Sacramento Report
February 16, 2010
New Loan Modification/Foreclosure Bill Introduced in State Legislature
SBX8 38 has been introduced in a special session of the state Legislature. The bill greatly enhances the declaration requirements under SB 1137, which became effective last year. For example, prior to recording an NOD, the beneficiary or trustee must send a new notice, in English and the “five other languages”, advising the borrower of the opportunity to request a modification. If the borrower requests a modification and one is not ultimately offered, there are extensive requirements on the lender to explain what alternatives were considered and rejected. Failure to comply with the requirements will result either in statutory damages, if the property was ultimately sold to a bona fide purchaser, or voiding the foreclosure, if the property went back to the foreclosing beneficiary.
As a special session bill, the legislature must act quickly due to procedural requirements.
