Sacramento Report
September 21, 2010
Foreclosure Legislation Dies
Legislation proposing significant changes to the foreclosure process failed to meet a crucial deadline in the Legislature. The failure occurred after last-minute amendments did not win sufficient support to pass the bill.
Under SB 1275 (Leno), prior to filing a notice of default, a trustee or beneficiary would have had to provide a borrower with an application for loan modification, or other foreclosure avoidance options, as well as a notice specifying a borrower’s rights during the foreclosure process. The bill would have also prohibited a beneficiary or their agent from combining collections activity with communications to a borrower about foreclosure avoidance options, and would have required that a compliance notice be recorded concurrently with the filing of a notice of default. Failure to record the compliance notice would have allowed the borrower to take action to either void the foreclosure or seek statutory damages up to $10,000.
Senate Bill 1275 was opposed by CLTA, the California Bankers Association, the California Escrow Association, and other industry groups.
