Mike Belote
By Michael Belote, Esq., UTA California Advocates, UTA California Lobbyist
The year 2018 may be less than half-over according to the calendar, but only nine weeks remain in California’s 2017-2018 two-year legislative session. According to the state constitution, the legislature must adjourn by midnight, August 31, 2018. For better and worse, a lot can happen between now and then.
First, the political situation: the primary elections and various special elections to fill vacancies will help determine whether California still has a viable two-party system. Although Democrats in both the Assembly and Senate lost the magical two-thirds supermajority threshold they possessed when the year started, they will regain the supermajority before the session is over, at least in the Assembly. And the supermajority matters: because California law requires two-thirds votes for tax increases, the supermajority was dispositive in passing last year’s SB 2, imposing the $75 surcharge on recording real estate documents in order to fund the development of affordable housing.
The primaries also will determine whether Republicans will make it to the November in ballot in major statewide races, under the state’s “top-two” primary system. It is possible if not likely that only Democrats will be on the ballot for such offices as governor, lieutenant governor, attorney general, U.S. Senator, and more. And if Republicans are not on the ballot for these seats, that drives Republican voter turnout down for the November general election, potentially affecting initiative campaigns discussed below.
Somehow the legislative process manages to move along even as these political winds are blowing. Nearly 2,500 bills were introduced in California for 2018, and nearly 100 have been identified of interest to UTA. Key issues include further regulation of PACE assessments, reenactment of HOBR obligations on large lenders and servicers, and UTA’s sponsored bill on reverse mortgages.
With respect to HOBR, UTA has been involved with discussions over SB 818 (Beall). The bill is designed to restore to California law those sections of law applicable to lenders and servicers which conduct more than 175 foreclosures annually that were repealed, or “sunsetted”, at the end of last year. UTA has been working with allied organizations such as the California Bankers Association, California Mortgage Bankers Association, California Mortgage Association, and with the bill’s sponsors, to reach agreement on SB 818.
Because of the political popularity of HOBR, SB 818 is likely to pass, but we have suggested amendments to make the process work better for all concerned. For example, we have suggested a reasonable cut-off date before sale for borrowers to submit complete applications for loan modifications. The sponsors currently are considering this and other workability modifications requested by UTA and others.
During a hearing on SB 818 in the Senate, one Judiciary Committee member listened to the debate on the bill, and then suggested simply doing away with nonjudicial foreclosure. The suggestion was off the cuff and was not adopted, but that is why UTA has a presence in California!
On PACE, two bills are pending to enhance obligations on program administrators, particularly relating to ability to pay determinations. A coalition of organizations including UTA are involved in discussions on these bills. The general approach is to move PACE assessments closer to the law relating to real estate loans generally.
As to UTA’s sponsored bill for 2018, SB 1183 (Morrell) would amend Civil Code Section 2920.7 to exclude reverse mortgages from the successor in interest provisions in current law. Thus far, the legislature has understood and agreed that it is inappropriate to send non-borrowing survivors information on assuming loans which are non-assumable. The bill has passed the Senate unanimously and will be heard in both the Assembly Banking and Finance and Judiciary committees.
As noted above, even as the legislative, and election, processes continue, the state is bracing for an exceedingly contention series of ballot initiatives for November. Already qualified for the ballot is a proposed repeal of last year’s gas tax increase (again illustrating the practical importance of the two-thirds supermajority in California) and a Proposition 13 amendment qualified by the California Association of Realtors allowing seniors to move base year values to new residences. The idea is to remove the disincentive to sell larger family residences, freeing the homes up for younger families.
The “big one”, though, is an extremely far-reaching privacy initiative sponsored by a wealthy Northern California real estate lawyer. The initiative could affect every California business large and small that collect personally identifiable information. Enough signatures already have been collected to qualify the measure for the ballot, but new California law allows initiative proponents to “pull the measures back” up to a certain date, if the legislature addresses the issue satisfactorily. Conversations are being had right now about the potential of heading off the initiative, but if it ultimately appears on the November ballot, UTA members will be hearing a lot more about it in the coming months!