Bill Text: CA SB306 | 2009-2010 | Regular Session | Introduced

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

---

Bill Title: Real property transactions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2009-08-06 - Chaptered by Secretary of State. Chapter 43, Statutes of 2009. [SB306 Detail]

Download: California-2009-SB306-Introduced.html

---

BILL NUMBER: SB 306	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Calderon

                        FEBRUARY 25, 2009

   An act to amend Sections 2923.5, 2923.6, 2924.8, and 2943 of the
Civil Code, and to amend Section 17312 of the Financial Code,
relating to real property transactions.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 306, as introduced, Calderon. Real property transactions.
   (1) 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, until January 1, 2013, prohibits 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 secure residential real property, under
certain circumstances.
   This bill would, until January 1, 2013, for the purposes of these
provisions, redefine the term borrower to mean a natural person or
persons who are original signators to a note or other obligation
secured by a mortgage or deed of trust on a residence, as defined.
The bill would provide that these provisions apply to mortgages and
deeds of trust recorded between January 1, 2003, to December 31,
2007, secured by owner-occupied residential real property containing
no more than 4 dwelling units. The bill would also, among other
things, revise the declaration that is required to be filed in this
connection with the notice of default.
   (2) Existing law states legislative findings and declarations with
regard to the duty loan servicers have to maximize net present value
under their pooling and servicing agreements, stating that their
duty is owed to all parties in a loan pool, not to any particular
parties, and that a servicer acts in the best interests of all
parties if it agrees to or implements a loan modification or workout
plan, as specified.
   This bill would specify the application of these findings and
declarations to certain investors.
   (3) Existing law requires 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.
   This bill would specify how and when this notice is to be mailed.
   (4) Existing law requires a beneficiary on a deed of trust or a
mortgagee on a mortgage to prepare and deliver a beneficiary
statement or a pay-off demand statement within 21 days of receipt of
a written demand from specified entitled parties. Existing law
requires the written statement to include information reasonably
necessary to calculate the payoff amount on a per diem basis for the
period of time, not to exceed 30 days, during which the per diem
amount is not changed by the terms of the note.
   This bill would revise the period of time during which the
information reasonably necessary to calculate the payoff amount may
be prepared.
   The bill would also require a beneficiary to prepare and deliver,
within 21 days upon written demand, a short-pay demand statement,
which would be a written statement, conditioned on the existence of a
short-pay agreement, 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-pay demand statement. The bill would provide that the short-pay
agreement is an agreement in writing in which the beneficiary agrees
to release its lien on a property in return for payment of an amount
less than the secured obligation. The bill would permit a
beneficiary that elects not to proceed with the transaction that is
the subject of the demand to refuse to provide a short-pay demand
statement, but would require that he or she provide a written
statement, indicating that the beneficiary has elected not to
proceed. The bill would provide that if the terms and conditions of
the short-pay 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, except as specified.
   (5) The Escrow Law provides for licensing and regulation of escrow
agents, other than certain exempt persons, by the Commissioner of
Corporations. The law requires licensees to apply for membership in
the Escrow Agents' Fidelity Corporation, a nonprofit mutual benefit
corporation, which is established to indemnify its members against
loss of trust obligations. The law limits required membership in the
Escrow Agents' Fidelity Corporation who engage in certain kinds of
business. Existing law defines and regulates the activities of
exchange facilitators and excepts from the definition of exchange
facilitator escrow companies, under specified circumstances.
   This bill would provide escrow transactions that involve money or
property held or deposited with a person acting as an exchange
facilitator are not transactions that require a licensee to have
membership in the Escrow Agents' Fidelity Corporation.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 2923.5 of the Civil Code is amended to read:
   2923.5.  (a) (1) A mortgagee, trustee, beneficiary, or authorized
agent may not file a notice of default pursuant to Section 2924 until
30 days after  initial  contact is made as required by
paragraph (2) or 30 days after satisfying the due diligence
requirements as described in subdivision (g).
   (2) 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. 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 the United States Department of
Housing and Urban Development (HUD) to find a HUD-certified housing
counseling agency. Any meeting may occur telephonically.
   (b) A notice of default filed pursuant to Section 2924 shall
include a declaration  from   that  the
mortgagee, beneficiary, or authorized agent  that it
 has contacted the borrower,  or has  tried with
due diligence to contact the borrower as required by this section
 , or the borrower has surrendered the property to the
mortgagee, trustee, beneficiary, or authorized agent  .
   (c) If a mortgagee, trustee, beneficiary, or authorized agent had
already filed the notice of default prior to the enactment of this
section and did not subsequently file a notice of rescission, then
the mortgagee, trustee, beneficiary, or authorized agent shall, as
part of the notice of sale filed pursuant to Section 2924f, include a
declaration that either:
   (1) States that the borrower was contacted to assess the borrower'
s financial situation and to explore options for the borrower to
avoid foreclosure.
   (2) Lists the efforts made, if any, to contact the borrower in the
event no contact was made.
   (d) A mortgagee's, beneficiary's, or authorized agent's loss
mitigation personnel may participate by telephone during any contact
required by this section.
   (e) For purposes of this section, a "borrower"  shall
include a mortgagor or trustor   means a natural person
or persons who are original signators to a note or other obligation
secured by a mortgage or deed of trust on a residence described in
subdivision (i)  .
   (f) 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 paragraph (2) of
subdivision (a). Any loan modification or workout plan offered at the
meeting by the mortgagee, beneficiary, or authorized agent is
subject to approval by the borrower.
   (g) A notice of default may be filed pursuant to Section 2924 when
a mortgagee, beneficiary, or authorized agent has not contacted a
borrower as required by paragraph (2) of subdivision (a) provided
that the failure to contact the borrower occurred despite the due
diligence of the mortgagee, beneficiary, or authorized agent. For
purposes of this section, "due diligence" shall require and mean all
of the following:
   (1) A mortgagee, beneficiary, or authorized agent shall first
attempt to contact a borrower by sending a first-class letter that
includes the toll-free telephone number made available by HUD to find
a HUD-certified housing counseling agency.
   (2) (A) After the letter has been sent, the mortgagee,
beneficiary, or authorized agent shall attempt to contact the
borrower by telephone at least three times at different hours and on
different days. Telephone calls shall be made to the primary
telephone number on file.
   (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, 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 primary telephone number and secondary telephone number or
numbers on file, if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgagee, beneficiary, or authorized agent shall then send a
certified letter, with return receipt requested.
   (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 has posted a
prominent link on the homepage of its Internet Web site, if any, to
the following information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (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) A toll-free telephone number 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.
   (h) Subdivisions (a),  (b),  (c), and (g) shall not apply
if any of the following occurs:
   (1) 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.
   (2) 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.
   (3)  The borrower has filed for bankruptcy, and the
proceedings have not been finalized.   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. 
   (i) This section shall apply only to  loans made 
 mortgages or deeds of trust recorded  from January 1,
2003, to December 31, 2007, inclusive, that are secured by 
owner-occupied  residential real property  and are for
owner-occupied residences   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
 .
   (j) 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 2923.6 of the Civil Code is amended to read:
   2923.6.  (a) The Legislature finds and declares that any duty
servicers may have to maximize net present value under their pooling
and servicing agreements is owed to all parties in a loan pool, 
or to all investors under a pooling and servicing agreement, 
not to any particular  parties  party in the
loan pool or investor under a polling and servicing agreement  ,
and that a servicer acts in the best interests of all parties 
to the loan pool or investors in the pooling and servicing agreement
 if it agrees to or implements a loan modification or workout
plan for which both of the following apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgagee,
beneficiary, or authorized agent offer the borrower a loan
modification or workout plan if such a modification or plan is
consistent with its contractual or other authority.
   (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. 3.  Section 2924.8 of the Civil Code is amended to read:
   2924.8.  (a) Upon posting a notice of sale pursuant to Section
2924f, a trustee or authorized agent shall also post the following
notice, in the manner required for posting the notice of sale on the
property to be sold, and a mortgagee, trustee, beneficiary, or
authorized agent  shall mail, at the same time  
, concurrently with the mailing of the notice of sale pursuant to
Section 2924b, shall send by first-class mail  in an envelope
addressed to the "Resident of property subject to foreclosure sale"
the following notice in English and the languages described in
Section 1632: "Foreclosure process has begun on this property, which
may affect your right to continue to live in this property. Twenty
days or more after the date of this notice, this property may be sold
at foreclosure. If you are renting this property, the new property
owner may either give you a new lease or rental agreement or provide
you with a 60-day eviction notice. However, other laws may prohibit
an eviction in this circumstance or provide you with a longer notice
before eviction. You may wish to contact a lawyer or your local legal
aid or housing counseling agency to discuss any rights you may have."

   (b) It shall be an infraction to tear down the notice described in
subdivision (a) within 72 hours of posting. Violators shall be
subject to a fine of one hundred dollars ($100).
   (c) A state government entity shall make available translations of
the notice described in subdivision (a) which may be used by a
mortgagee, trustee, beneficiary, or authorized agent to satisfy the
requirements of this section.
   (d) This section shall only apply to loans secured by residential
real property, and if the billing address for the mortgage note is
different than the property address.
   (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. 4.  Section 2943 of the Civil Code is amended to read:
   2943.  (a) As used in this section:
   (1) "Beneficiary" means a mortgagee or beneficiary of a mortgage
or deed of trust, or his or her assignees.
   (2) "Beneficiary statement" means a written statement showing:
   (A) The amount of the unpaid balance of the obligation secured by
the mortgage or deed of trust and the interest rate, together with
the total amounts, if any, of all overdue installments of either
principal or interest, or both.
   (B) The amounts of periodic payments, if any.
   (C) The date on which the obligation is due in whole or in part.
   (D) The date to which real estate taxes and special assessments
have been paid to the extent the information is known to the
beneficiary.
   (E) The amount of hazard insurance in effect and the term and
premium of that insurance to the extent the information is known to
the beneficiary.
   (F) The amount in an account, if any, maintained for the
accumulation of funds with which to pay taxes and insurance premiums.

   (G) The nature and, if known, the amount of any additional
charges, costs, or expenses paid or incurred by the beneficiary which
have become a lien on the real property involved.
   (H) Whether the obligation secured by the mortgage or deed of
trust can or may be transferred to a new borrower.
   (3) "Delivery" means depositing or causing to be deposited in the
United States mail an envelope with postage prepaid, containing a
copy of the document to be delivered, addressed to the person whose
name and address is set forth in the demand therefor. The document
may also be transmitted by facsimile machine to the person whose name
and address is set forth in the demand therefor.
   (4) "Entitled person" means the trustor or mortgagor of, or his or
her successor in interest in, the mortgaged or trust property or any
part thereof, any beneficiary under a deed of trust, any person
having a subordinate lien or encumbrance of record thereon, the
escrowholder licensed as an agent pursuant to Division 6 (commencing
with Section 17000) of the Financial Code, or the party exempt by
virtue of Section 17006 of the Financial Code who is acting as the
escrowholder.
   (5) "Payoff demand statement" means a written statement, prepared
in response to a written demand made by an entitled person or
authorized agent, setting forth the amounts required as of the date
of preparation by the beneficiary, to fully satisfy all obligations
secured by the loan that is the subject of the payoff demand
statement. The written statement shall include information reasonably
necessary to calculate the payoff amount on a per diem basis for the
period of time  , not to exceed 30 days,  during
which the per diem amount is not changed by the terms of the note.
 The period of time shall not be greater than 30 days from the
date of preparation by the beneficiary and not less than the lesser
of the fol   lowing:  
   (A) Ten days from the date of preparation by the beneficiary.
 
   (B) The number of days from the date of preparation by the
beneficiary days until the terms of the note result in a change in
the per diem amount.  
   (6) "Short-pay agreement" means an agreement in writing in which
the beneficiary agrees to release its lien on a property in return
for payment of an amount less than the secured obligation.  

   (7) "Short-pay demand statement" means a written statement,
conditioned on the existence of a short-pay agreement, that is
prepared in response to a written demand made by 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 will execute and deliver a reconveyance of the deed
of trust securing the note that is the subject of the short-pay
demand statement. The period shall not be greater than 30 days from
the date of preparation by the beneficiary and not less than the
lesser of the following:  
   (A) Ten days from the date of preparation by the beneficiary.
 
   (B) The number of days from the date of preparation by the
beneficiary days until the terms of the note result in a change in
the per diem amount. 
   (b) (1) A beneficiary, or his or her authorized agent, shall,
within 21 days of the receipt of a written demand by an entitled
person or his or her authorized agent, prepare and deliver to the
person demanding it a true, correct, and complete copy of the note or
other evidence of indebtedness with any modification thereto, and a
beneficiary statement.
   (2) A request pursuant to this subdivision may be made by an
entitled person or his or her authorized agent at any time before, or
within two months after, the recording of a notice of default under
a mortgage or deed of trust, or may otherwise be made more than 30
days prior to the entry of the decree of foreclosure.
   (c)  (1)    A beneficiary, or his or her
authorized agent, shall, on the written demand of an entitled person,
or his or her authorized agent, prepare and deliver a payoff demand
statement to the person demanding it within 21 days of the receipt of
the demand. However, if the loan is subject to a recorded notice of
default or a filed complaint commencing a judicial foreclosure, the
beneficiary shall have no obligation to prepare and deliver this
statement as prescribed unless the written demand is received prior
to the first publication of a notice of sale or the notice of the
first date of sale established by a court. 
   (2) Except as provided in this subdivision, a beneficiary, or his
or her authorized agent, shall, on the written demand of an entitled
person, or his or her authorized agent, prepare and deliver a
short-pay demand statement to the person demanding it within 21 days
of the receipt of the demand. A beneficiary, or his or her authorized
agent that elects not to proceed with the transaction that is the
subject of the written demand may refuse to provide a short-pay
demand statement for that transaction, but shall provide a written
statement to the person demanding it, indicating that the beneficiary
elects not to proceed with the proposed transaction, within 21 days
of the receipt of the demand. If the terms and conditions of the
short-pay agreement require approval by the beneficiary of a closing
statement or similar document prepared by an escrowholder, approval
or disapproval shall be provided not more than four days after
receipt by the beneficiary of the closing statement, or the closing
statement shall be deemed approved, provided that the statement is
not clearly contrary to the terms of the short-pay agreement or to
any short-pay demand statement previously provided to the escrow
holder. 
   (d) (1) A beneficiary statement  or   , 
payoff demand statement  , or short-pay demand  
statement  may be relied upon by the entitled person or his or
her authorized agent in accordance with its terms, including with
respect to the payoff demand statement  or short-pay demand
statement  reliance for the purpose of establishing the amount
necessary to pay the obligation in full. If the beneficiary notifies
the entitled person or his or her authorized agent of any amendment
to the statement, then the amended statement may be relied upon by
the entitled person or his or her authorized agent as provided in
this subdivision.
   (2) If notification of any amendment to the statement is not given
in writing, then a written amendment to the statement shall be
delivered to the entitled person or his or her authorized agent no
later than the next business day after notification.
   (3) Upon the dates specified in subparagraphs (A) and (B) any sums
that were due and for any reason not included in the statement or
amended statement shall continue to be recoverable by the beneficiary
as an unsecured obligation of the obligor pursuant to the terms of
the note and existing provisions of law.
   (A) If the transaction is voluntary, the entitled party or his or
her authorized agent may rely upon the statement or amended statement
upon the earlier of (i) the close of escrow, (ii) transfer of title,
or (iii) recordation of a lien.
   (B) If the loan is subject to a recorded notice of default or a
filed complaint commencing a judicial foreclosure, the entitled party
or his or her authorized agent may rely upon the statement or
amended statement upon the acceptance of the last and highest bid at
a trustee's sale or a court supervised sale.
   (e) The following provisions apply to a demand for either a
beneficiary statement or a payoff demand statement:
   (1) If an entitled person or his or her authorized agent requests
a statement pursuant to this section and does not specify a
beneficiary statement  or   ,  a payoff
demand statement  , or short-pay demand statement  the
beneficiary shall treat the request as a request for a payoff demand
statement.
   (2) If the entitled person or the entitled person's authorized
agent includes in the written demand a specific request for a copy of
the deed of trust or mortgage, it shall be furnished with the
written statement at no additional charge.
   (3) The beneficiary may, before delivering a statement, require
reasonable proof that the person making the demand is, in fact, an
entitled person or an authorized agent of an entitled person, in
which event the beneficiary shall not be subject to the penalties of
this section until 21 days after receipt of the proof herein provided
for. A statement in writing signed by the entitled person appointing
an authorized agent when delivered personally to the beneficiary or
delivered by registered return receipt mail shall constitute
reasonable proof as to the identity of an agent. Similar delivery of
a policy of title insurance, preliminary report issued by a title
company, original or photographic copy of a grant deed or certified
copy of letters testamentary, guardianship, or conservatorship shall
constitute reasonable proof as to the identity of a successor in
interest, provided the person demanding a statement is named as
successor in interest in the document.
   (4) If a beneficiary for a period of 21 days after receipt of the
written demand willfully fails to prepare and deliver the statement,
he or she is liable to the entitled person for all damages which he
or she may sustain by reason of the refusal and, whether or not
actual damages are sustained, he or she shall forfeit to the entitled
person the sum of three hundred dollars ($300). Each failure to
prepare and deliver the statement, occurring at a time when, pursuant
to this section, the beneficiary is required to prepare and deliver
the statement, creates a separate cause of action, but a judgment
awarding an entitled person a forfeiture, or damages and forfeiture,
for any failure to prepare and deliver a statement bars recovery of
damages and forfeiture for any other failure to prepare and deliver a
statement, with respect to the same obligation, in compliance with a
demand therefor made within six months before or after the demand as
to which the award was made. For the purposes of this subdivision,
"willfully" means an intentional failure to comply with the
requirements of this section without just cause or excuse.
   (5) If the beneficiary has more than one branch, office, or other
place of business, then the demand shall be made to the branch or
office address set forth in the payment billing notice or payment
book, and the statement, unless it specifies otherwise, shall be
deemed to apply only to the unpaid balance of the single obligation
named in the request and secured by the mortgage or deed of trust
which is payable at the branch or office whose address appears on the
aforesaid billing notice or payment book.
   (6) The beneficiary may make a charge not to exceed thirty dollars
($30) for furnishing each required statement. The provisions of this
paragraph shall not apply to mortgages or deeds of trust insured by
the Federal Housing Administrator or guaranteed by the Administrator
of Veterans Affairs.
   (f) The preparation and delivery of a beneficiary statement
 or   ,  a payoff demand statement  ,
  or short-pay demand statement  pursuant to this
section shall not change a date of sale established pursuant to
Section 2924g.
  SEC. 5.  Section 17312 of the Financial Code is amended to read:
   17312.  (a) Each person licensed pursuant to this division who is
engaged in the business of receiving escrows specified in subdivision
(c) and whose escrow business location is located within the State
of California shall participate as a member in Fidelity Corporation
in accordance with this chapter and rules established by the board of
directors of Fidelity Corporation. Fidelity Corporation shall not
deny membership to any escrow agent holding a valid unrevoked license
under the Escrow Law who is required to be a member under this
subdivision.
   (b) Upon filing a new application for licensure as required by
Section 17201, persons required to be a member of Fidelity
Corporation shall file a copy thereof concurrently with Fidelity
Corporation. If an application for licensure submitted to Fidelity
Corporation contains personal or confidential information, Fidelity
Corporation and its board shall maintain this information in
confidence to protect the privacy of the information. The copy of the
application shall include the three thousand dollar ($3,000) fee
specified in subdivision (a) of Section 17320 and all required
Fidelity Corporation Certificates set forth in Sections 17331 and
17331.1. Fidelity Corporation shall promptly furnish to the
commissioner a compliance letter confirming that the applicant has
satisfied the requirements to be a member of Fidelity Corporation.
   (c) The required membership in Fidelity Corporation shall be
limited to those licensees whose escrow business location is located
within the State of California and who engage, in whole or in part,
in the business of receiving escrows for deposit or delivery in the
following types of transactions:
   (1) Real property escrows, including, but not limited to, the
sale, encumbrance, lease, exchange, or transfer of title, and loans
or other obligations to be secured by a lien upon real property 
, excluding money or property held or deposited with a person acting
as an exchange facilitator pursuant to Division 20.5 (commencing
with Section 51000)  .
   (2) Bulk sale escrows, including, but not limited to, the sale or
transfer of title to a business entity and the transfer of liquor
licenses or other types of business licenses or permits.
   (3) Fund or joint control escrows, including, but not limited to,
transactions specified in Section 17005.1, and contracts specified in
Section 10263 of the Public Contract Code.
   (4) The sale, transfer of title, or refinance escrows for
manufactured homes or mobilehomes.
   (5) Reservation deposits required under Article 2 (commencing with
Section 11010) of Chapter 1 of Part 2 of Division 4 of the Business
and                                                   Professions
Code or by regulation of the Department of Real Estate to be held in
an escrow account.
   (6) Escrows for sale, transfer, modification, assignment, or
hypothecation of promissory notes secured by deeds of trust.
   (d) Coverage required to be provided by Fidelity Corporation under
this chapter shall be provided to members only for loss of trust
obligations with respect to those types of transactions specified in
subdivision (c). If a loss covered by Fidelity Corporation is also
covered by a member's general liability, dishonesty, or indemnity
policy, or other private insurance policy, then the member's private
policy shall first be applied as the primary indemnity to cover the
loss. However, the failure of the member's private primary policy to
indemnify the member's loss within the time specified for Fidelity
Corporation indemnity in subdivision (a) of Section 17314 shall not
limit the indemnity obligations of Fidelity Corporation as defined in
this chapter. Indemnity coverage for those types of transactions not
specified in subdivision (c) shall be provided by escrow agents in
accordance with Section 17203.1.