Bill Text: CA SB1183 | 2017-2018 | Regular Session | Chaptered
Bill Title: Mortgages: deeds of trust: successors in interest.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-07-18 - Chaptered by Secretary of State. Chapter 136, Statutes of 2018. [SB1183 Detail]
Download: California-2017-SB1183-Chaptered.html
| Senate Bill No. 1183 |
| CHAPTER 136 |
An act to amend Section 2920.7 of the Civil Code, relating to mortgages and deeds of trust.
[
Approved by
Governor
July 18, 2018.
Filed with
Secretary of State
July 18, 2018.
]
LEGISLATIVE COUNSEL'S DIGEST
SB 1183, Morrell.
Mortgages: deeds of trust: successors in interest.
Existing state law regulates reverse mortgages and defines a reverse mortgage to mean a nonrecourse loan secured by real property if the loan provides cash advances to a borrower based on the equity or the value in a borrower’s owner-occupied principal residence, the loan requires no payment of principal or interest until the entire loan becomes due and payable, and the loan is made by a specified licensed or chartered lender.
Existing law prohibits a mortgage servicer, upon notification that a borrower has died by a person claiming to be a successor in interest, from recording a notice of default until the mortgage servicer gives an opportunity for the claimant to show that he or she is a successor in interest, as specified. Existing law requires a mortgage servicer, within 10 days of a claimant being deemed a successor in interest, to provide
the successor in interest with information about the loan, as specified. Existing law also requires a mortgage servicer to allow a successor in interest to assume the deceased borrower’s loan or to apply for foreclosure prevention alternatives on an assumable loan, as specified. Existing law provides other protections for these successors in interest and deems a mortgage servicer, mortgagee, or beneficiary of the deed of trust, or an agent thereof, to be in compliance with the above-described provisions if they comply with specified federal laws. Existing law makes these provisions inoperative on January 1, 2020.
This bill would make those provisions inapplicable to reverse mortgages, as defined, and would delete certain obsolete references.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 2920.7 of the Civil Code is amended to read:2920.7.
(a) Upon notification by someone claiming to be a successor in interest that a borrower has died, and where that claimant is not a party to the loan or promissory note, a mortgage servicer shall not record a notice of default pursuant to Section 2924 until the mortgage servicer does both of the following:(1) Requests reasonable documentation of the death of the borrower from the claimant, including, but not limited to, a death certificate or other written evidence of the death of the borrower. A reasonable period of time shall be provided for the claimant to present this documentation, but no less than 30 days from the date of a written request by the mortgage servicer.
(2) Requests reasonable
documentation from the claimant demonstrating the ownership interest of that claimant in the real property. A reasonable period of time shall be provided for the claimant to present this documentation, but no less than 90 days from the date of a written request by the mortgage servicer.
(b) (1) Upon receipt by the mortgage servicer of the reasonable documentation of the status of a claimant as successor in interest and that claimant’s ownership interest in the real property, that claimant shall be deemed a “successor in interest.”
(2) There may be more than one successor in interest. A mortgage servicer shall apply the provisions of this section to multiple successors in interest in accordance with the terms of the loan and federal and state laws and regulations. When there are multiple successors in interest who do not wish to proceed as coborrowers or
coapplicants, a mortgage servicer may require any nonapplicant successor in interest to consent in writing to the application for loan assumption.
(3) Being a successor in interest under this section does not impose an affirmative duty on a mortgage servicer or alter any obligation the mortgage servicer has to provide a loan modification to the successor in interest. If a successor in interest assumes the loan, he or she may be required to otherwise qualify for available foreclosure prevention alternatives offered by the mortgage servicer.
(c) Within 10 days of a claimant being deemed a successor in interest pursuant to subdivision (b), a mortgage servicer shall provide the successor in interest with information in writing about the loan. This information shall include, at a minimum, loan balance, interest rate and interest reset dates and amounts, balloon payments if any,
prepayment penalties if any, default or delinquency status, the monthly payment amount, and payoff amounts.
(d) A mortgage servicer shall allow a successor in interest to either:
(1) Apply to assume the deceased borrower’s loan. The mortgage servicer may evaluate the creditworthiness of the successor in interest, subject to applicable investor requirements and guidelines.
(2) If a successor in interest of an assumable loan also seeks a foreclosure prevention alternative, simultaneously apply to assume the loan and for a foreclosure prevention alternative that may be offered by, or available through, the mortgage loan servicer. If the successor in interest qualifies for the foreclosure prevention alternative, assume the loan. The mortgage servicer may evaluate the creditworthiness of the successor in interest subject
to applicable investor requirements and guidelines.
(e) (1) A successor in interest shall have all the same rights and remedies as a borrower under subdivision (a) of Section 2923.4 and under Sections 2923.6, 2923.7, 2924,
2924.11, 2924.12, 2924.15, and 2924.17. For the purposes of Section 2924.15, “owner-occupied” means that the property was the principal residence of the deceased borrower and is security for a loan made for personal, family, or household purposes.
(2) If a trustee’s deed upon sale has not been recorded, a successor in interest may bring an action for injunctive relief to enjoin a material violation of subdivision (a), (b), (c), or (d). Any injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer has corrected and remedied the violation or violations giving rise to the action for injunctive relief. An enjoined entity may move to dissolve an
injunction based on a showing that the material violation has been corrected and remedied.
(3) After a trustee’s deed upon sale has been recorded, a mortgage servicer shall be liable to a successor in interest for actual economic damages pursuant to Section 3281 resulting from a material violation of subdivision (a), (b), (c), or (d) by that mortgage servicer if the violation was not corrected and remedied prior to the recordation of the trustee’s deed upon sale. If the court finds that the material violation was intentional or reckless, or resulted from willful misconduct by a mortgage servicer, the court may award the successor in interest the greater of treble actual damages or statutory damages of fifty thousand dollars ($50,000).
(4) A court may award a prevailing successor in interest reasonable attorney’s fees and costs in an action brought pursuant to this section. A
successor in interest shall be deemed to have prevailed for purposes of this subdivision if the successor in interest obtained injunctive relief or damages pursuant to this section.
(5) A mortgage servicer shall not be liable for any violation that it has corrected and remedied prior to the recordation of the trustee’s deed upon sale or that has been corrected and remedied by third parties working on its behalf prior to the recordation of the trustee’s deed upon sale.
(f) Consistent with their general regulatory authority, and notwithstanding subdivisions (b) and (c) of Section 2924.18, the Department of Business Oversight and the Bureau of Real Estate may adopt regulations applicable to any entity or person under their respective jurisdictions that are necessary to carry out the purposes of this section.
(g) The
rights and remedies provided by this section are in addition to and independent of any other rights, remedies, or procedures under any other law. This section shall not be construed to alter, limit, or negate any other rights, remedies, or procedures provided by law.
(h) Except as otherwise provided, this act does not affect the obligations arising from a mortgage or deed of trust.
(i) For purposes of this section, all of the following definitions shall apply:
(1) “Notification of the death of the mortgagor or trustor” means provision to the mortgage servicer of a death certificate or, if a death certificate is not available, of other written evidence of the death of the mortgagor or trustor deemed sufficient by the mortgage servicer.
(2) “Mortgage
servicer” shall have the same meaning as provided in Section 2920.5.
(3) “Reasonable documentation” means copies of the following documents, as may be applicable, or, if the relevant documentation listed is not available, other written evidence of the person’s status as successor in interest to the real property that secures the mortgage or deed of trust deemed sufficient by the mortgage servicer:
(A) In the case of a personal representative, letters as defined in Section 52 of the Probate Code.
(B) In the case of devisee or an heir, a copy of the relevant will or trust document.
(C) In the case of a beneficiary of a revocable transfer on death deed, a copy of that deed.
(D) In the case of
a surviving joint tenant, an affidavit of death of the joint tenant or a grant deed showing joint tenancy.
(E) In the case of a surviving spouse where the real property was held as community property with right of survivorship, an affidavit of death of the spouse or a deed showing community property with right of survivorship.
(F) In the case of a trustee of a trust, a certification of trust pursuant to Section 18100.5 of the Probate Code.
(G) In the case of a beneficiary of a trust, relevant trust documents related to the beneficiary’s interest.
(4) “Successor in interest” means a natural person who provides the mortgage servicer with notification of the death of the mortgagor or trustor and reasonable documentation showing that the person is the
spouse, domestic partner, joint tenant as evidenced by grant deed, parent, grandparent, adult child, adult grandchild, or adult sibling of the deceased borrower, who occupied the property as his or her principal residence within the last six continuous months prior to the deceased borrower’s death and who currently resides in the property.
(j) This section shall apply to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property containing no more than four dwelling units. “Owner-occupied” means that the property was the principal residence of the deceased borrower.
(k) This section shall not apply to a reverse mortgage, as defined in Section 1923.
(l) (1) Any mortgage servicer, mortgagee, or beneficiary of the deed of trust, or an authorized agent thereof, who, with respect to the successor in interest or person claiming to be a successor in interest, complies with the relevant provisions regarding successors in interest of Part 1024 of Title 12 of the Code of Federal Regulations (12 C.F.R. Part 1024), known as Regulation X, and Part 1026 of Title 12 of the Code of Federal Regulations (12 C.F.R. Part 1026), known as Regulation Z, including any revisions to those regulations, shall be deemed to be in compliance with this section.
(2) The provisions of paragraph (1) shall only become operative on the effective date of any revisions to the relevant provisions regarding successors in interest of Part
1024 of Title 12 of the Code of Federal Regulations (12 C.F.R. Part 1024), known as Regulation X, and Part 1026 of Title 12 of the Code of Federal Regulations (12 C.F.R. Part 1026), known as Regulation Z, issued by the federal Consumer Financial Protection Bureau that revise the Final Servicing Rules in 78 Federal Register 10696, of February 14th, 2013.
(m) This section shall not apply to a successor in interest who is engaged in a legal dispute over the property that is security for the borrower’s outstanding mortgage loan and has filed a claim raising this dispute in a legal proceeding.
(n) This section shall not apply to a depository institution chartered under state or federal law, a person licensed pursuant to Division 9 (commencing with Section 22000) or Division 20 (commencing with Section 50000) of the Financial Code, or a person licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, that, during its immediately preceding annual reporting period, as established with its primary regulator, foreclosed on 175 or fewer residential real properties, containing no more than four dwelling units, that are located in California.
(o) This section shall remain in effect only until January 1, 2020, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2020, deletes or extends that date.
