Bill Text: CA SB1275 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Mortgages: foreclosures.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Engrossed - Dead) 2010-08-30 - Reconsideration granted. (Ayes 47. Noes. 29. Page 6841.) Read third time. Refused passage. (Ayes 30. Noes 36. Page 6873.) From Assembly without further action. [SB1275 Detail]

Download: California-2009-SB1275-Amended.html

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BILL NUMBER: SB 1275	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 27, 2010
	AMENDED IN SENATE  MAY 18, 2010
	AMENDED IN SENATE  APRIL 28, 2010
	AMENDED IN SENATE  APRIL 8, 2010

INTRODUCED BY   Senators Leno and Steinberg
   (Principal coauthor: Assembly Member Caballero)

                        FEBRUARY 19, 2010

   An act to amend Section 2923.5 of, and to add and repeal Sections
2923.4, 2923.7, 2923.73, and 2923.75 of, the Civil Code, relating to
mortgages.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1275, as amended, Leno. Mortgages: foreclosures.
   Existing law requires 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.
Existing law provides that, after not less than 3 months after the
filing of the notice of default, the parties described above may give
notice of sale, stating the time and place of the sale, as
specified.
   Existing law, until January 1, 2013, and as applied to mortgages
and deeds of trust recorded between January 1, 2003, and December 31,
2007, that are secured by owner-occupied residential real property
containing no more than 4 dwelling units, requires a mortgagee,
trustee, beneficiary, or authorized agent to contact the borrower, as
defined, prior to filing a notice of default, in order to assess the
borrower's financial situation and explore options for the borrower
to avoid foreclosure. Existing law requires the notice of default to
include a specified declaration from the mortgagee, beneficiary, or
authorized agent regarding its contact with the borrower.
   This bill would, until January 1, 2013, extend those requirements
for those types of dwellings to apply to mortgages or deeds of trust
recorded prior to January 1, 2009, if the loans are required to be
reviewed under federal Home Affordable Modification Program (HAMP)
guidelines, or between January 1, 2003, and January 1, 2009, if the
loans are not required to be reviewed under HAMP guidelines. The bill
would require a mortgagee, beneficiary, or authorized agent, within
a specified time period prior to the filing of a notice of default,
to provide the borrower with written information regarding loan
modifications and a specified notice regarding the borrower's rights
during the foreclosure process, subject to specified exceptions. The
bill would require an unspecified state entity to make that notice
available in English and specified languages. The bill would further
revise the borrower contact requirements described above by requiring
a mortgagee, beneficiary, or authorized agent to make reasonable
borrower solicitation efforts, as specified, to explore options for
the borrower to avoid foreclosure. The bill would prohibit a
mortgagee, trustee, beneficiary, or authorized agent from filing a
notice of default until the borrower has been evaluated and
determined to be ineligible for a loan modification or the borrower
has failed to submit an application prior to the passing of the
deadline. The bill would specify minimum time periods in which the
borrower may submit an application or supplemental information for a
loan modification, and would require the mortgagee, beneficiary, or
authorized agent, if it denies the application, to send a denial
explanation letter within a specified time period. These requirements
would not apply to a mortgagee, beneficiary, or authorized agent
that has no loan modification option available to the borrower.
   This bill would require, until January 1, 2013, that a mortgagee,
beneficiary, or authorized agent, concurrently with the filing of a
notice of default, record a declaration of compliance that attests to
specified facts relating to its borrower solicitation and
foreclosure avoidance efforts. The bill would provide that failure to
record a declaration of compliance, or failure to materially comply
with these provisions, would constitute grounds for the borrower to
bring an action to void the foreclosure, or to recover specified
damages from the mortgagee, trustee, beneficiary, or authorized
agent, if specified conditions exist.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 2923.4 is added to the Civil Code, to read:
   2923.4.  (a) A state government entity shall create the following
notice in at least 12-point type and make it available in English and
the languages set forth in subdivision (b) of Section 1632:


   "Important Notice Regarding Your Rights and Foreclosure Avoidance
Options: California law requires that you receive this notice of your
legal rights before the foreclosure process begins.
   ARE YOU HAVING TROUBLE PAYING YOUR MORTGAGE?
   If you are having trouble paying your mortgage, you should contact
your loan servicer as soon as possible to discuss options for
avoiding foreclosure. Your loan servicer is the company listed on
your mortgage bills that collects your mortgage payments.
   You may also call 1-800-569-4287 to find a housing counseling
agency certified by the United States Department of Housing and Urban
Development (HUD) that offers free services in your area.
   POTENTIAL FORECLOSURE AVOIDANCE OPTIONS
   One potential option for avoiding foreclosure is a loan
modification. Your loan servicer may be participating in the federal
loan modification program called the Home Affordable Modification
Program (HAMP), which has specific requirements and guidelines. To
see if your loan servicer is participating, or to find out more about
this program, visit
http://www.makinghomeaffordable.gov/contact_servicer.html.
   Your loan servicer may, but is not required to, offer other types
of loan modifications instead of or in addition to HAMP. However, not
all loan servicers offer loan modifications, and not all borrowers
are eligible to apply for a loan modification. You may also qualify
for other options for avoiding foreclosure, such as loan refinancing,
a temporary forbearance, a repayment plan, short sale, or a deed in
lieu of foreclosure.
   With this notice, you should have received a letter from your loan
servicer that describes any options for avoiding foreclosure that
may be available to you. That letter should describe any types of
loan modifications that you may be eligible to apply for, and list
the steps you must take to apply.
   If the letter from your loan servicer indicates that you may be
eligible to apply for a loan modification and you are interested in
applying, you must submit the required documentation to your loan
servicer as soon as possible. Your loan servicer must give you at
least 45 days from the date you received this notice to submit the
required documentation. Be sure to read and carefully review any
communication from your loan servicer, and submit all of the
documentation and information required by the deadlines indicated in
the loan servicer's communications. If you submit all of the required
documentation and information by the specified deadlines, your loan
servicer must review your application and inform you of its decision
before initiating the foreclosure process.
   If your loan servicer denies your request for a loan modification,
it must send you a detailed letter that explains the reason for the
denial and provides you with contact information for the loan
servicer if you need more information or want to dispute the denial.
   THE FORECLOSURE PROCESS
   If your loan servicer complies with the contact and notice
requirements described in Sections 2923.5 and 2923.73 of the Civil
Code, including sending you a denial explanation letter if you are
eligible to apply for a loan modification and submit a timely loan
modification application, it may proceed with the foreclosure
process. Your loan servicer may not foreclose on your home without
filing official documents with the county recorder. You are entitled
to receive copies of those documents.
   Notice of Default:
   The first step in the foreclosure process is the filing of a
notice of default. If your loan servicer records a notice of default
on your loan, it must mail you a copy of that notice by certified
mail and must wait at least three months before taking further steps
to sell your home.
   Notice of Sale:
   Three months after filing the notice of default, your loan
servicer may file a notice of sale that sets out the date, time, and
place of the scheduled foreclosure sale. Your loan servicer must post
the notice of sale on your property, mail you a copy of the notice
by certified mail, and wait at least 20 days before selling your
home. Your notice of sale will include the contact information of the
person or company to call if you want more information about your
sale date. You should make note of that contact information and be
sure to check for any changes to the sale date.
   Please seek legal help if you believe that you have been denied
your legal foreclosure rights. Keep in mind, though, that it is
illegal for any person, including a lawyer, to charge you for helping
you with a loan modification or other effort to avoid foreclosure
before providing the services promised."


   (b) The English and translated forms of this notice shall be made
available on or before January 31, 2011.
   (c)This section shall remain in effect only until January 1, 2013,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2013, deletes or extends that date.

  SEC. 2.  Section 2923.5 of the Civil Code is amended to read:
   2923.5.  (a) A mortgagee, trustee, beneficiary, or authorized
agent may not file a notice of default pursuant to Section 2924 until
the applicable requirements of this section and Sections 2923.7 and
2923.73 have been satisfied.
   (b) For all mortgage loans, a notice of default may not be filed
until a borrower either applies for a loan modification and has been
evaluated and denied for a loan modification based on the
requirements and guidelines of the mortgagee, beneficiary, or
authorized agent, or  reasonable borrower solicitation efforts
have been completed and  the borrower's deadline for submitting
a loan modification application has passed without the borrower
applying for a loan modification. If a mortgagee, beneficiary, or
authorized agent has no loan modification option available to a given
borrower, a notice of default may be filed 30 days after reasonable
borrower solicitation efforts regarding any other foreclosure
avoidance options available to that borrower have been completed.
   (c) For purposes of this section, reasonable borrower solicitation
efforts shall consist of all of the following:
   (1) After a loan becomes 16 days delinquent, but not later than 10
days after the loan becomes 60 days delinquent, a mortgagee,
beneficiary, or authorized agent shall send the borrower a written
communication, by certified mail with return receipt requested,
containing both of the following:
   (A) A copy of the informational notice described in Section
2923.4. A mortgagee, beneficiary, or authorized agent shall be
subject to the requirements of this subparagraph 30 days following
the availability of the English and translated forms of the notice,
but in no event earlier than January 1, 2011.
   (B) A letter that includes the following information, as
applicable:
   (i) A clear description of the loan modification options available
to the borrower, if any, and a list of the steps the borrower must
take to apply for a loan modification, if the mortgagee, beneficiary,
or authorized agent has an existing loan modification program or if
the borrower is otherwise eligible to be considered for a loan
modification by the mortgagee, beneficiary, or authorized agent.
   (ii) A statement that no loan modification option is available to
the borrower, if the mortgagee, beneficiary, or authorized agent does
not offer any loan modification programs or if the borrower is not
eligible to be considered for a loan modification.
   (iii) A toll-free telephone number that will provide access to a
live representative during business hours for borrowers who wish to
discuss options for avoiding foreclosure with their mortgagee,
beneficiary, or authorized agent.
   (iv) The Internet Web site address, if any, of the mortgagee,
beneficiary, or authorized agent, where a borrower may obtain the
following:
   (I) Information about any available options for avoiding
foreclosure.
   (II)  A list of financial documents borrowers should collect and
be prepared to present to the mortgagee, beneficiary, or authorized
agent when discussing options for avoiding foreclosure.
   (III) Contact information for borrowers who wish to discuss
options for avoiding foreclosure with their mortgagee, beneficiary,
or authorized agent.
   (IV) The toll-free telephone number made available by HUD to find
a HUD-certified housing counseling agency.
   (2) (A) A mortgagee, beneficiary, or authorized agent shall
contact the borrower in person or by telephone in order to assess the
borrower's financial situation and explore options for the borrower
to avoid foreclosure. The mortgagee, beneficiary, or authorized agent
shall attempt to make this contact, at a minimum, by calling the
borrower by telephone at the last known telephone number of record at
least three times at different hours and on different days. 
These efforts shall be completed no later than 15 calendar days after
the date that the informational notice and letter required by
paragraph (1) are sent.  This in-person or telephone
communication shall be clearly identified as an attempt to initiate
discussion with the borrower about foreclosure avoidance options, and
may not include a demand for immediate payment of any past due
amounts owed by the borrower. During the initial contact, the
mortgagee, beneficiary, or authorized agent shall advise the borrower
that he or she has the right to request a subsequent meeting and, if
requested, the mortgagee, beneficiary, or authorized agent shall
schedule the meeting to occur within 14 days. The assessment of the
borrower's financial situation and discussion of options may occur
during the first contact, or at the subsequent meeting scheduled for
that purpose. In either case, the borrower shall be provided the
toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency. Any meeting may occur
telephonically.
   (B) A mortgagee, beneficiary, or authorized agent may attempt to
contact a borrower using an automated system to dial borrowers,
provided that, if the telephone call is answered, the call is
connected to a live representative of the mortgagee, trustee,
beneficiary, or authorized agent.
   (C) A mortgagee, beneficiary, or authorized agent satisfies the
telephone contact requirements of this paragraph if it determines,
after attempting contact pursuant to this paragraph, that the
borrower's telephone numbers on file, if any, have been disconnected.

   (3) If contact has not been made with the borrower within two
weeks after the in-person or telephone contact requirements of
paragraph (2) have been satisfied, the mortgagee, beneficiary, or
authorized agent shall then send a certified letter, with return
receipt requested, that includes, at a minimum, the information set
forth in subparagraph (B) of paragraph (1) of subdivision (c).
   (4) The mortgagee, beneficiary, or authorized agent shall provide
a means for the borrower to contact it in a timely manner, including
a toll-free telephone number that will provide access to a live
representative during business hours.
   (5) The mortgagee, beneficiary, or authorized agent shall post a
prominent link on the homepage of its Internet Web site, if any, to
all of the following:
   (A) Information about any available options for avoiding
foreclosure.
   (B)  A list of financial documents borrowers should collect and be
prepared to present to the mortgagee, beneficiary, or authorized
agent when discussing options for avoiding foreclosure.
   (C) Contact information for borrowers who wish to discuss options
for avoiding foreclosure with their mortgagee, beneficiary, or
authorized agent.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (d) If the mortgagee, beneficiary, or authorized agent is
participating in the federal Home Affordable Modification Program
(HAMP) or is otherwise required to review the borrower's loan under
HAMP guidelines, compliance with the borrower solicitation
requirements set forth in the applicable HAMP guidelines shall
satisfy the reasonable borrower solicitation efforts requirement set
forth in this section as long as the mortgagee, beneficiary, or
authorized agent provides the borrower with the written communication
required by paragraph (1) of subdivision (c) as part of, or in
addition to, the  outreach   solicitation 
efforts conducted pursuant to the applicable HAMP guidelines.
   (e) If the loan at issue is not required to be reviewed under HAMP
guidelines, and the mortgagee, trustee, beneficiary, or authorized
agent had already filed a notice of default prior to January 1, 2011,
and did not subsequently file a notice of rescission, then the
mortgagee, trustee, beneficiary, or authorized agent shall include as
part of the notice of sale filed pursuant to Section 2924f a
declaration that the mortgagee, beneficiary, or authorized agent sent
a denial explanation letter to the borrower that includes the
information set forth in paragraph (2) of subdivision (a) of Section
2923.73 at least 30 calendar days before filing the notice of sale,
if both of the following conditions are met:
   (1) The mortgagee, beneficiary, or authorized agent has an
existing loan modification program or a borrower is otherwise
eligible to be considered for a loan modification by the mortgagee,
beneficiary, or authorized agent.
   (2) The borrower applied for a loan modification no later than 30
calendar days after receiving the notice of default.
   (f) A mortgagee's, beneficiary's, or authorized agent's loss
mitigation personnel may participate by telephone during any contact
required by this section.
   (g) For purposes of this section, a "borrower" shall include a
mortgagor or trustor.
   (h) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other advisor
to discuss with the mortgagee, beneficiary, or authorized agent, on
the borrower's behalf, the borrowers financial situation and options
for the borrower to avoid foreclosure. That contact made at the
direction of the borrower shall satisfy the contact requirements of
subdivision (c). Any loan modification or other foreclosure avoidance
option offered by the mortgagee, beneficiary, or authorized agent is
subject to approval by the borrower.
   (i) (1) Subdivisions (a) and (b) shall not apply if any of the
following occurs:
   (A) The borrower has surrendered the property as evidenced by
either a letter confirming the surrender or delivery of the keys to
the property to the mortgagee, trustee, beneficiary, or authorized
agent.
   (B) The borrower has contracted with an organization, person, or
entity whose primary business is advising people who have decided to
leave their homes on how to extend the foreclosure process and avoid
their contractual obligations to mortgagees or beneficiaries.
   (C) A case has been filed by the borrower under Chapter 7, 11, 12,
or 13 of Title 11 of the United States Code and the bankruptcy court
has not entered an order closing or dismissing the bankruptcy case,
or granting relief from a stay of foreclosure. This shall not
preclude a mortgagee, trustee, beneficiary, or authorized agent from
soliciting or considering a borrower who is in bankruptcy for a loan
modification, whether under the requirements of HAMP, or under its
own proprietary loan modification program.
   (2) Nothing in this subdivision shall be construed to diminish in
any way the obligations of a mortgagee, trustee, beneficiary, or
authorized agent that is participating in HAMP or is otherwise
required to review a loan under HAMP guidelines.
   (j) This section shall apply only to mortgages or deeds of trust
that are secured by owner-occupied residential real property
containing no more than four dwelling units. For purposes of this
subdivision, "owner-occupied" means that the residence is the
principal residence of the borrower as indicated to the lender in
loan documents.
   (1) With respect to loans required to be reviewed under HAMP
guidelines, this section shall apply only to mortgages or deeds of
trust recorded prior to January 1, 2009.
   (2) With respect to loans not required to be reviewed under HAMP
guidelines, this section shall apply only to mortgages or deeds of
trust recorded between January 1, 2003, and January 1, 2009.
   (k) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
  SEC. 3.  Section 2923.7 is added to the Civil Code, to read:
   2923.7.  (a) (1) In order to initiate the foreclosure process, a
mortgage servicer shall do both of the following:
   (A) For purposes of completing the declaration of compliance
described in paragraph (2), compile in one place a record
demonstrating that the reasonable borrower solicitation efforts
required by Section 2923.5 have been met. This record shall include
the dates and times of, and addresses and telephone numbers used for,
the contact or attempted contact required by Section 2923.5. The
record shall be made available to the borrower within 10 business
days if requested in writing after the notice of default has been
filed.
   (B) Transmit to the foreclosure trustee a declaration of
compliance that is signed on behalf of the mortgage servicer. The
declaration shall be signed either by an individual having personal
knowledge of the facts stated within, or by an individual with
authority to bind the mortgage servicer, who certifies that the
declaration is based upon records that were made in the regular
course of the servicer's business at or near the time of the events
recorded. The declaration of compliance shall be included as part of,
or attached to, every notice of default filed pursuant to Section
2924. A notice of default that does not include a declaration of
compliance shall not be recorded.
   (2) The declaration of compliance shall be substantially similar
to the following form:


   DECLARATION OF COMPLIANCE
   /-/ The mortgagee, beneficiary, or authorized agent is
participating in the Home Affordable Modification Program (HAMP) or
is otherwise required to review this loan under HAMP guidelines.
   /-/ The mortgagee, beneficiary, or authorized agent is not
required to review this loan under HAMP guidelines.
   BORROWER CONTACT
   /-/ This loan is not subject to Cal. Civil Code Sec. 2923.5,
pursuant to (check all that apply):
( ) Cal. Civil Code Sec. 2923.5(i).
( ) Cal. Civil Code Sec. 2923.5(j).


   /-/ This loan is subject to Cal. Civil Code Sec. 2923.5, and the
mortgagee, beneficiary, or authorized agent has complied with the
requirements of Cal. Civil Code Sec. 2923.5 by doing the following
(check all that apply):
( ) Satisfying the applicable reasonable
borrower solicitation efforts described in Cal.
Civil Code Sec. 2923.5(c). If checked, insert
the date that the reasonable borrower
solicitation efforts were completed
here:________
( ) Sending the letter required by Cal. Civil
Code Sec. 2923.5(c)(3).
( ) Sending the notice and written
communication required by Cal. Civil Code Sec.
2923.5(c)(1) during the time period set forth
in that section.


   FORECLOSURE AVOIDANCE REVIEW
   /-/ This loan is not subject to Cal. Civil Code Sec. 2923.73,
pursuant to (check all that apply):
( ) Cal. Civil Code Sec. 2923.73(e).
( ) Cal. Civil Code Sec. 2923.73(f).
( ) Cal. Civil Code Sec. 2923.73(g).


   □ This loan is subject to Cal. Civil Code Sec. 2923.73 and
(check only one):
( ) The borrower was evaluated for a loan
modification but did not qualify, and the
mortgagee, beneficiary, or authorized agent
sent the borrower a denial explanation letter
in compliance with the requirements of Cal.
Civil Code Sec. 2923.73(a)(2).
( ) The borrower initiated an application for a
loan modification       either verbally or in
writing but did not subsequently submit all
required written application materials and
documentation by the applicable deadline, and
the mortgagee, beneficiary, or authorized agent
sent the borrower a denial explanation letter
in compliance with the requirements of Cal.
Civil Code Sec. 2923.73(a)(1).
( ) The borrower did not initiate an
application for a loan modification either
verbally or in writing by the applicable
deadline.
( ) The borrower was offered a HAMP trial
period plan, but the borrower did not accept
the trial period plan or failed to comply with
the terms of the plan.
( ) The borrower was offered a permanent loan
modification, but the borrower did not accept
the modification offered.
( ) The borrower was offered a permanent loan
modification, but the borrower failed to comply
with the terms of the modification.
( ) The borrower communicated to the mortgagee,
beneficiary, or authorized agent that he or she
is not interested in pursuing a loan
modification.




   (b) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
  SEC. 4.  Section 2923.73 is added to the Civil Code, to read:
   2923.73.  (a) If a borrower initiates an application for a loan
modification either verbally or in writing, and the mortgagee,
beneficiary, or authorized agent denies either a permanent loan
modification or a federal Home Affordable Modification Program (HAMP)
trial period plan, the mortgagee, beneficiary, or authorized agent
shall send the borrower a denial explanation letter by certified mail
no later than 10 business days following the denial decision.
   (1) If the loan modification is denied because the borrower failed
to provide all required verification documents or information by the
applicable deadline as set forth in subdivision (b), the letter
shall indicate the date by which the documents or information were to
be provided, list the documents or information that were not
provided, and state that the borrower's request for a loan
modification has been denied for this reason.
   (2) If the borrower submitted all required written application
materials for a loan modification by the applicable deadline as set
forth in subdivision (b), and the application is denied, the denial
explanation letter shall include all of the following in plain
English or, if communications with the borrower have been primarily
in one of the languages set forth in subdivision (b) of Section 1632,
then in that language:
   (A) The date a completed application for a loan modification was
received from the borrower.
   (B) The date on which a decision was made regarding the borrower's
application.
   (C) The final decision made by the mortgagee, beneficiary, or
authorized agent.
   (D) If the mortgagee, beneficiary, or authorized agent was
required to consider the borrower for a loan modification under HAMP,
the information required to be provided in the borrower notice
described in the federal Home Affordable Modification Guidelines
Supplemental Directive 09-08, issued November 3, 2009, and any
amendments thereto.
   (E) Information detailing the reasons the borrower did not qualify
for a loan modification, including, but not limited to, the
following:
   (i) If applicable, an explanation of any investor guidelines or
restrictions on loan modifications that resulted in the denial
decision.
   (ii) If the denial decision is based on the borrower's income or
expenses, or on a debt-to-income ratio or net present value
calculation, any borrower income or expense figures, including, but
not limited to, property taxes and hazard insurance premiums, used in
determining the borrower's qualification for a loan modification.
   (iii) If applicable, a finding that the borrower was previously
offered a loan modification and failed to successfully make payments
under the terms of the modified loan.
   (F) The name and contact information of the holder of the note for
the borrower's loan.
   (G) A description of other foreclosure alternatives for which the
borrower may be eligible, if any, including, but not limited to,
other loan modification programs, short sale, or deed in lieu or
forbearance, and a list of the steps the borrower must take in order
to be considered for those options. If the servicer has already
approved the borrower for another foreclosure alternative,
information necessary to participate in or complete the alternative
should be included.
   (H) Instructions regarding how to contact the mortgagee,
beneficiary, or authorized agent for further information about the
denial or to dispute the basis for the denial.
   (b) (1) The mortgagee, beneficiary, or authorized agent shall
communicate to the borrower in each contact, whether oral or written,
the borrower's deadline for submitting an initial application for a
loan modification, which shall not be less than 45 days from the
borrower's receipt of the notice required by subparagraph (A) of
paragraph (1) of subdivision (c) of Section 2923.5.
   (2) If a borrower submits an initial application, but does not
include all the documentation or information the mortgagee,
beneficiary, or authorized agent needs in order to consider the
borrower for a loan modification, the mortgagee, beneficiary, or
authorized agent must provide the borrower with written notice that
clearly describes any supplemental documentation or information
needed to consider the borrower for a loan modification, and the
deadline for providing that documentation or information, which shall
not be less than 25 calendar days from the date the borrower
receives the notice.
   (3) If the mortgagee, beneficiary, or authorized agent is
participating in HAMP or is otherwise required to review the borrower'
s loan under HAMP guidelines, compliance with applicable HAMP
guidelines regarding deadlines and timeframes for the borrower to
submit and complete a loan modification application shall satisfy the
requirements of this subdivision.
   (c) If a borrower's request for a loan modification is denied, and
the mortgagee, beneficiary, or authorized agent sends a denial
explanation letter in compliance with subdivision (a), the mortgagee,
trustee, beneficiary, or authorized agent may proceed to record a
notice of default and declaration of compliance pursuant to Section
2923.7 even if the borrower initiates a dispute relating to the
denial and the dispute has not yet been resolved.

  (d) This section shall not require a mortgagee, beneficiary, or
authorized agent to apply any standards in determining a borrower's
eligibility or qualification for a loan modification separate from
the standards and requirements of the loan modification program
utilized by the mortgagee, beneficiary, or authorized agent, and
shall not require a mortgagee, beneficiary, or authorized agent to
offer or provide a borrower with a loan modification if that borrower
does not qualify for a modification under the applicable loan
modification program.
   (e) This section shall not apply if the mortgagee, beneficiary, or
authorized agent has no loan modification program available to the
borrower, and the mortgagee, beneficiary, or authorized agent
informed the borrower of that fact in the written communication
required to be sent to the borrower pursuant to subparagraph (B) of
paragraph (1) of subdivision (c) of Section 2923.5.
   (f) (1) This section shall not apply if any of the following
occurs:
   (A) The borrower has surrendered the property as evidenced by
either a letter confirming the surrender or delivery of the keys to
the property to the mortgagee, trustee, beneficiary, or authorized
agent.
   (B) The borrower has contracted with an organization, person, or
entity whose primary business is advising people who have decided to
leave their homes about how to extend the foreclosure process and
avoid their contractual obligations to mortgagees or beneficiaries.
   (C) A case has been filed by the borrower under Chapter 7, 11, 12,
or 13 of Title 11 of the United States Code, and the bankruptcy
court has not entered an order closing or dismissing the bankruptcy
case or granting relief from a stay of foreclosure. This shall not
preclude a mortgagee, trustee, beneficiary, or authorized agent from
soliciting or considering a borrower who is in bankruptcy for a loan
modification, whether under the requirements of HAMP, or under its
own proprietary loan modification program.
   (2) Nothing in this subdivision shall be construed to diminish in
any way the obligations of a mortgagee, trustee, beneficiary, or
authorized agent that is participating in the HAMP or is otherwise
required to review a loan under HAMP guidelines.
   (g) This section shall apply only to mortgages or deeds of trust
that are secured by owner-occupied residential real property
containing no more than four dwelling units. For purposes of this
subdivision, "owner-occupied" means that the residence is the
principal residence of the borrower as indicated to the lender in
loan documents.
   (1) With respect to loans required to be reviewed under HAMP
guidelines, this section shall apply only to mortgages or deeds of
trust recorded prior to January 1, 2009.
   (2) With respect to loans not required to be reviewed under HAMP
guidelines, this section shall apply only to mortgages or deeds of
trust recorded between January 1, 2003, and January 1, 2009.
   (h) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.
  SEC. 5.  Section 2923.75 is added to the Civil Code, to read:
   2923.75.  (a) All of the options available to borrowers under this
section are available only subsequent to a trustee sale conducted in
accordance with Section 2924f.
   (b) (1) If the mortgagee, trustee, beneficiary, or authorized
agent fails to record a completed declaration of compliance pursuant
to Section 2923.7, submits a false declaration of compliance, or
fails to send a denial explanation letter that materially complies
with the requirements of Section 2923.73, a borrower may pursue any
one of the following options, as applicable, against the mortgagee,
trustee, beneficiary, or authorized agent:
   (A) If the property at issue is sold to a bona fide purchaser at a
trustee sale conducted in accordance with Section 2924f, the
borrower may recover the greater of treble actual damages or
statutory damages in the amount of ten thousand dollars ($10,000).
   (B) If, prior to the initiation of an action under this section,
the property at issue is sold to a bona fide purchaser by the
foreclosing party subsequent to a trustee sale conducted in
accordance with Section 2924f in which title was transferred to the
foreclosing party, the borrower may recover the greater of treble
actual damages or statutory damages in the amount of ten thousand
dollars ($10,000). If the borrower establishes that the mortgagee,
trustee, beneficiary, or authorized agent had actual notice of the
borrower's claim under this section prior to selling the property to
a bona fide purchaser, the borrower shall be entitled to recover
statutory damages in the amount of fifteen thousand dollars
($15,000), in addition to other damages recoverable under this
subparagraph.
   (C) If title to the property at issue is transferred to the
foreclosing party at a trustee sale conducted in accordance with
Section 2924f, the borrower may bring an action to void the
foreclosure sale, except if paragraph (2) applies.
   (2) For purposes of this subdivision, the declaration of
compliance shall not be considered false if it lists an incorrect
date for the date that the reasonable borrower solicitation efforts
were completed, unless the mortgagee, beneficiary, or authorized
agent knowingly included the wrong date on the declaration.
   (c) If the mortgagee, trustee, beneficiary, or authorized agent
fails to send the notice required by subparagraph (A) of paragraph
(1) of Section 2923.5 or fails to materially comply with the loan
modification review process requirements of Section 2923.73, a
borrower may recover statutory damages of up to ten thousand dollars
($10,000), but not less than one thousand five hundred dollars
($1,500), from the mortgagee, trustee, beneficiary, or authorized
agent.
   (d) (1) Notwithstanding subdivisions (b) and (c), a borrower shall
not have a cause of action under this section for any failure or
error that is technical or de minimis in nature.
   (2) Failure to complete any required section of the declaration of
compliance shall not be considered technical or de minimis.
   (e)This section shall remain in effect only until January 1, 2013,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2013, deletes or extends that date.

  SEC. 6.  Nothing in this act shall affect any cause of action or
claim that is pending as of the effective date of this act.
  SEC. 7.  The requirements of Sections 2923.4, 2923.7, and 2923.73,
the amendments to Section 2923.5 made at the 2009-10 Regular Session
of the Legislature, and the remedies set forth in Section 2923.75,
shall not be construed to be retroactive.
  SEC. 8.  The provisions of this act are severable. If any provision
of this act or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.