Mortgages: foreclosure.

Plain English Breakdown

The candidate explanation includes a requirement for bidders to add an additional amount to their bids, which is not explicitly stated in the provided official summary or digest text.

Mortgages: Changes to Foreclosure Rules

This law modifies the eligibility criteria for bidders in trustee's sales and accelerates the repeal of certain foreclosure regulations.

What This Bill Does

• Removes prospective owner-occupants and eligible nonprofit corporations from the list of who can be an 'eligible bidder' in a trustee’s sale.
• Limits the provisions to only apply to trustee’s sales involving specific types of property.
• Requires bidders to include an amount equal to 1.2% of the highest bid when they submit their bids.
• Moves up the date when certain rules about bundling properties for sale will no longer be in effect from January 1, 2031, to January 1, 2027.

Who It Names or Affects

• People who want to buy homes during foreclosure sales.
• Nonprofit housing organizations involved in buying foreclosed homes.
• Trustees managing the sale of properties under a power of sale clause.

Terms To Know

Eligible bidder

A person or organization that is allowed to bid on property during a foreclosure sale according to specific rules.

Trustee’s sale

The process of selling property when the owner cannot pay back a loan, as agreed in a deed of trust or mortgage.

Limits and Unknowns

• Does not specify what happens to properties purchased by nonprofits after January 1, 2027.
• Does not provide details on how the changes will affect current foreclosure processes.

Official Summary Text

AB 1957, as amended, Pacheco.
Mortgages: foreclosure.
Existing law provides that a trustee’s sale of property under a power of sale contained in a deed of trust or mortgage on real property containing one to 4 residential units is not final until the earliest of various time periods. Existing law provides specified eligible bidders, defined to include prospective owner-occupants and eligible nonprofit corporations with certain attributes, various rights in connection with those sales, and sets forth procedures for eligible bidders to submit bids after those sales. Existing law authorizes the Attorney General, a county counsel, a city attorney, or a district attorney to bring an action to enforce these provisions as specified.
This bill would remove prospective owner-occupants and eligible nonprofit corporations
from the definition of “eligible bidder.” The bill would apply the provisions described above only to trustee’s sales of eligible property, as defined. The bill would require eligible bidders who submit bids pursuant to the procedures described above to include in the bid an amount equal to 1.2% of the last and highest bid at the trustee’s sale. The bill would make conforming changes.
Existing law generally regulates foreclosures of real property under the power of sale contained in the mortgage or deed of trust. Existing law prohibits a trustee from bundling properties for the purpose of sale, instead requiring each property to bid on separately, unless the deed of trust or mortgage requires otherwise.
Existing law imposes certain restrictions on a trustee’s sale of real property containing one to 4 residential units. Specifically, existing law provides tenants of that property, prospective owner-occupants, and specified nonprofit housing entities 45 days to purchase the property before a sale to any other bidder becomes final, as specified. If one of those specified nonprofit housing entities purchases the property pursuant to that provision, existing law requires the property to be subject to a recorded covenant that
requires the property be sold at an affordable housing cost or rented at an affordable rent for lower income households, as specified.
Under existing law, the above-described prohibition on bundling properties for sale and the above-described provisions relating to the sale of those specified residential properties are repealed on January 1, 2031.
This bill would instead repeal these provisions on January 1, 2027. The bill would also make technical conforming changes.

Current Bill Text

Download Bill PDF