Last week the California Association of REALTORS® (C.A.R.) reported the adoption of a new law that dictates how foreclosed properties must be maintained and managed and requires lenders to provide options for home owners facing foreclosure.
According to C.A.R. the following two provisions of Senate Bill 1137 go into effect immediately:
- Foreclosed Property Maintenance: According to C.A.R. analysis of the new legislation, anyone who acquires a property through foreclosure must maintain the exterior if the property is vacant. This includes maintaining landscaping that could diminish the value of surrounding properties; securing the property against trespassers or squatters; and preventing mosquitoes from breeding in standing water. Failure to comply could result in fines up to $1,000 per day as long as the owner has been given notice and an opportunity to remedy the violation. According to C.A.R. a violator must be given at least 14 days to begin, and 30 days to complete, such remediation before a fine can be assessed.
- Eviction Notice: This law will require that the lender, trustee, or authorized agent posting a notice of sale of a foreclosed unit occupied by a tenant must also post and mail a notice of the tenant's right to a 60-day eviction notice from the new owner. This requirement to notify tenants of their rights applies to loans secured by residential real property where the borrower has a different billing address than the property address.
In September a third provision of this law will go into effect:
- Foreclosure Options: The new law will require that a lender must contact a borrower in default and discuss options to foreclosure at least 30 days prior to filing a notice of default. According to C.A.R. a lender must contact the borrower in person or by telephone, or satisfy other "due diligence" requirements for contacting a borrower. The lender must inform the borrower of their right to request a meeting with the lender and must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency. A subsequent notice of default must include the lender's declaration that it has contacted the borrower, tried with due diligence to contact the borrower, or the borrower has surrendered the property. According to C.A.R. the requirement to contact borrowers applies to loans secured by owner-occupied residences made from 2003 to 2007.
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