Michael Belote, Esq.

Just as foreclosures move from a series of deadlines to deadlines, so also the legislative process has a distinctive rhythm. In general, the legislative session progresses from slow, largely ceremonial meetings early in the year, to absolutely manic hearings in the spring, to a big finish in late summer. You really do not want to see law being made in the final hours before the constitutionally-imposed adjournment of August 31, 2014!

Having introduced just over 2,000 new bills for 2014, the legislature set about conducting initial policy hearings on this mountain of legislation between roughly March 20 and May 9. At that point, the Assembly and Senate floors act on their own, “first-house” bills, sending them over to the opposite house. In June, the process repeats itself, with policy hearings in the “second house”. Although the process tends to swing wildly in terms of level of activity, in a strange way, it works.

Each of the 2,000 new bills must be read for possible impact on UTA members. What’s more, each amended bill must be read, because a bill not previously of interest to UTA could suddenly impact trustees. At this point in the session, approximately 30 bills of interest to UTA are being monitored. Because California is in the second year of the current 2013-2014 legislative session, no bill will carry over to next year; every bill not passed and signed into law this year will be dead and would have to be reintroduced next year to be considered.

The good news is that no bills harming the foreclosure process are pending now in California. The converse is that no bills are pending to make even non-controversial clarifications to the Homeowner’s Bill of Rights. The legislature is clearly focusing on determining the effectiveness of HOBR at this point and has not shown any intent to make changes in the law this year. In early May, the Senate Banking and Financial Institutions Committee held an informational hearing in Santa Rosa to take testimony on HOBR implementation. While of course different points of view were presented, there did not seem to be any consensus on immediate changes to the statutes, certainly not for this year.

Bills presently alive and moving through the legislative process include the following:

• AB 1383 (Perea): Mortgage Debt Forgiveness. Conforms state income tax law to federal law relating to the exclusion for the discharge of qualified mortgage indebtedness.
• AB 1698 (Wagner) False Public Record. Provides a procedure for criminal courts to void false or fraudulent documents in connection with criminal convictions for fraud or forgery.
• AB 1770 (Dababneh): Home Equity Lines of Credit. Creates a procedure for lenders to freeze home equity lines of credit for properties in escrow, to prevent borrowers from drawing on equity lines just prior to escrow closings.
• AB 2257 (Cooley): Sales of Tax-Defaulted Property. Modifies the procedure for distribution of excess proceeds from sales of tax-defaulted properties.
• AB 2416 (Stone): Wage Liens. Permits the recordation of “wage liens” against all of an employer’s real property, and against any personal property on which UCC financing statements have been filed, for unproven allegations of unpaid wages.
• SB 391 (DeSaulnier): Recording Surcharges. Would impose a recording surcharge of $75 on the recordation of any real estate-related document in order to create a fund for the development of affordable housing.
• SB 1050 (Monning): Notaries. Modifies the content of notary acknowledgments and jurats to clarify that the notarial documents only verify the identity of the individuals signing the documents, not the information included therein.

Finally, it is with great regret that we must report that UTA-sponsored AB 1026 will not move forward this year. The bill provided a procedure to give notice of notices of intent to foreclose and notices of default in assessment lien foreclosures, in cases where the unit owner could not be located for purposes of personal service. After extensive discussions and acknowledgments in the Capitol that some procedure is necessary in assessment lien foreclosures when personal service cannot be effected, the Attorney General’s office indicated strong opposition to the procedure contemplated in the bill. This longstanding problem will be the subject of further discussions with the Attorney General and UTA will again sponsor legislation in 2015, as the problem is not going away.