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

Some things really never change in Sacramento.  The sheer volume of legislation proposed and passed into law by the Assembly and Senate is one example. When the legislature returns for the 2023-2024 two-year session in January, we can very confidently predict that the usual 2500 or so new bills will be introduced, and that of those, approximately 1000 will be enacted into law.  The California Capitol has well-earned its reputation as a “bill factory”.

At the same time, various commentators have described the very significant changes afoot in Sacramento, noting that the Capitol environment is on the precipice of a new era.  As we transition to 2023, this seems like an opportune time to identify what is old, and what will be new, and what this means for UTA members.

First, it seems clear that once again UTA and our industry partners will be confronting the issue of “equity stripping.”  When Senator Bob Archuleta decided to shelve the very controversial SB 1323 earlier this year, it was with the understanding that industry would work with him on a responsible compromise for 2023.  It was agreed that four elements would constitute the compromise moving forward: advising borrowers at loan origination, and at default, that they may have a trusted third party record a request for notice of default pursuant to Civil Code Section 2924b; postponing sales for a reasonable period if the trustor has executed a bona fide listing agreement to sell the subject house; postpone sales again for a reasonable period if the trustor is in contract to sell; and for trustee’s sales for first liens, commence the bidding at two-thirds of fair market value as estimated by the beneficiary.  This last element is similar to current law in Ohio. 

Our industry coalition has submitted draft language to Senator Archuleta to implement the four elements, and discussions will continue in the coming weeks.  We have also heard rumblings, however, that the sponsors of SB 1323 are considering reintroducing the bill from this year again in 2023.  We strongly believe that this proposal, which would require trustees to select a real estate agent, list the property, evaluate offers, and actually sell the house, all with no involvement whatever by the actual owner, is both illegal and unworkable.  If reintroduced, we expect our industry coalition to strongly oppose the bill.

Now, for the new. When legislators return in January, they will find a political environment in a period of transition.  First, a very large number of legislators will be brand new to Sacramento, partly because of term limits and partly because of pandemic burnout.  Nearly one-third of the combined 120 members of the Senate and Assembly will be freshmen, and there is a learning curve for these new members to understand complex issues like nonjudicial foreclosure. This requires UTA and other real estate groups to engage in an education process to bring new members up to speed.

Next, we will be dealing with a new Chair of the Assembly Judiciary Committee, because the prior Chair, Assembly Member Mark Stone of Santa Cruz, elected not to seek reelection. This is an incredibly important position for UTA, as virtually all issues relating to foreclosure and real property generally are assigned to the judiciary committees in each house for review.  As of now, no new Chair has been named.  Fortunately we expect continuity in the Senate, where the very capable Tom Umberg from Orange County is likely to continue as Chair of the Senate Judiciary Committee.  Additionally, very experienced committee staff consultants are very likely to be retained.

Additionally, the leadership of the Assembly will transition later in 2023.  The Speaker of the Assembly is one of the most powerful political positions in California, and current Speaker Anthony Rendon from Lakewood will likely continue until summer, when newly-designated Speaker Robert Rivas will assume the position.  This likely means staff and cultural changes in the Assembly, with the need for UTA and all other interest groups to foster and forge new relationships.  The good news is that we know and respect Mr. Rivas, who will be the first Speaker in memory to hail from the agricultural regions of Northern California.

Finally, the various transitions in store for 2023 will occur in an environment which remains, and in some cases is even increasingly dominated by one party.  California is virtually a mirror image of Texas, Arkansas and a number of other states with Republican supermajorities.  Whatever “red wave” might have been forming around the country, such a phenomenon clearly did not extend to California.  Although a couple of legislative races remain too close to call, even six weeks following Election Day, it appears that Democrats will retain a 31-9 “mega-majority” in the state senate, and will actually increase their majority in the Assembly to 62-18, or even potentially 63-17.  California remains an “electric blue” state.