RED ALERT: Mortgage Bankers Strongly Oppose New Foreclosure Bill in California – SBX8 38

These guys are a bunch of farbisseners.  And I think every homeowner in America should know just what the Mortgage Bankers Association is all about.  Because these guys are no one’s friend. And they should all ech hob dir in drerd.

(Sometimes you just have to break into Yiddish to express the way you feel.  That last phrase means “go to hell.”)

In California, State Senators Corbett and Steinberg, with co-author: Senator Leno have proposed a bill to help the situation related to the tsunami of foreclosures that is only getting worse across the state and throughout the nation.

The bill, known as Senate Bill X8 38 (“SB X8 38”) was immediately and strongly opposed by the California Mortgage Bankers Association.  They apparently don’t like any of it one bit.  They’re down right offended.  Here’s what the bill would provide for:

1. Prior to filing a notice of default (for mortgages or deeds of trust recorded prior to December 31, 2009) that are secured by owner occupied residential real property (1 to 4 dwelling units), the mortgagee, trustee, beneficiary or author agent must provide a borrower with a new notice of “Rights And Foreclosure Options” and an application for a loan modification.

Oh my God.  I can totally see how this would offend anyone’s sensibilities, can’t you?  I mean, provide homeowners with a notice of “Rights and Foreclosure Options” AND an application for a loan modification?  Heaven forefend.  Zut alors!  Clearly, this must be stopped!

And these requirements would stay in effect until January 1, 2013! 2013!  Now they’ve gone too far.  That’s almost three whole years!  What kind of socialist is responsible for this outrageous thinking?

And the proposed bill doesn’t even stop there.  Check this out:

2. Prior to filing a notice of default the borrower must also be notified as to whether the application for loan modification has been approved or denied.  And if denied, the servicer MUST provide a detailed letter describing the reason for the denial.

Oh, holy crap.  Servicers can’t possibly be expected to do that.  That’s just totally Draconian and unwarrented!  Notify a borrower as to whether they’ve been approved or denied?  Who’s ever heard of anything like that happening in the banking industry?  And as far as a detailed letter explaining why the borrower has been denied, well that’s just a deal killer right there.  Even if the mortgage bankers agreed with the rest of it, there’s no way they’re ever going to agree with that provision.  If they can’t just foreclose at will, and without reason, then there won’t be any mortgage lending ever again.  That in and of itself will mean higher rates and investors won’t invest, and the world as we know it will end.

The Callifornia Mortgage Bankers Association is so concerned about the potential for this bill to pass that it sent out an emergency call-to-arms type of alert saying:

Because this bill is proposed during special session, it is not subject to the normal rigors of legislative scrutiny, and may become binding law within a matter of weeks.  CMBA is strongly opposing SBX8 38, and will be seeking to work with the author and provide feedback and input.


“Get our best lobbyist on one of our private jets right away! Someone pack a suitcase with currency, our Guide to Threatening State Legislators, the black American Express Card and a couple of clean shirts.  Oh, and tell him to take one or two of the finance MILFs along just in case.  We must stop that notification nonsense from becoming law… it’s a slippery slope… next thing you know they’ll be expecting all sorts of disclosures and you know what that can lead to.  That’s right… talk of transparency.  We let Obama do that during the campaign and it took us almost three full months to get a lid on all of that.  We’ve only got weeks, lads… get moving… make us proud!


The really sad thing is that this bill isn’t going to accomplish shit.  I think it should pass, but it’s about the most craven, flaccid and timorous response to what’s been going on in this country of which I ever could have conceived.  I have no respect for these people and they should be ashamed of themselves.

I have but one thing to say to the Mortgage Bankers Association… Kush meer in toches.  You can figure that one out without a Yiddish dictionary, right?


My good friend, and “big sister” Julie Greenfield is smarter than me, but nowhere near as funny, in my special mean spirited sort of way. She sent me an email about this and had the following to say:

“I would assume that this bill has been introduced because the California Foreclosure Prevention Act implemented by SB 1137 (which requires Servicers to contact Borrowers to “explore” alternatives to foreclosure) has been utterly useless in preventing foreclosures or effecting Modifications. This bill would require Servicers to provide a loan modification application and a disclosure of foreclosure options to a Borrower before filing an NOD. It would allow Borrowers to be awarded statutory damages for noncompliance.”

Julie was a mortgage banking attorney for years.  She’s been in-house counsel at places like Lehman Bros., Option One, and others I don’t like mentioning.  Yuck. But she’s totally reformed and today helps homeowners, serves as an expert witness, and is one of the god guys.  The best, in fact.

If you want to scream your head off about this kind of crap, contact me.  If you want to engage in any sort of intelligent dialog, you’ll have to reach out to Julie.  Tell her I said to get in touch, she won’t mind… seriously.

Julie Greenfield



Here’s a brief look at the proposed bill’s very scary language.  Below it is a link to the full mark-up:


SECTION 1.  Section 2923.4 is added to the Civil Code, to read:

2923.4.  (a) A mortgagee, trustee, beneficiary, or authorized

agent shall provide a borrower with a copy of the notice described in

subdivision (b) and an application for a loan modification and other

foreclosure avoidance options prior to filing a notice of default

pursuant to Section 2924.

This bill would, until January 1, 2013, require a mortgagee,

trustee, beneficiary, or authorized agent, prior to the filing of a

notice of default, to provide the borrower with an application for a

loan modification and other foreclosure avoidance options and a

specified notice regarding the borrower’s rights during the

foreclosure process, subject to specified exceptions. The bill would

require an unspecified state entity to make that notice available in

English and specified languages.

This bill would prohibit the mortgagee, beneficiary, or authorized

agent from combining collections activity with communication with

the borrower about foreclosure avoidance options. The bill would

delete the requirement that the notice of default contain a specified

declaration, and would instead require the mortgagee, beneficiary,

or authorized agent to, concurrently with the filing of a notice of

default, record a declaration of compliance that attests to specified

facts, and mail the borrower a notice stating that these

requirements have been met. The bill would provide that failure to

record a declaration of compliance, or recordation of a declaration

of compliance that fails to meet the specified requirements, would

constitute grounds for the borrower to bring an action to void the

foreclosure, or to recover either treble damages or statutory damages

in the amount of $10,000, whichever is greater, from the mortgagee,

trustee, beneficiary, or authorized agent, if specified conditions


The California Constitution authorizes the Governor to declare a

fiscal emergency and to call the Legislature into special session for

that purpose. The Governor issued a proclamation declaring a fiscal

emergency, and calling a special session for this purpose, on January

8, 2010.

This bill would state that it addresses the fiscal emergency

declared by the Governor by proclamation issued on January 8, 2010,

pursuant to the California Constitution.

“Important Notice Regarding Your Rights And Foreclosure Avoidance

Options: California law requires that you receive this notice of your

legal rights before the foreclosure process begins.


If you are having trouble paying your mortgage, you should contact

your loan servicer as soon as possible to discuss options for

avoiding foreclosure. Your loan servicer is the company listed on

your mortgage bills as the party to which your mortgage payment

should be sent. You are also entitled to receive a telephone call and

a letter from your loan servicer inviting you to discuss foreclosure

avoidance options.


One potential option for avoiding foreclosure is a loan

modification. Your loan servicer may be participating in the federal

loan modification program called the Home Affordable Modification

Program, which has specific requirements and guidelines. To see if

your servicer is participating, or to find out more about this

program, visit Your

servicer may also offer other loan modification programs. You may

also qualify for other options for avoiding foreclosure, including

loan refinancing, forbearance, short sale, or a deed in lieu of


With this notice, you should have received an application from

your servicer for a loan modification and other foreclosure relief.

If you request that your loan servicer consider you for a loan

modification or other alternative to foreclosure, your servicer is

required to inform you of its decision before filing a document

called a Notice of Default, which is the first step in the

foreclosure process. If your servicer denies your application, it

must send you a detailed letter describing the reasons for the



If your servicer has complied with these requirements, but has

denied your application and complied with the contact requirements

described in Section 2923.5 of the Civil Code, it may proceed with

the foreclosure process.

Notice of Default: Your loan servicer may not foreclose on your

home without filing official documents with the county recorder. You

are entitled to receive copies of those documents. The first step in

the foreclosure process is the filing of a notice of default. If your

loan servicer records a notice of default on your loan, it must mail

you a copy of that notice and must wait at least 90 days before

taking further steps to sell your home.

Notice of Sale: Once 90 days have passed from the filing of the

notice of default, your servicer may file a notice of sale. Your

servicer must post that notice of sale on your property, mail you a

copy of that notice, and wait at least 20 days before selling your

home. Your notice of sale will include the contact information of the

person or company to call if you want more information about your

sale date.

Please seek legal help if you believe that you have been denied

your legal foreclosure rights. It is illegal for any person,

including a lawyer, to charge you for helping you with a loan

modification or other effort to avoid foreclosure before providing

the services promised.”

Full Text of SBX8 38

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