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Blue on Blue

By Mike Belote, California Advocates, UTA California Lobbyist

Perhaps science can help describe what a blue state California is, and we are getting bluer all the time.  In 2009, a scientist discovered an intense new blue pigment, described as “the first new inorganic blue pigment to have been discovered since cobalt blue 200 hundred years ago”; it is called “Yinmn”, which is short for ytrrium, indium, and manganese.  Look it up: that’s how blue California is!

Although resignations from the California legislature for allegations of sexual harassment have temporarily reduced Democrats below the coveted two-thirds supermajority in the Assembly and Senate, those supermajorities will be restored in the coming months when special elections are held to fill the vacated seats.  And the people running to replace the departed members are almost universally to the left of those they are replacing, moving the legislature further left. Whether the issue is health care, immigration, taxation, climate change, marijuana or others, the legislative leadership is pushing California in the opposite direction of Washington, D.C. and Donald Trump.

It is in this environment that UTA operates in California.  The two-thirds supermajority matters in issues involving trustees.  The supermajority was, for example, virtually 100% responsible for the passage of SB 2 last year, imposing the $75 recording surcharge on real estate documents.  When Democrats coalesce around an issue, their sheer numbers make opposition difficult.

For 2018, February 16 of this year was the deadline for the introduction of new bills.  All 2,300 new bills have been read and evaluated for potential impact on UTA members, and dozens of new bills have been entered into the UTA electronic file.  All of the bills and related information may be accessed through the UTA website.

This year the Democratic dominance may well matter in the outcome of SB 818 (Beall), relating to the Homeowner’s Bill of Rights. UTA has been reporting to members that certain portions of HOBR, providing additional requirements applicable to lenders and servicers conducting more than 175 foreclosures per year in California, were repealed effective January 1, 2018.  This repeal basically conformed the HOBR requirements for all lenders and servicers, making the rules consistent regardless of the number of foreclosures conducted.

Although it is virtually impossible to tell from reading SB 818, because the bill proposes a dizzying series of additions and deletions from current law, the upshot is that the additional obligations applicable to the “over 175s” repealed at the beginning of this year would be restored, thus reinstating the two levels of obligations depending upon the number of foreclosures conducted by the lender or servicer.

UTA and lender groups will oppose SB 818, on the basis that HOBR was directed at a specific problem at a specific point in time, and that the enhanced requirements are no longer necessary to address a problem with foreclosures.  If the additional obligations on larger lenders and servicers were necessary to be retained, that action should have come last year before the statutes were repealed, sparing lenders and servicers from the problem of re-engineering systems after the repeal of the HOBR sections, and now recreating them after they sunsetted at the end of last year.

Another issue raised in 2018 bills which relates back to earlier actions by the legislature concerns “PACE” assessments.  Last year the legislature enacted two separate bills on PACE (property assessed clean energy) to bring PACE program administrators, solicitors and solicitor agents under the regulation of the Department of Business Oversight and to regulate the underwriting of PACE “assessments”.  The underwriting bill was intended to apply standards more akin to real property loans to PACE assessments.

Additional legislation is being proposed for 2018 to regulate the PACE process.  UTA will continue to participate with our industry colleagues to make sure that the growing use of PACE assessments integrates as much as possible with laws applicable to lenders, servicers, trustees and others in real property lending.

Finally, UTA is sponsoring legislation in California for 2018.  SB 1183 (Morrell) has been introduced to clarify that procedures in current law relating to disclosures to successors in interest about assumption of loans do not apply to reverse mortgages, since reverse mortgages are not assumable.  Additional provisions may be added to SB 1183 based upon discussions in the UTA  legislative committee as the year unfolds.

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