California Reinstates Expired Homeowner Bill of Rights Provisions

Some sections of the original California Homeowner Bill of Rights expired on January 1, 2018; but a new law reinstates many of those provisions.

In response to the foreclosure crisis, California governor Jerry Brown signed the California Homeowner Bill of Rights (HBOR) into law in 2012. Many provisions of the law—including some that servicers considered burdensome, but that provided homeowners with protections against foreclosure—expired on January 1, 2018.

Then, on September 14, 2018, Governor Brown signed Senate Bill No. 818 into law. This law permanently reinstates certain provisions of HBOR and better protects the interests of homeowners.

History of HBOR

When HBOR went into effect on January 1, 2013, the law reformed many aspects of the California foreclosure process to provide more rights to homeowners who're facing foreclosure. HBOR required, among other things, that the servicer designate a single point of contact for homeowners seeking a loan modification or other foreclosure prevention alternative. Also, once a homeowner submitted a complete loan modification application, the servicer had to stop the foreclosure while it reviewed the application. Even if the servicer denied the request, it could not foreclose until any applicable appeals period had expired (generally 30 days from the date of a written denial).

But on January 1, 2018, many provisions of HBOR expired or were replaced—and were considerably easier for servicers to follow. Among the changes, the servicer didn’t have to provide certain notices or let the borrower appeal a loan modification denial.

How Senate Bill 818 Changes HBOR

Senate Bill 818 reinstated many expired provisions, as well as amended HBOR. The newly revised and restored HBOR requires large servicers (those that foreclose on more than 175 properties per year) to comply with the following, among other things.

  • Before recording a notice of default, the servicer has to tell borrowers about the rights available to servicemembers and their dependents, including rights pertaining to interest rates and foreclosure protections, as well as inform borrowers that they can request copies of their note, deed of trust, any assignment, and payment history. (Cal. Civ. Code § 2923.55.)
  • The servicer has to halt the foreclosure process if the borrower submits a complete first lien loan modification application at least five business days before any scheduled foreclosure sale, and can’t proceed until it makes a written determination that the borrower is not eligible, and the appeal period has expired, or the borrower does not accept an offer within 14 days, or the borrower accepts an offer but defaults or breaches the modification. (Cal. Civ. Code § 2923.6).
  • The servicer has to send a written notice of denial that identifies the reasons for the denial, describes other foreclosure prevention alternatives, if available, and provides a list of steps the borrower has to take to be considered for those options. (Cal. Civ. Code § 2923.6).
  • Whenever a sale is postponed for a period of at least 10 business days, a written notice of postponement must be sent to the borrowers with the new sale date and time within five business days following the postponement. (Cal. Civ. Code § 2924).

(To get further details about HBOR and the protections it provides to borrowers facing foreclosure in California, see Special Foreclosure Protections in California.)

Effective date: September 14, 2018