The California General Assembly is considering legislation that would require an attempt to be made to sell property via a multiple-listing service before the property could be foreclosed in certain instances.
Under current law, various requirements must be satisfied before exercising a power of sale under a mortgage or deed of trust. This includes “recording a notice of default, providing a mortgagor or trustor a copy of the recorded notice of default, providing notice of the time and place scheduled for the public auction sale of the real property and other notices related to the sale, determining the fees and expenses that may be paid from the sale, determining who may conduct the sale and act in the sale as an auctioneer for the trustee, determining the time and place where the auction sale may occur and specifying how bids may be made and accepted at the auction sale,” the Legislative Counsel’s Digest for SB 1323 states.
The Legislative Digest for SB 1323 states that the bill would “recast these provisions to require that an equity sale of property under a power of sale of a mortgage or deed of trust must be made by a real estate licensee, and by publicly listing the property for sale on a multiple listing service with an initial list price at the property’s appraised value. If the trustee receives multiple qualifying offers, the bill would require the trustee to make counter offers to each offer or and comply with prescribed procedures. The bill would require the trustee to reduce the listing price of the property if the trustee does not receive a qualifying offer within 30 days of listing the property, and every 30 days thereafter.
Additionally, the Legislative Digest states the bill would “authorize the trustee to sell the property by public auction if the trustee does not receive a qualifying offer within 30 days of the 4th price decrease, or if a price decrease will result in the property’s listed price falling below the equity threshold. The bill would also make conforming changes to the various requirements to be satisfied before exercising a power of sale under a mortgage or deed of trust and would impose liability for damages resulting from specified violations of these provisions.”
The bill is opposed by the California Mortgage Bankers Association and the California Land Title Association (CLTA).
CLTA stated it is “opposed to the measure for numerous reasons, including that it will have a detrimental effect on California’s housing market by increasing barriers to homeownership for all Californians, and will add to neighborhood blight by creating extensive delays and litigation within the foreclosure process.”