(a) If a borrower submits a complete application for a foreclosure prevention alternative offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, trustee, mortgagee, beneficiary, or authorized agent shall not record a notice of sale or conduct a trustee’s sale while the complete foreclosure prevention alternative application is pending, and until the borrower has been provided with a written determination by the mortgage servicer regarding that borrower’s eligibility for the requested foreclosure prevention alternative.
(b) Following the denial of a first lien loan modification application, the mortgage servicer shall send a written notice to the borrower identifying with specificity the reasons for the denial and shall include a statement that the borrower may obtain additional documentation supporting the denial decision upon written request to the mortgage servicer.
(c) If a foreclosure prevention alternative is approved in writing prior to the recordation of a notice of default, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default under either of the following circumstances:
(1) The borrower is in compliance with the terms of a written trial or permanent loan modification, forbearance, or repayment plan.
(2) A foreclosure prevention alternative has been approved in writing by all parties, including, for example, the first lien investor, junior lienholder, and mortgage insurer, as applicable, and proof of funds or financing has been provided to the servicer.
(d) If a foreclosure prevention alternative is approved in writing after the recordation of a notice of default, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of sale or conduct a trustee’s sale under either of the following circumstances:
(1) The borrower is in compliance with the terms of a written trial or permanent loan modification, forbearance, or repayment plan.
(2) A foreclosure prevention alternative has been approved in writing by all parties, including, for example, the first lien investor, junior lienholder, and mortgage insurer, as applicable, and proof of funds or financing has been provided to the servicer.
(e) This section applies only to mortgages or deeds of trust as described in Section 2924.15.
(f) For purposes of this section, an application shall be deemed “complete” when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.
(g) This section shall become operative on January 1, 2018.
(Repealed (in Sec. 14) and added by Stats. 2012, Ch. 86, Sec. 15. (AB 278) Effective January 1, 2013. Section operative January 1, 2018, by its own provisions. See identical section added by Stats. 2012, Ch. 87, Sec. 15.)
Last modified: October 25, 2018