Mike Belote
UTA Bill Signed, Others Pending
By Michael Belote, Esq., California Advocates, UTA California Lobbyist
The California Legislature works in two-year sessions, and this is the end of the 2017-2018 session. The pace of legislative activity is especially intense at this time, for the simple reason that all bills not passed this year are dead, and cannot carry over to the 2019-2020 session. And invariably, there are groups which begin their legislative projects in the final days of session. Sausage-making, indeed!
No matter what happens during the closing days of session, 2018 will be known for landmark legislation in two areas, one of which will impact some UTA members. The issue unrelated to UTA is a complete re-working of California’s bail laws, essentially replacing money bail with a risk assessment performed by courts. This bill is headed for the Governor’s desk, where a signature seems likely.
The landmark issue that will affect some UTA members revolves around privacy and data breaches, addressed by AB 375. What a story this is: a wealthy San Francisco lawyer spent millions of dollars gathering signatures to qualify what would have been arguably the world’s most comprehensive privacy law for the November ballot. Business interests concerned about the risk of enacting the initiative, which they viewed as both confusing and damaging, began negotiating with the initiative proponent and the legislature on a proposed bill as an alternative to the initiative. Over the space of less than two weeks, AB 375 emerged, was sent to the Governor and signed, and the proponent agreed to pull the initiative from the November ballot.
AB 375 is considered a superior product when compared with the proposed initiative, but the bill still represents easily the most far-reaching privacy law in the country. For covered businesses, which either sell lots of consumer data or receive $25 million or more in gross revenue, consumers will have the right to see what information is being held on them and prohibit the sale of information. Every business meeting the size or subject matter thresholds in the bill must now work to understand this extremely complex new statute, which becomes effective on January 1, 2019. Expect a great deal more information from UTA on this subject in the future.
Of far less complexity and breadth, but still important to UTA members, has been legislative activity around PACE assessments. Last year the Legislature passed two major PACE bills, one which subjected PACE providers to regulation by the Department of Business Oversight, and a second which imposed various consumer protections on PACE assessment transactions. This year it appears that two more PACE bills will be enacted, which generally are designed to enhance consumer protections. A third bill is emerging in the closing days of session, which would expand the permissible purposes of PACE financing to “home hardening”, which apparently refers to home improvements which help protect homes from fire risks.
The home hardening bill will be opposed broadly by real estate groups, primarily because of the super-priority of PACE assessments. What we are seeing in recent years has been a breathtaking growth in this financing mechanism, while the law seeks to keep “pace”. The Governor’s view of the expansion is unknown, but the Brown administration has been supportive of PACE financing in the energy conservation area.
Finally, we are pleased to report UTA success on two other legislative issues. The first was the signing of UTA-sponsored SB 1183 (Morrell), which was suggested by member Andrew Boylan. The bill exempts reverse mortgages from the successor in interest requirements of California Civil Code Section 2920.7. The problem was that existing law, designed to assist surviving spouses and other heirs with assuming loans after borrowers died, should not have applied to reverse mortgages, which are always non-assumable by non-borrower survivors. SB 1183 corrects this problem, and we appreciate Senator Morrell’s authorship of the bill.
Second, UTA was successful, working with our industry partners the California Bankers Association and California Mortgage Bankers Association, with securing an important improvement in the Homeowner’s Bill of Rights. SB 818 Beall) is designed to restore enhanced obligations on large lenders and servicers (those who conduct more than 175 foreclosures per year in California), which had expired at the end of 2017. Given political realities, restoration of these obligations was going to pass the California Legislature, but we were successful in creating a cut-off date for submission of completed loan modification applications at five days prior to a scheduled foreclosure sale. This change, suggested by Robert Finlay, responds to the problem of loan modification requests coming in the night before, or even the morning of, trustee’s sales. With this improvement included, SB 818 is expected to make it to the Governor’s desk and be signed into law. On this bill, we appreciate Senator Beall’s cooperation in adding the improvement.