California reinstates provisions of Homeowner Bill of Rights

State Issues State Legislation Mortgages Consumer Protection Mortgage Servicing Mortgage Modification

On September 14, the California governor signed SB 818, which permanently reinstates and amends certain provisions of California’s Homeowner Bill of Rights (HBOR), which expired on January 1, 2018. The revised and restored provisions of the HBOR, among other things, require entities that foreclosed on more than 175 first lien mortgages and deeds of trust on owner-occupied residences during the prior reporting year to: (i) stop foreclosure proceedings if a complete loan modification application is submitted and pending, a homeowner is in compliance with a foreclosure prevention alternative, or an appeal of a loan modification denial is pending; (ii) include in the notice of default a specified declaration regarding contact with a borrower; (iii) send a written notice of a loan modification denial, specifying the reasons for the denial and providing foreclosure prevention alternatives; (iv) assign a single point of contact to any borrower who requests foreclosure prevention assistance; (v) not charge fees in conjunction with applications for foreclosure prevention alternatives; and (vi) honor loss mitigation alternatives following servicing transfers. The legislation also adds a legislative intent clause that emphasizes that any amendment, addition, or repeal of an HBOR section will not have the effect to release, extinguish, or change any liability under a previous section that was in effect at the time of an action.