Dear Attorney,

I’m about to go into foreclosure. So is my neighbor. We’ve heard there are new foreclosure laws and we’d like to know what they are. Please advise.

Judy, Temecula

Dear Judy,

The California Legislature passed Senate Bill No 1137 last July and became effective Sept. 8.

The new law applies to residential mortgages made between Jan. 1, 2003, and Dec. 31, 2007, and it expires on Jan. 1, 2013.

The bill does include substantial changes to California foreclosure laws.

For instance, it used to be that recording a Notice of Default was the first step in a foreclosure.

Now the law requires lenders to contact the homeowner to explore options to avoid foreclosure. It actually says that.

The lender cannot record the Notice of Default now until 30 days after that contact has been made.

Also, the lender must be sent to the homeowner providing them with a toll free number to call a HUD-certified counseling agency.

The lender must make three attempts to call the homeowner at different times on different days and they cannot use one of those annoying automated callers to do so.

If the homeowner picks up the phone, there has to be a real live person on the other end.

If the lender is unable to reach the homeowner or the homeowner doesn’t respond within two weeks, the lender has to send a certified letter to the homeowner.

The lender has to provide a toll free number that will be answered by someone with a pulse during business hours.

The lender also Advertisement

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There are exceptions to these requirements, though – none of them apply if the homeowner has filed bankruptcy, contracted with a firm whose sole purpose is to help them delay the foreclosure when their intent is to abandon the property or the homeowners have already vacated the premises.

The new law encourages lenders to modify home loans in default by requiring lenders to "maximize net present value under their pooling and servicing agreements is owed to all parties in a loan pool, not to any particular parties…"

It also says that a servicer is acting in the best interests of all parties if it agrees to modify a loan when the results would be better than they would be in foreclosure. Hallelujah!

Even renters get greater protection under the new foreclosure laws.

Whereas the lender used to be required to give renters 30 days notice to vacate the property, they are now required to give them 60 days notice and to post notice of the foreclosure on the property.

And now lenders who foreclose are required to maintain the property.

No more green pools, which were becoming havens for West Nile Virus.

And they have to maintain the exterior of the property. If they fail to comply with this section, they can be fined up to $1,000.

We all know how much banks hate to part with money, so expect some compliance in that regard.