Law Alert! New California law amends loan foreclosure procedures

 

On July 8, 2008, California signed into law SB 1137 as urgency legislation, effective immediately. The new law

  1. (1) establishes detailed procedures as part of the foreclosure process requiring lenders to contact homeowners in default on their mortgages to assess the homeowner's financial situation and explore options for avoiding foreclosure;
  2. (2) requires a purchaser to maintain under the building codes vacant residential property purchased at a foreclosure sale and authorizes local governmental entities to impose civil fines and penalties for violations of up to $1000 per day; and
  3. (3) gives a tenant or subtenant, in possession of a rental housing unit at the time the property is sold in foreclosure, 60 days instead of 30 days to vacate the unit.

Note, the legislature declared that this act was necessary for "the immediate preservation of the public peace, health, or safety" of California communities, citing the underlying policy of the law to "stabilize and protect the state and local economies and housing market." Although most provisions are effective immediately, some provisions become operative 60 days after the effective date of the law (i.e., 60 days after July 8, 2008). Nearly all provisions sunset by January 1, 2013.