTRODUCED BY Assembly Member Dababneh
FEBRUARY 14, 2014
An act to add and repeal Section 2943.1 of the Civil Code,
relating to real property.
LEGISLATIVE COUNSEL'S DIGEST
AB 1770, Dababneh. Real property liens: equity lines of credit:
suspend and close.
Under existing law, within 30 days after a mortgage has been
satisfied, the mortgagee or the assignee of the mortgagee is required
to execute a certificate of the discharge of the mortgage, as
specified, and to deliver, upon the request of the mortgagor or
another authorized person, the original note and mortgage to the
person making the request.
Existing law requires a creditor to make certain disclosures to a
consumer applying for a home equity loan, as defined. Existing
federal law relating to lending practices specifies certain
circumstances under which a lender may reduce or terminate an
existing home equity line of credit.
This bill would, on and after July 1, 2015, and until July 1,
2019, require a lender, upon receipt of a specified written request
from a borrower and a specified payment, to close a borrower's equity
line of credit, as defined, and to release or reconvey the property
secured by the equity line of credit, as specified. The bill would
prescribe the contents of the written request.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2943.1 is added to the Civil Code, to read:
2943.1. (a) For purposes of this section, the following
definitions apply:
(1) "Beneficiary" has the same meaning as defined in Section 2943.
(2) "Borrower's Instruction to Suspend and Close Equity Line of
Credit" means the instruction described in subdivision (c), signed by
the borrower or borrowers under an equity line of credit.
(3) "Entitled person" has the same meaning as defined in Section
2943.
(4) "Equity line of credit" means a revolving line of credit used
for consumer purposes, which is secured by a mortgage or deed of
trust encumbering residential real property consisting of one to four
dwelling units, at least one of which is occupied by the borrower.
(5) "Payoff demand statement" has the same meaning as defined in
Section 2943.
(6) "Suspend" means to prohibit the borrower from drawing on,
increasing, or incurring any additional principal debt on the equity
line of credit.
(b) Notwithstanding paragraph (5) of subdivision (a) of Section
2943, a payoff demand statement issued by a beneficiary in connection
with an equity line of credit shall include an email address, fax
number, or mailing address designated by the beneficiary for delivery
of the Borrower's Instruction to Suspend and Close Equity Line of
Credit by the entitled person.
(c) Upon receipt from an entitled person of a Borrower's
Instruction to Suspend and Close Equity Line of Credit, that has been
prepared and presented to the borrower by the entitled person and
signed by a borrower, a beneficiary shall suspend the equity line of
credit for a minimum of 30 days. A Borrower's Instruction to Suspend
and Close Equity Line of Credit shall be effective if made
substantially in the following form and signed by the borrower:
""Borrower's Instruction to Suspend and
Close
Equity Line of Credit
Lender: (Name of Lender)
Borrower(s): (Name of Borrower(s))
Account Number of the Equity Line of Credit:
(Account Number)
Encumbered Property Address: (Property Address)
Escrow or Settlement Agent: (Name of Agent):
In connection with a sale or refinance of the
above-referenced property, my Escrow or
Settlement Agent has requested a payoff demand
statement for the above-described equity line of
credit. I understand my ability to use this
equity line of credit has been suspended for at
least 30 days to accommodate this pending
transaction. I understand that I cannot use any
credit cards, debit cards, or checks associated
with this equity line of credit while it is
suspended and all amounts will be due and
payable upon close of escrow. I also understand
that when payment is made in accordance with the
payoff demand statement, my equity line of
credit will be closed. If any amounts remain due
after the payment is made, I understand I will
remain personally liable for those amounts even
if the equity line of credit has been closed and
the property released.
This is my written authorization and instruction
that you are to close my equity line of credit
and cause the secured lien against this property
to be released when you are in receipt of both
this instruction and payment in accordance with
your payoff demand statement.
___________________
________ (Signature of Each
(Date) ____________
Borrower)''
(d) When a beneficiary is in receipt of both a Borrower's
Instruction to Suspend and Close Equity Line of Credit and payment in
accordance with the payoff demand statement as set forth in Section
2943, the beneficiary shall do all of the following:
(1) Close the equity line of credit.
(2) Release or reconvey the property securing the equity line of
credit, as provided by this chapter.
(e) The beneficiary may conclusively rely on the Borrower's
Instruction to Suspend and Close Equity Line of Credit provided by
the entitled person as coming from the borrower.
(f) (1) This section shall become operative on July 1, 2015.
(2) This section shall remain in effect only until July 1, 2019,
and as of that date is repealed.
