Where Bills Come From

Michael Belote, Esq.

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

Like foreclosures, the legislative process moves from a series of deadlines to deadlines. February 24 was the deadline for the introduction of new bills in California for 2012, the second year of the current two-year legislative session. We are still sorting through the approximately 2,000 bills introduced for the year, but already it is apparent that a veritable avalanche of foreclosure bills were introduced, yet again.

Those unfamiliar with the legislative process often ask how it is possible to even think of ideas for 2,000 new bills. Besides a number of bills covering true minutia, most bills are introduced to address problems identified by legislators, both real and imagined. It should come as no surprise, then, that so many foreclosure-related bills are introduced. As long as foreclosures remain high, so will the legislative desire to do something. Or anything.

While the past few years have seen the introduction of dozens of foreclosure-related bills in Sacramento, and the enactment of many, for a variety of reasons this year may be the busiest yet. A number of things are coming together to create something of a legislative perfect storm: the national settlement between state attorneys general and banks, in which California Attorney General Kamala Harris played a major role; the "investigation" of foreclosures in San Francisco by Assessor-Recorder Phil Ting; growing interest in the legislative leadership to do more on foreclosures, and more.

In recent years, UTA has been a major participant in a large coalition of lender and real estate groups which opposed bills proposing cumbersome rules relating to loan modifications. This concept is sure to be introduced again in 2012. There is much talk in Sacramento about alleged "dual-tracking", although opinions differ about exactly what the term means. Some suggest that the term refers to discussions about loan modifications occurring contemporaneously with foreclosure timelines, while others believe that it refers to proceeding to foreclosure after a modification or short-sale has been approved.

In any event, a potent group of legislators and statewide officials will be involved in foreclosure bills this year. An early sample of bills in this area includes the following:

• AB 1547 (Eng): Repeals the January 1, 2013 sunset date on laws requiring diligent attempts to contact borrowers before recording notices of default, laws dealing with obligations to maintain vacant property or incur fines, and laws providing expanded notice to tenants in residential property after foreclosure, thus making these laws permanent;
  
  
• AB 1557 (Skinner): Extends the January 1, 2013 sunset date on the maintenance of vacant properties law until January 1, 2018;
  
  
• AB 1599 (Feuer): Requires all notices required to be sent to borrowers in the foreclosure process to be sent in the borrower's primary language;
  
  
• AB 1602 (Eng): Prohibits recordation of notices of default unless the mortgagee, trustee, beneficiary or authorized agent has made "reasonable and good faith efforts to evaluate the borrower for available loan modification options to avoid foreclosure";
  
  
• AB 1603 (Feuer): Requires servicers to "take reasonable actions to continue or re-establish" a borrowers insurance coverage before force-placing coverage;
  
  
• SB 1191 (Simitian): Requires landlords of residential properties subject to recorded notices of sale to disclose this to prospective tenants.

Given the large number of bills introduced right at the February 24 deadline, the actual number of bills affecting UTA will be many times those identified above. A more complete list will appear in the next issue of the UTA eNews.

Members also should be aware of UTA-sponsored SB 1244 (Harman). As introduced, the bill proposes to allow changes of location for trustee's sales to be implemented by announcement at the originally scheduled location, when the location must be changed by action of government or other unavoidable factors. The bill also provides a "nail and mail" option in assessment lien foreclosures when the owner of the separate interest cannot be served with reasonable diligence. Other provisions may be added to the UTA-sponsored bill at a later date.