By Mike Belote

A surprising percentage of bills introduced in the California Legislature are designed to address prior actions, including technical corrections, extending “sunset” dates, repealing archaic laws, and the like. California is a highly-codified state, and it is often necessary to simply clean up the detritus of the past. Usually these bills are relatively noncontroversial.

Occasionally, however, the original bill was controversial, with repeated attempts at clean-up, ultimately leading to proposals to repeal the original bill. After all, at the end of the day, bills are simply experiments: someone identifies a problem and proposes a solution. Sometimes the solution works, sometimes it doesn’t.

Such is the case with UTA-sponsored AB 1957 (Pacheco). This bill would advance the sunset date on Civil Code Section 2924m, enacted by the now-legendary SB 1079, from January 1, 2031 to January 1, 2027. By now all UTA members are aware of the issues surrounding SB 1079, which was first enacted in 2020, and serially modified since.

What is perhaps less well-known, or maybe long-forgotten, was the context of SB 1079. The author of the original bill was then-state senator Nancy Skinner from Alameda County. Senator Skinner, who termed out of the legislature and is now serving on the California Energy Commission, is a decent, kind and caring person. She proposed a well-intentioned idea to broaden opportunities to achieve home ownership for tenants, prospective owner-occupants, nonprofits, land trusts, and others. A total of 79 well-meaning legislators voted for the measure, while 40 voted “no” or abstained. UTA was opposed to the bill, not because the mission was not worthy, but because we didn’t think it would work.

What Senator Skinner did not anticipate, however, under the law of unintended consequences, was the degree to which unscrupulous actors would go to manipulate the SB 1079 process. Right from the beginning in 2021, people who should simply have been bidding at trustee’s sales, decided to sit out the sales and instead pose as prospective owner-occupants, hide behind “straw-buyer” tenants, or even create sham nonprofits, in order to abuse the SB 1079 process.

The good news is that there is growing consensus that the fraudulent manipulation of SB 1079 should be addressed. The bad news is that it is hard to outright repeal laws, especially when the lack of affordable housing has only gotten worse since the enactment of SB 1079 in 2020. A coalition of eight community groups and housing advocacy organizations recently submitted opposition to AB 1957, acknowledging the fraud problem but literally arguing that “the solution is not to throw the baby out with the bathwater.” These groups pledge to work collaboratively on AB 1957 to address the fraud problem, but they also want to talk about “other kinds of demonstrated, fraudulent activity related to corporate scams of homeowners facing foreclosure.” So far, the organizations have not articulated what those corporate scams are.

AB 1957 is pending hearing in the Assembly Judiciary Committee. It is past time to address the fraud in this well-intentioned effort, which is systematically disincentivizing bidding at sale. We will keep the membership apprised of developments.

Of course, AB 1957 is far from the only bill in Sacramento affecting trustees. Others include:

· AB 1847 (Harabedian): Extends the current law which makes borrowers in specific wildfire ZIP codes eligible to request forbearance for four 90-day periods, to three years, with requests available until January 7, 2029. The real estate community is broadly opposed to the length of this extension.

· AB 1842 (Harabedian): Creates a template for forbearance requests relating to future declared disasters. While the details need refinement, most agree that the concept makes sense.

· AB 2145 (Garcia): Permits a borrower “of retirement age” to transfer a mortgage on a residential property to a replacement property, to preserve the rate and term of the mortgage.

These are just a few of the more than 30 bills identified of interest to UTA. Everyday, bills are being amended and the list will grow. As the August 31 conclusion of the legislative session approaches, the urgency to pass bills will increase.

It could be a wild year!