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Once More with Feeling

Mike Belote

We have stated many times in this column about the prodigious legislative output of the California Legislature.  One long-ago state senator famously described the institution as a “bill factory”, and in a body where some members measure their productivity by the number of bills they get enacted each year, he was not wrong.  In all, approximately 1000 bills are entered into the California Codes annually, covering an almost limitless range of issues.

So where do all of these bills come from?  While a certain percentage spring forth from the fertile minds of legislators seeking to remedy problems real or imagined, a large percentage come from organizations exactly like UTA, or even literally, UTA.  Known in Sacramento parlance as “sponsored bills”, interest groups identify problems in the statutes, and inveigle legislators to “author” bills to address those problems. The main organization pushing the bill is called the “sponsor”; interestingly this sponsored bill phenomenon does not exist in Congress, where the legislators themselves are known as “sponsors”.  So in a very real sense, the number of bills introduced in Sacramento is at least partially attributed to, well, us!

For 2024, UTA is sponsoring not one, but two pieces of legislation, which is quite unusual for the organization.  But the facts giving rise to sponsoring two bills are unusual also.  In brief, last year UTA sponsored AB 1043 by Assembly Member Bill Essayli , a freshman Republican from Riverside County.  The bill proposed a series of largely technical changes to the California Civil Code relating to nonjudicial foreclosure, including some relating to the SB 1079 process.  Among the many provisions in the bill were liability protections for trustees passing on payoff amounts provided by beneficiaries, increasing the postponement fee from $50 to $100, and prohibiting “surplus chasers” from soliciting or contacting   foreclosed homeowners for 90 days following the recordation of trustee’s deeds.  This latter provision was seen as particularly beneficial for consumers.

What went wrong with this bill, which moved through the legislative process without controversy in 2023?  Simply put, the author, a man of strong convictions, angered Democrats in the Assembly, who used AB 1043 to deliver a message, literally on the last night of the legislative year.  This is exceedingly rare in Sacramento, when legislators reject the messenger, not the message, and UTA-sponsored AB 1043 was caught in the crossfire.  For 2024, the identical language was inserted in AB 295, now carried by Assembly Member Josh Lowenthal from Long Beach, who recognized the consumer benefits in the original bill and agreed to assist this year.

UTA’s second sponsored bill for the year is SB 1146 (Wilk), which also makes a series of mostly technical changes, including again, you guessed it, SB 1079.  While space does not permit an exhaustive description of each element in SB 1146, the bill permits trustees to require checks from third-party bidders to be made payable to trustees, establishes a postponement procedure when an act of force majeure prevents the conduct of a sale, and amends the Homeowner’s Bill of Rights to correct an anomalous provision that even a few loans by an unlicensed lenders subjects them to the requirements placed on lender/servicers conducting more than 175 foreclosures in a year.  So far, this bill is moving without controversy in the legislative process.

More controversial is AB 2424, which proposed a complex procedure for “conditional bids”, where winning third-party bidders would be given 20 days after trustee’s sales to obtain financing and acceptable inspections of properties.  Fortunately, working with the sponsors of the bill, the conditional bid language was deleted, in favor of ideas which were offered two years ago on the much-discussed SB 1323.  These concepts include giving borrowers a brief postponement if they have listed a residential property for sale,  a second postponement if they have a bona fide offer to sell the property, and a requirement to commence bidding on certain properties at two-thirds of the estimated market value provided by beneficiaries.  Expect to read much more about AB 2424 in the coming months, because at the present time passage of the bill appears likely.

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