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FORECLOSURES – HELP FOR BORROWERS AND TENANTS
AB 1137, Civil Code 2923.5, 2923.6, 2924.8, 2929.3, Civil Procedure 1161
Effective September 8, 2008
This new law applies only to residential mortgage loans created from 2003 through 2007. This law requires the mortgage holder, before the notice of default is sent, to attempt to contact the borrower by mail and then by telephone at least three times if nedeed, on different days and times.
This bill requires that lenders must call the borrower or try to reach the borrower in person before they file a Notice of Default. Once the lender reaches the borrower, the lender has to discuss the borrower’s financial situation and explore options to assist him in avoiding foreclosure. During this conversation, the lender must offer to set up a meeting with the borrower within 14 days to discuss the borrower’s financial situation and ways the borrower can avoid foreclosure. The meeting can be in person or by phone. If the borrower wishes, he can have a representative discuss the pending foreclosure with the lender. The representative may be a HUD-approved counseling agency, an attorney or another person of the borrower’s choosing.
If the lender doesn’t reach the borrower by telephone or in person, they must send the borrower a letter that includes a toll-free number for a HUD-approved counselor. If the borrower doesn’t respond, the lender must make at least one phone call to the borrower on three different days at three different times of the day. If the borrower doesn’t respond, the lender must send the borrower a certified letter that includes a toll-free number for the lender.
If a notice of default is eventually sent, it must include a declaration that the required contact or attempted contact was made. If the mortgage holder has a website, it must contain the process information.
Mortgage holders are required to post notice of the foreclosure sale on the property. This law requires that the notice be posted for at least 72 hours.
The bill requires that tenants (except the borrower) on the property get 60 days to move, and receive notice in English, Spanish, Korean, Tagalog, Chinese, and Vietnamese.
To protect the value of homes in the area of the foreclosed property, the owner of the property after the foreclosure, frequently the original mortgage holder, must maintain the property. The city or county can, after proper notice and 14 days to cure, assess fines of up to $1,000 per day for failure to maintain the property.
A lender does not have to follow these steps required by this law if the borrower surrenders the property, files bankruptcy, or hires an advisor to help him with the foreclosure.
For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452
Web site: dca.lacounty.gov