Governor Brown Signs Trustee Fee Increase Into Law
On Monday, August 22nd, Governor Brown signed UTA’s sponsored bill, SB 983 into California law. The legislation, introduced by Senator Mike Morrell (R-40) increases the base limitations on the amount of trustee’s or attorney’s fees by $50 throughout the nonjudicial foreclosure process. The new law also made a clarifying change by eliminating the reference to rescission in the case of a pending trustee’s sale.
As background, and as noted in the legislation, “existing law limits the amount of trustee’s or attorney’s fees that may be charged in connection with the enforcement of certain terms of obligation upon default in payment under a mortgage or deed of trust prior to reinstatement of a monetary default, or until the notice of sale is deposited in the mail, or otherwise at any time prior to the decree of foreclosure, to a base amount not to exceed $300 for an unpaid principal balance sum of $150,000 or less, or $250 plus specified additional percentages of unpaid principal sums, if the unpaid principal balance exceeds $150,000. Existing law, in lieu of an authorized charge, limits the amount of trustee’s or attorney’s fees after the notice of sale is deposited in the mail and until the property is sold by power of sale, to a base amount not to exceed $425 for an unpaid principal balance sum of $150,000 or less, or $360 plus specified additional percentages of unpaid principal sums, if the unpaid principal balance exceeds $150,000. This bill would increase the base limitations on the amount of those trustee’s or attorney’s fees by $50.”
With respect to the elimination of reference to rescission in pending sales, existing law requires a mortgagee, beneficiary, or authorized agent to record a rescission of a notice of default or cancel a pending trustee sale, if applicable, upon the borrower executing a permanent foreclosure prevention alternative. Existing law, in the case of a short sale, requires the rescission or cancellation of the pending trustee’s sale to occur when the short sale has been approved and proof of funds or financing has been provided, as specified. The legislation eliminated the reference to rescission in the case of a pending trustee’s sale.
The bill was seen as non-controversial, passing the Assembly Judiciary Committee 10-0 and the full Assembly 75-1. The Senate Judiciary had passed the bill 7-0 and the full Senate passed the bill 39-0.
The bill was narrowed during consideration by the Senate Judiciary Committee. Technical changes to the wording of the ‘notice to potential bidders’ and clarification that trustees are not ‘owners’ for purposes of obligations to register and maintain foreclosed properties were amended out.
“We are thrilled that the legislature saw fit to provide a trustee fee increase,” said UTA President Randy Newman. “Although the increase is modest, it does recognize that trustee fees have simply not kept pace.”