On September 20, the Governor of California signed AB 2424 (the “Act”), which enacts new mortgage foreclosure procedures. The Act mandates mortgage servicers, trustees and beneficiaries provide borrowers with enhanced notices and opportunities to avoid foreclosure. This includes the right for a third party — such as a family member, HUD-certified housing counselor or attorney — to receive copies of any notice of default and notice of sale. Additionally, the Act requires a 45-day postponement of foreclosure sales if the trustee receives a listing agreement or purchase agreement from the borrower at least five days before the scheduled sale date.
The Act also stipulates that the mortgagee or beneficiary must provide the fair market value of the property at least 10 days before the initial sale date, and the property cannot be sold for less than two-thirds of this value at the initial trustee’s sale. If the property remains unsold, the sale must be postponed for at least seven days before proceeding and sold thereafter to the highest bidder. These changes aim to provide borrowers with additional time and resources to avoid foreclosure and ensure properties are sold at fair market values.
