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California Civil Code Section 2924i

Legal Research Home > California Lawyer > Civil Code > California Civil Code Section 2924i

(a) This section applies to loans secured by a deed of trust
or mortgage on real property containing one to four residential
units at least one of which at the time the loan is made is or is to
be occupied by the borrower if the loan is for a period in excess of
one year and is a balloon payment loan.
   (b) This section shall not apply to (1) open end credit as defined
in Regulation Z, whether or not the transaction is otherwise subject
to Regulation Z, (2) transactions subject to Section 2956, or (3)
loans made for the principal purpose of financing the construction of
one or more residential units.
   (c) At least 90 days but not more than 150 days prior to the due
date of the final payment on a loan that is subject to this section,
the holder of the loan shall deliver or mail by first-class mail,
with a certificate of mailing obtained from the United States Postal
Service, to the trustor, or his or her successor in interest, at the
last known address of that person, a written notice which shall
include all of the following:
   (1) A statement of the name and address of the person to whom the
final payment is required to be paid.
   (2) The date on or before which the final payment is required to
be paid.
   (3) The amount of the final payment, or if the exact amount is
unknown, a good faith estimate of the amount thereof, including
unpaid principal, interest and any other charges, such amount to be
determined assuming timely payment in full of all scheduled
installments coming due between the date the notice is prepared and
the date when the final payment is due.
   (4) If the borrower has a contractual right to refinance the final
payment, a statement to that effect.
   If the due date of the final payment of a loan subject to this
section is extended prior to the time notice is otherwise required
under this subdivision, this notice requirement shall apply only to
the due date as extended (or as subsequently extended).
   (d) For purposes of this section:
   (1) A "balloon payment loan" is a loan which provides for a final
payment as originally scheduled which is more than twice the amount
of any of the immediately preceding six regularly scheduled payments
or which contains a call provision; provided, however, that if the
call provision is not exercised by the holder of the loan, the
existence of the unexercised call provision shall not cause the loan
to be deemed to be a balloon payment loan.
   (2) "Call provision" means a loan contract term that provides the
holder of the loan with the right to call the loan due and payable
either after a specified period has elapsed following closing or
after a specified date.
   (3) "Regulation Z" means any rule, regulation, or interpretation
promulgated by the Board of Governors of the Federal Reserve System
under the Federal Truth in Lending Act, as amended (15 U.S.C. Sec.
1601 et seq.), and any interpretation or approval thereof issued by
an official or employee of the Federal Reserve System duly authorized
by the board under the Truth in Lending Act, as amended, to issue
such interpretations or approvals.
   (e) Failure to provide notice as required by subdivision (a) does
not extinguish any obligation of payment by the borrower, except that
the due date for any balloon payment shall be the date specified in
the balloon payment note, or 90 days from the date of delivery or
mailing of the notice required by subdivision (a), or the due date
specified in the notice required by subdivision (a), whichever date
is later.  If the operation of this section acts to extend the term
of any note, interest shall continue to accrue for the extended term
at the contract  rate and payments shall continue to be due at any
periodic interval and on any payment schedule specified in the note
and shall be credited to principal or interest under the terms of the
note.  Default in any extended periodic payment shall be considered
a default under terms of the note or security instrument.
   (f) (1) The validity of any credit document or of any security
document subject to the provisions of this section shall not be
invalidated solely because of the failure of any person to comply
with this section.  However, any person who willfully violates any
provision of this section shall be liable in the amount of actual
damages suffered by the debtor as the proximate result of the
violation, and, if the debtor prevails in any suit to recover that
amount, for reasonable attorney's fees.
   (2) No person may be held liable in any action under this section
if it is shown by a preponderance of the evidence that the violation
was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adopted to
avoid any such error.
   (g) The provisions of this section shall apply to any note
executed on or after January 1, 1984.

Last modified: July 31, 2008