Foreclosure Moratorium Bill Amended to Protect BFPs

​A foreclosure moratorium and forbearance bill to protect wildfire victims, Assembly Bill 238 (Harabedian), has been amended in response to concerns expressed by a number of industry organizations, including CLTA.

One of the amendments to the bill would provide that a failure to comply with its provisions would not affect the validity of a trustee’s sale or a sale to a bona fide purchaser for value. In addition, the amendments limit eligibility for that forbearance to residential mortgage loans for personal, family, or household use, or borrowers with 10 or fewer investment properties. The amendments to the bill also would authorize a mortgage servicer, after that initial 180-day forbearance period, to require the borrower to provide documentation of ongoing financial hardship, and to participate in a check-in with the mortgage servicer every 90 days thereafter, to extend the period of forbearance for no more than one additional year. Under the bill as amended, a mortgage servicer could not require a lump sum payment at the end of the forbearance period and could not act to negatively impact a borrower’s credit score.