July 12, 2008
Changes to California Foreclosure Law - from the Insolvency Committee
Dear Insolvency Law Committee Constituency List Members:
Governor Schwarzenegger signed legislation on July 8, 2008, effective immediately, regarding all California residential mortgage foreclosures.
Civil Code sections 2923.5, 2923.6, 2924.8 and 2929.3 and Code of Civil Procedure section 1161b are added to the California Codes to address the influx of mortgage foreclosures in California.
Requirements to Contact Borrower re Workout Options Prior to Foreclosure and to Provide Declaration re Same with Notice of Default and/or Notice of Sale
Civil Code section 2923.5 applies to loans initiated from January 1, 2003 to December 31, 2007 secured by residential real property for owner-occupied residences. Owner-occupied means it is the borrower’s principal residence.
The section provides that a mortgagee, beneficiary or authorized agent, which can be the prospective foreclosure trustee (collectively hereafter “beneficiary”), may not file a Notice of Default under section 2924 until 30 days after contacting the borrower as prescribed below or a diligent effort as described below is made to contact the borrower.
The beneficiary shall contact the borrower in person or by telephone to assess “the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” During the initial contact, the beneficiary must:
1. Advise the borrower that he or she has the right to request a subsequent meeting to be scheduled by the beneficiary within 14 days; and
2. Provide the borrower with the toll free number made available by the US Dept of Housing and Urban Development to find a HUD certified housing counseling agency [(800) 569-4287].
The Notice of Default must now include a declaration from the beneficiary that it has contacted the borrower or conducted due diligence to do so unless the borrower has surrendered the property to the beneficiary. If the Notice of Default was recorded before July 8, 2008, a declaration must accompany the Notice of Sale when it is recorded, stating that the borrower was contacted to assess the financial situation and explore options to avoid the foreclosure or list the efforts made to contact the borrower if no contact was made.
Diligent efforts to contact the borrower shall “require and mean:”
1. Sending a first class letter that includes the toll free HUD number; and
2. Attempting to contact the borrower, after the letter has been sent, at least three times by telephone call to the primary number on file at different times on different days—an automated system is ok so long as a live representative connects if the borrower answers, and the telephone requirements are met if after trying the contact, the number is disconnected; and
3. Two weeks after the telephone contact attempts are satisfied, if the borrower does not respond, the beneficiary must send a certified letter that includes a toll free number to contact a live representative; and
4. The beneficiary has posted a “prominent” link on the homepage of its internet website, if any, with the following information:
a. Options may be available to borrowers who cannot afford their mortgage and the instructions on how to explore the options;
b. A list of financial documents borrowers should collect to discuss options with the beneficiary;
c. A toll free number to discuss the options; and
d. The HUD toll free counseling number;
Contacting the borrower or diligent efforts to do so are not required if:
1. The borrower surrenders the property by turning over the keys or by sending a letter to the beneficiary; or
2. The borrower has contracted with a person or organization whose primary business is advising how to extend the foreclosure process and how to avoid contractual obligations; or
3. The borrower has filed bankruptcy.
Duty of Servicing Agents to Enter into Workouts or Modifications
Section 2923.6 provides that servicing agents for loan pools owe a duty to all parties in the pool so that a workout or modification is in the best interests of the parties if the loan is in default or default is reasonably foreseeable, and the recovery on the workout exceeds the anticipated recovery through a foreclosure based on the current value of the property.
Notice to Tenants Living in Foreclosed Property of Extended Eviction Period
Section 2924.8 applies to residential real property when the billing address is different than the property address, i.e. there are potentially tenants living in the property. It provides for an additional notice to be mailed and posted with the Notice of Sale, addressed to “Resident of property subject to foreclosure sale.” The notice shall say in English and other languages as required by Civil Code section 1632, if the agreement was negotiated in another language:
Foreclosure process has begun on this property, which may affect your right to continue to live in this property. Twenty days or more after the date of this notice, this property may be sold at foreclosure. If you are renting this property, the new property owner may either give you a new lease or rental agreement or provide you with a 60-day eviction notice. However, other laws may prohibit an eviction in this circumstance or provide you with a longer notice before eviction. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights you may have.
60-Day Eviction Notice for Tenants in Foreclosed Properties
Finally, Code of Civil Procedure section 1161b provides that tenants in foreclosed properties must be given a 60-day eviction notice. The section does not apply if any party to the foreclosed note remains a tenant, subtenant or occupant in the property.
These materials were written by Donna T. Parkinson, Chair of the Insolvency Law Committee.
July 11, 2008
Alex Kozinski on the Dating Game
July 10, 2008
Thomas Mesereau-Ephriam-Villaraigosa Free Legal Clinic
Hello Fellow Alums
I am a 2003 UWLA graduate and the legal coordinator for the Thomas Mesereau-Ephriam-Villaraigosa Free Legal Clinic.
I am extending to all students and alum the opportunity to come out and share your legal expertise, brush up on client intake or for students to obtain the opportunity to interview clients in all areas of law. As most may know, Thomas Mesereau was Michael Jackson and Robert Blake's attorney, Ms Ephriam was Divorce court judge and Villaraigosa is the mayor of LA. Tom spends most of his time at this clinic and is always eager to share his knowledge with students and attorneys willing to assist in the clinic.
Our clinic offers seminars and discussions on various legal and relevant topics. For instance, August 30th we will have UWLA Professor Tiggs conducting a BK workshop, August 2nd will be a discussion on Juvenile issues, August 16th will be BASTA Inc discussing Tenants Advocacy and Rights. In September we will have Immigration Law & Drug Court Judge Ellen DeShazer.
We also have started a new program: Criminal Record Cleaning: Expungement, where we assist those needing to clear their criminal record in order to get jobs and become a productive citizen. We will have a FREE special training on July 19th at a sister location so you will have to contact me directly through the website if you are interested in participating, just say that you are a UWLA student or Alum.
Later in the year we will begin a full-fledge mediation program that we have partnered with the City Attorney's office, again if you are interested in this program you will need to be a participant of the clinic to obtain the FREE training.
So why don't you check out our website at www.mevfreelegalclinic.com which will have our various clinic dates and feel free to email me through the clinic.
If you are available come on out this Saturday July 12th otherwise we will be open again on the 26th.
Again, I invite each of you to take advantage of this great opportunity.
Best to All
Sophia Harris, J.D.
Class of 2003
July 8, 2008
Michael Vick Bankruptcy
The man was my idol; the absolute best make-the-play-no-matter-what quarterback. Maybe I will learn something from his chapter 11 case. Vick filed chapter 11 in the Eastern District of Virgina yesterday, case no. 08-50775-FJS. His address is listed as Michael Vick, USP Levenworth, P.O. Box 100, Leavenworth, KS 66048 in case you want to write to him. I say that with no sarcasm; I suspect he would like mail. His schedules aren't due for a while so there's not too much I can report for now. There is an application to appoint someone named David Talbot as Designated Responsible Person.
"Consider Chapter 13" Website
This looks like a really useful website for chapter 13 practitioners, www.considerchapter13.org . Retired Bankruptcy Judge Tom Waldron is the spearhead of the organization with the title "Academy Adviser."