This article is one of several entries regarding California's recent enactment of its Foreclosure Reform Law (SB 1137). The general purpose of the new law is to alleviate the negative effects of the rising foreclosure rate in California on lenders, borrowers and renters.
In an effort to ensure borrowers are given every opportunity to avoid foreclosure, lenders are now required to make contact with the borrower, in person or on the telephone, at least 30 days before a Notice of Default can be filed. The purpose of this contact is to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. The lender must also inform the borrower of his/her right to a subsequent meeting to occur within 14 days to further discuss the situation and the potentially available options and also provide the borrower with the contact information for the United States Department of Housing and Urban Development (commonly referred to as "HUD") for available counseling and assistance.
If a lender is unable to contact the borrower, lenders must prove they undertook due diligence in attempting to contact the borrower. SB 1137 lays out specific steps as to how attempted contact should be made. These steps include, but are not limited to:
1) sending first class letter, which includes HUD contact information;
2) placing telephone call to borrower at primary telephone number at least three separate times on different days at different times during the day;
3) sending certified letter with return receipt request;
4) providing to borrower a toll-free telephone number that transfers to a live person during business hours; and
5) providing a URL link to the lender's internet website, which contains specific information related to options regarding avoiding foreclosure as well as information as to what documents to locate and review in preparation for such discussion.
When the lender is preparing the Notice of Default pursuant to California Civil Code section 2924, the lender must include a declaration that the lender has either a) successfully contacted the borrower, b) exercised due diligence, however failed to make contact with borrower, or c) report that the borrower has surrendered the property to the lender.
The required contact by lenders, as stated in Section 2 of SB 1137 applies only to loans made to borrowers between January 1, 2003 and December 31, 2007.
Lenders in need of assistance with the foreclosure procedure can contact Griswold Law for a free initial consultation.
