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A Year Like No Other

Michael Belote

By Michael Belote, Esq., UTA California Lobbyist, California Advocates

To residents of the world: this will get better. Infection rates ultimately will decline.  A vaccine will be developed and distributed. Herd immunity will be created.  Economies will bounce back.

Until then, 2020 has been a year like no other, for everyone. A booming economy slammed to a halt with the g-force of an F-18. If the pandemic was not enough, California and the west are experiencing wild fires of unprecedented scope. All levels of government are feeling their way.  When and how to reopen?  What groups of people and businesses deserve assistance?  Where will the money come from to provide this assistance?

For UTA, 2020 has presented challenges which in many ways exceeded those of the Great Recession.  At least the recession could be blamed on someone, with no and low-doc loans at 125% of value.  It is hard to blame someone for a pandemic or a wild fire, try as we might.

California legislators, as a class, believe that we are on the precipice of a wave of business closures, personal and business evictions, and foreclosures.  On evictions, legislators told us that they literally could not return to their districts in the fall unless they did something. At the same time, they are fully aware of thousands of small landlords who need rent payments to survive.

The results for UTA from the 2020 legislative year in Sacramento were a decidedly mixed bag. There were at least two pieces of good news.  First, despite a determined effort in the Assembly, the legislature enacted no foreclosure moratoria, and no mandatory requirements for forbearances. The biggest threat on this front was AB 2501, which was held on the Assembly floor with 39 votes, just two short of the required 41-vote majority.  AB 2501 would have required forbearances of mortgages based upon the self-attestation of borrowers, with additional provisions relating to car loans, payday loans and PACE assessments.  A large coalition of groups including UTA helped defeat the bill, one of the very few Democratic bills killed this year in a legislature dominated by Democratic supermajorities.

Instead of AB 2501, the legislature adopted a compromise measure in consultation with the Newsom administration.  AB 3088 was enacted and signed into law on August 31, and since the bill contained an “urgency clause”, it took effect immediately on that date.  For mortgages, the essence of the bill was that lenders are required to provide specified notices to borrowers if they deny forbearances, in spite of borrowers’ assertions that they need relief because of COVID.

The second piece of good news was the passage and signing by Governor Newsom of UTA-sponsored SB 1148, which modifies publication requirements for notices of sale and clarifies that declarations of nonmonetary default are filed in court without fee.  The bill takes effect on January 1, 2021.

With respect to publication, SB 1148 removes the first choice of publication location, cities, instead providing that publication should occur in a public notice district, or if there is no newspaper of general circulation in the district, then in the county.  The hope is that this slightly relaxed location requirement will enable more newspapers to qualify for publication, encouraging competition and lowering costs.

The issue of fees for filing declarations of nonmonetary default simply conforms to the practice of most large counties, which accept the documents without charge.

Unfortunately as noted above, the news was not all good for 2020.  On September 28, Governor Newsom signed SB 1079, to take effect on January 1, 2021, relating to trustee’s sales.  Heavily opposed by UTA in a coalition which included banks, mortgage banks, Realtors, credit unions, and mortgage brokers, SB 1079 contains a rather complicated process for certain entitled parties to purchase foreclosed properties up to 45 days after the trustee’s sale.  The bill proceeded from the belief that large institutional investors have purchased blocks of properties in times of economic distress, and with an increase in foreclosures potentially on the horizon, it is necessary to provide avenues for tenants, owner-occupants and nonprofit housing entities to acquire housing properties.

Space here simply does not permit an exhaustive treatment of SB 1079, which has enormous ramifications for trustees, credit bids, post-sale procedures, maintenance of properties, and much more.  But this bill may be the most impactful legislative enactment for trustees since the Homeowners Bill of Rights.  The issues will be addressed at the virtual conference on October 7, but the discussion is likely to continue for some time.  If SB 1079 is not reason to join, support and participate in UTA, nothing is.

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