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AB-1639 Facilitated Mortgage Workout Program.(2009-2010)



Current Version: 05/28/10 - Amended Assembly

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AB1639:v96#DOCUMENT

Amended  IN  Assembly  May 28, 2010
Amended  IN  Assembly  April 12, 2010
Amended  IN  Assembly  March 15, 2010

CALIFORNIA LEGISLATURE— 2009–2010 REGULAR SESSION

Assembly Bill
No. 1639

Introduced  by  Assembly Member Nava, Bass, Lieu
 (Coauthor(s): Assembly Member Monning)
 (Coauthor(s): Senator DeSaulnier)

January 11, 2010

An act to amend Section 2923.5 of, and to add Article 1.7 (commencing with Section 2946) to Chapter 2 of Title 14 of Part 4 of Division 3 of, the Civil Code, relating to mortgages.


LEGISLATIVE COUNSEL'S DIGEST


AB 1639, as amended, Nava. Mediated Facilitated Mortgage Workout Program.
Existing law requires that, upon a breach of the obligation of a mortgage or transfer of an interest in property, the trustee, mortgagee, or beneficiary record a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mail the notice of default to the mortgagor or trustor, among other acts required prior to exercising a power of sale in a nonjudicial foreclosure proceeding.
This bill would establish, contingent upon receipt of federal funding for all costs, and only until January 1, 2014, the Mediated Facilitated Mortgage Workout (MMW) (FMW) Program. The program would be a process whereby borrowers and lenders would engage in mediation conciliation sessions for purposes of developing a loan modification plan. These provisions would apply, except as specified, if the loan originated prior to January 1, 2009, the loan is the 1st mortgage or deed of trust secured by the property, the property is occupied by the borrower as the borrower’s principal residence, and the unpaid principal balance is not more than $729,750. The program would require that specified information regarding the MMW FMW Program be included with the notice of default sent to a borrower, as defined, on a loan secured by residential real property of one- to 4-family dwelling units that is the primary residence of the borrower, as specified. The bill would require that this additional notice be recorded in the office of the county recorder. By expanding the duties of county recorders, the bill would impose a state-mandated local program.
The bill would provide for an administrator of the program who would be appointed by the Governor and confirmed by the Senate. The program would require a borrower who elects to participate in the program to complete a specified form and return the form to the administrator of the program not later than 30 calendar days after receiving the notice of default. The program would require the borrower to submit other information to the administrator within 10 15 days of requesting to participate in the program, including tax returns, income verification, and a specified deposit of funds, and a letter describing the borrower’s financial hardship, as specified. The program would require a borrower who elects to participate in the program to deposit with the administrator 50% of the current mortgage payment each month during participation in the MMW FMW Program. The bill would also prohibit a mortgagee, trustee, beneficiary, or authorized agent from reporting negative credit information to a credit reporting agency about a borrower who has completed the MMW FMW Program and accepted a mortgage loan modification. The bill would impose various administrative fees, and a specified minimum deposit, payable by the mortgagee, trustee, beneficiary, or authorized agent, or by the borrower, as specified, who participate participates in the MMW FMW Program.
The bill would also provide that the timelines set forth in the provision governing the exercise of the power of sale, as specified, would be suspended until the completion of the program, as specified.
The bill would require the administrator of the program, among other duties, to implement rules and standards for selecting qualified mediators neutral conciliation officers and to develop standards for forms and reports required to implement the program. The bill would also require the administrator, upon receipt of a borrower’s form whereby he or she elects to participate in the program, to randomly appoint nominate an individual to serve as mediator a neutral conciliation officer from a list of qualified mediators neutral conciliation officers in the county in which the property is located. The bill would establish the compensation for a mediator neutral conciliation officer who provides his or her services to the program and require a mediator neutral conciliation officer to use reasonable efforts to ensure that each MMW FMW Program is completed within 60 calendar days of the mediator’s neutral conciliation officer’s appointment nomination. The bill would require the mediator neutral conciliation officer to prepare a final report, as specified. The bill would also require, only until January 1, 2015, the administrator to report quarterly to the Legislature regarding the MMW FMW Program, as specified. The bill would also require each mortgagee, trustee, beneficiary, or authorized agent participating in the program to post specified data about its loans on its Internet Web site.
These provisions would become operative only upon the issuance of a notice from the administrator to the Governor and specified other legislative leaders, and the posting of the notice on an Internet Web site, declaring that the administrator has the capacity to make the program available to any borrower in every county who desires to participate.
The bill would also make related and technical changes.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 2923.5 of the Civil Code is amended to read:

2923.5.
 (a) (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after initial contact is made as required by paragraph paragraphs (2) and (3) or 30 days after satisfying the due diligence requirements as described in subdivision (g) (f).
(2) (A) Except as provided under subdivisions (c) and (d) of Section 2946.1, a mortgagee, trustee, beneficiary, or authorized agent shall inform the borrower, via certified mail accompanying a notice of delinquency, that the borrower may request to participate in the Facilitated Mortgage Workout Program under Article 1.7 (commencing with Section 2946). The contents of this notice and accompanying documents shall comply with the requirements of Section 2946.3.
(B) (i)  A borrower shall have 30 days from receipt of the notice to request to participate in the Facilitated Mortgage Workout Program.
(ii) If a borrower chooses to participate in the Facilitated Mortgage Workout Program, the requirements in paragraph (3) shall be deemed to be completed.
(iii) A notice of default may not be filed while the borrower participates in the Facilitated Mortgage Workout Program under Article 1.7 (commencing with Section 2946).

(2)

(3) A mortgagee, trustee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee, trustee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, trustee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower’s financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically.
(b) A notice of default filed pursuant to Section 2924 shall include a declaration that the mortgagee, trustee, beneficiary, or authorized agent has contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required pursuant to subdivision (h) (g).
(c) If a mortgagee, trustee, beneficiary, or authorized agent had already filed the notice of default prior to the enactment of this section and did not subsequently file a notice of rescission, then the mortgagee, trustee, beneficiary, or authorized agent shall, as part of the notice of sale filed pursuant to Section 2924f, include a declaration that either:
(1) States that the borrower was contacted to assess the borrower’s financial situation and to explore options for the borrower to avoid foreclosure.
(2) Lists the efforts made, if any, to contact the borrower in the event no contact was made.
(d) A mortgagee’s, trustee’s, beneficiary’s, or authorized agent’s loss mitigation personnel may participate by telephone during any contact required by this section.

(e)For purposes of this section, a “borrower” shall include a mortgagor or trustor.

(f)

(e) A borrower may designate, with consent given in writing, a HUD-certified housing counseling agency, attorney, or other advisor to discuss with the mortgagee, trustee, beneficiary, or authorized agent, on the borrower’s behalf, the borrowers borrower’s financial situation and options for the borrower to avoid foreclosure. That contact made at the direction of the borrower shall satisfy the contact requirements of paragraph (2) of subdivision (a). Any loan modification or workout plan offered at the meeting by the mortgagee, trustee, beneficiary, or authorized agent is subject to approval by the borrower.

(g)

(f) A notice of default may be filed pursuant to Section 2924 when a mortgagee, trustee, beneficiary, or authorized agent has not contacted a borrower as required by paragraph (2) of subdivision (a) provided that the failure to contact the borrower occurred despite the due diligence of the mortgagee, trustee, beneficiary, or authorized agent. For purposes of this section, “due diligence” shall require and mean all of the following:
(1) A mortgagee, trustee, beneficiary, or authorized agent shall first attempt to contact a borrower by sending a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.
(2) (A) After the letter has been sent, the mortgagee, trustee, beneficiary, or authorized agent shall attempt to contact the borrower by telephone at least three times at different hours and on different days. Telephone calls shall be made to the primary telephone number on file.
(B) A mortgagee, trustee, beneficiary, or authorized agent may attempt to contact a borrower using an automated system to dial borrowers, provided that, if the telephone call is answered, the call is connected to a live representative of the mortgagee, trustee, beneficiary, or authorized agent.
(C) A mortgagee, trustee, beneficiary, or authorized agent satisfies the telephone contact requirements of this paragraph if it determines, after attempting contact pursuant to this paragraph, that the borrower’s primary telephone number and secondary telephone number or numbers on file, if any, have been disconnected.
(3) If the borrower does not respond within two weeks after the telephone call requirements of paragraph (2) have been satisfied, the mortgagee, trustee, beneficiary, or authorized agent shall then send a certified letter, with return receipt requested.
(4) The mortgagee, trustee, beneficiary, or authorized agent shall provide a means for the borrower to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours.
(5) The mortgagee, trustee, beneficiary, or authorized agent has posted a prominent link on the homepage of its Internet Web site, if any, to the following information:
(A) Options that may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure, and instructions to borrowers advising them on steps to take to explore those options.
(B) A list of financial documents borrowers should collect and be prepared to present to the mortgagee, trustee, beneficiary, or authorized agent when discussing options for avoiding foreclosure.
(C) A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure with their mortgagee, trustee, beneficiary, or authorized agent.
(D) The toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

(h)

(g) Subdivisions (a), (c), and (g) (f) shall not apply if any of the following occurs:
(1) The borrower has surrendered the property as evidenced by either a letter confirming the surrender or delivery of the keys to the property to the mortgagee, trustee, beneficiary, or authorized agent.
(2) The borrower has contracted with an organization, person, or entity whose primary business is advising people who have decided to leave their homes on how to extend the foreclosure process and avoid their contractual obligations to mortgagees, trustees, or beneficiaries.
(3) A case has been filed by the borrower under Chapter 7, 11, 12, or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case, or granting relief from a stay of foreclosure.
(4) The borrower has completed participation in the Facilitated Mortgage Workout Program, and participation did not result in a mortgage loan modification, or other result mutually agreed to by the borrower and the mortgagee, trustee, beneficiary, or authorized agent.

(i)

(h) This section shall apply only to mortgages or deeds of trust recorded from January 1, 2003, to December 31, 2007, inclusive, that are secured by owner-occupied residential real property containing no more than four dwelling units. For purposes of this subdivision, “owner-occupied” means that the residence is the principal residence of the borrower as indicated to the lender in loan documents.
(i) For purposes of this section, a “borrower” includes a mortgagor or trustor.
(j) This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.

SEC. 2.

 Article 1.7 (commencing with Section 2946) is added to Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code, to read:
Article  1.7. Facilitated Mortgage Workout Program

2946.
 For purposes of this article:
(a) “Administrator” means the administrator of the Facilitated Mortgage Workout (FMW) Program.
(b) “Borrower” includes a mortgagor, trustor, or owner of the residential real estate property described in the notice of default sent pursuant to Section 2924.
(c) “Meaningful participation” shall be defined as the following:
(1) Attendance at all conciliation sessions.
(2) Presentation of all required documents and payment of all required fees.
(d) “Residential real estate property” means residential real property consisting of one- to four-family dwelling units. Owner-occupied condominiums shall be considered residential real estate property within the scope of this program, regardless of the number of family dwelling units in any single homeowners’ association, complex, or community.

(a) This article shall apply if all of the following conditions exist:

2946.1.
 (1) The loan originated prior to January 1, 2009.
(2) The loan at issue is the first mortgage or deed of trust secured by the property.
(3) The loan is secured by residential real property that is occupied by the borrower as the borrower’s principal residence.
(4) The unpaid principal balance of the mortgage is not more than seven hundred twenty-nine thousand, seven hundred fifty dollars ($729,750).
(5) A notice of default has been filed on the property pursuant to Section 2924 or the borrower has received notice pursuant to paragraph (2) of subdivision (a) of Section 2923.5.
(b) Chapter 2 (commencing with Section 1115) of Division 9 and Section 703.5 of the Evidence Code shall apply to a conciliation session conducted pursuant to this article, except that, in the event of a conflict, the specific provisions of this article shall prevail.
(c) This article shall not apply if a mortgagee, trustee, beneficiary, or authorized agent has either of the following:
(1) Written evidence documenting a personal face-to-face meeting with the borrower for the purpose of discussing loan modification or foreclosure avoidance options.
(2) Written evidence documenting that the borrower has been offered a loan modification that would establish a ration of the borrower’s housing-related debt to the borrower’s gross income of 38 percent or less through some combination of the following features:
(i) An interest rate reduction for a fixed term of at least five years.
(ii) An extension of the mortgage term, not to exceed 40 years from the original date of the loan.
(iii) Deferral of a portion of the principal amount of the unpaid principal balance until maturity of the loan.
(iv) Reduction of the principal balance.
(v) A loan modification offer consistent with the Home Affordable Modification Program.
(vi) Other alternatives that reduce the borrower’s monthly payment.
(d) This article shall not apply if the borrower has filed a petition for bankruptcy and the proceedings have not been finalized.

2946.2.
 (a) The administrator shall be appointed by the Governor and confirmed by the Senate.
(b) The administrator shall do all of the following in order to carry out this article:
(1) Implement rules and standards for choosing qualified neutral conciliation officers.
(2) Implement rules and standards for ensuring the actual impartiality and appearance of impartiality by qualified neutral conciliation officers based on comparable professional standards for mediators.
(3) Implement rules and standards for the removal of neutral conciliation officers for good cause.
(4) Develop standards for forms and reports, as may be required to implement the FMW Program.
(5) Require any additional training for neutral conciliation officers to meet the goals of this article.
(6) Collect all moneys and fees as may be required to implement this program.

2946.3.
 (a) A notice of default sent pursuant to Section 2924 to a borrower of residential real property that is subject to this chapter shall include all of the following:
(1) (A) A separate notice, entitled “Opportunity to Meet Face-to-Face with Your Lender/Loan Servicer and a Neutral Professional in a Facilitated Mortgage Workout Program,” advising the borrower of his or her right to participate in an FMW Program to explore options for the borrower to avoid foreclosure. This notice and all of the documents required to be included with the notice of default shall be printed in large, boldface type and shall be printed in English, Spanish, Chinese, Tagalog, and Korean. This separate notice shall be sent to all borrowers of record. This notice shall be recorded, in addition to the notice of default, in the office of the appropriate county recorder.
(B)  The notice described in subparagraph (A) shall do all of the following:
(i) Explain the requirements for participation in the FMW Program and advise the borrower of the procedures that are to be followed to make an election to participate in the program.
(ii) Include the name, address, telephone number, facsimile number, and e-mail address of the mortgagee, trustee, beneficiary, or authorized agent, and the administrator of the FMW Program, as well as ten or more independent local housing counseling agencies that are approved by the United States Department of Housing and Urban Development. The counseling agency shall not receive any compensation, either directly or indirectly, from the mortgagee, trustee, beneficiary or authorized agent, or from any other person or entity involved in originating or servicing the mortgage. This subdivision does not prevent a counseling agency from receiving financial assistance that is provided by the lender as part of charitable or philanthropic activities.
(2) Three copies of an election form, as developed and approved by the administrator of the FMW Program, upon which the borrower may indicate his or her election to either participate in, or waive participation in, the FMW Program.
(3) Two separate envelopes, one addressed to the mortgagee, trustee, beneficiary, or authorized agent and one addressed to the administrator of the FMW Program, for use by the borrower to advise the mortgagee, trustee, beneficiary, or authorized agent and the administrator of the borrower’s election to participate in the FMW Program.
(b) This section shall not apply to borrowers who have previously completed the FMW Program with respect to the loan at issue.

2946.4.
 (a) If the borrower elects to participate in the FMW Program, the borrower shall complete the election form and mail a copy of the election form to the mortgagee, trustee, beneficiary, or authorized agent and to the administrator not later than 30 calendar days after receipt of the notice of default. The election form shall be sent by certified mail, return receipt requested.
(b) The administrator may allow the borrower to elect to participate in the FMW Program by completing the election form on an Internet Web site, by submitting the form via e-mail, or by completing the form over the telephone. The administrator shall maintain a platform that responsibly records and gives the borrower a hard copy record of his or her election to participate in the FMW Program and that record shall be in compliance with recognizable standards for recording and storing critical electronic information.
(c) Within 15 days of requesting to participate in the FMW Program, the borrower shall submit all of the following to the administrator:
(1) Tax returns filed for the prior tax year, if the borrower was required to file a tax return for that year.
(2) Payroll or other income verification for the previous two months.
(3) First deposit of funds in accordance with Section 2946.7.
(4) A letter describing the financial hardship that prevents the borrower from being able to afford his or her current mortgage payment.
(d) Within 15 days of receiving notice that the borrower has elected to participate in the FMW Program, the mortgagee, trustee, beneficiary, or authorized agent shall submit all of the following documents to the administrator:
(1) The applicable pooling and service agreement, if that agreement limits or prohibits modification.
(2) Documentary evidence of the terms of the loan and the borrower’s payment history.
(3) A recent appraisal report on the property.
(4) Documentary evidence of current ownership or chain of custody of the mortgage note.
(5) The net present value formula that the mortgagee, trustee, beneficiary, or authorized agent uses.
(e) All documents submitted by the parties shall be kept confidential by the administrator and the neutral conciliation officer.
(f) When a borrower has elected to participate in the FMW Program, the timelines set forth in Section 2924 shall be suspended for the duration of, and no further action may be taken to exercise the power of sale until the completion of, the FMW Program, as evidenced by the neutral conciliation officer’s final report as described in Section 2946.14.

2946.5.
 A neutral conciliation officer shall be compensated by the administrator, from payment made by the parties in advance of the conciliation session, for his or her services at a reasonable hourly rate to be determined by the administrator. This compensation shall initially be paid by the mortgagee, trustee, beneficiary, or authorized agent and, in the event that the mortgage loan is modified, the borrower shall reimburse the mortgagee, trustee, beneficiary, or authorized agent for one-half of the total compensation paid to the neutral conciliation officer. The borrower’s share of the neutral conciliation officer’s fees may be added to the principal balance of the loan if requested by the borrower. If the parties’ efforts to modify the loan fail and the property is sold, the mortgagee, trustee, beneficiary, or authorized agent, alone, shall be responsible for the expense of the neutral conciliation officer’s fees.

2946.6.
 (a) Upon receipt of a borrower’s form whereby he or she elects to participate in the FMW Program the administrator shall nominate an individual from a list of qualified neutral conciliation officers available to serve in the county in which the property is located to act as the neutral conciliation officer for the borrower and the mortgagee, trustee, beneficiary, or authorized agent. The neutral conciliation officer shall contact the parties within 15 days of his or her nomination to disclose any information potentially affecting his or her impartiality, including any past, present, and currently expected interests, relationships, and affiliations of a person, professional, or financial nature, and provide the parties an opportunity to object to the nomination within 15 days. If neither party objects, the neutral conciliation officer shall promptly schedule the first conciliation session of the FMW Program. If the parties are unable to agree on a neutral conciliation officer after two nominees, the administrator shall randomly appoint a neutral conciliation officer from the list of qualified individuals.
(b) (1) The administrator shall notify the mortgagee, trustee, beneficiary, or authorized agent of the borrower’s election to participate in the FMW Program within 15 days of receipt of the borrower’s election to participate in the program. The mortgagee, trustee, beneficiary, or authorized agent shall submit an administrative fee of five hundred dollars ($500), as well as a minimum deposit in the amount of six hundred dollars ($600) to be applied toward conciliation fees and all required documentation, to the administrator within 10 days of the administrator’s notification of the borrower’s election. In the event that the mortgage loan is modified, as part of the modification plan, the borrower shall reimburse the mortgagee, trustee, beneficiary, or authorized agent one-half of the total administration and conciliation fees incurred in the matter as partial reimbursement according to the same terms as set forth in Section 2946.5. In the event that the parties’ efforts to modify the loan fail and the property is sold by the mortgagee, trustee, beneficiary, or authorized agent, the mortgagee, trustee, beneficiary, or authorized agent, alone, shall be responsible for the program fees.
(2) Failure of the mortgagee, trustee, beneficiary, or authorized agent to deposit the fees within 10 days of the administrator’s notification of the borrower’s election to participate shall result in a stay of foreclosure proceedings and delay of the FMW Program until the fees are deposited with an additional penalty of one hundred dollars ($100) per day for each day after the deadline that the fees have not been deposited.

2946.7.
 Any borrower who elects to participate in the FMW Program shall deposit with the administrator 50 percent of the current mortgage payment every month during participation in the FMW Program. The first monthly deposit shall be made within 10 days after requesting participation in the FMW Program. If the borrower fails to comply with these terms, the borrower’s election shall be deemed to be canceled and the FMW Program shall be deemed to be completed.

2946.8.
 A borrower who participates in the FMW Program shall not be required, as a condition of participation, or as a condition of acceptance of a modification, to waive any rights and remedies that may otherwise be available.

2946.9.
 Unless a mutually agreeable resolution is achieved sooner, the parties shall meaningfully participate in one or more facilitated workout sessions for no less than four hours. By mutual agreement, the parties may extend their participation beyond the minimum period set forth in this section. Upon the completion of the minimum period or other agreed period under this section, the parties may choose to continue their participation or terminate their efforts.

2946.10.
 (a) The borrower or borrowers and mortgagee, trustee, beneficiary, or authorized agent shall attend the FMW Program sessions in person.
(b) In the event of exigent circumstances, the administrator may allow either party to be represented by a person with a power of attorney or other written authorization to represent and bind the party. In addition, each party may be represented by an attorney or housing counselor.
(c) No request for a continuance of a facilitated workout session may be granted, except upon showing of exceptional circumstances. A request shall be made to the administrator, at least 15 days prior to the scheduled conciliation session detailing the exceptional circumstances that require the continuance.
(d) The borrower and mortgagee, trustee, beneficiary, or authorized agent may agree on the terms of a loan modification which may include any or all of the following features:
(1) An interest rate reduction for a fixed term of at least five years.
(2) An extension of the mortgage term, not to exceed 40 years from the original date of the loan.
(3) Deferral of a portion of the principal amount of the unpaid principal balance until maturity of the loan.
(4) Reduction of the principal balance.
(5) Compliance with a federally mandated loan modification program.
(6) Other alternatives that may reduce the borrower’s monthly payment to 31 percent or less of the borrower’s debt-to-income ratio and that are designed to meet long-term sustainability for the borrower.
(7) Nothing in this section shall be construed to prevent a creditor from offering or accepting alternatives in writing to foreclosure, such as a short sale or deed-in-lieu of foreclosure, but only if the borrower requests these alternatives, rejects a loan modification offered pursuant to this section, or does not qualify for a loan modification pursuant to this section.
(e) If a borrower has failed to meaningfully participate in the FMW Program, the FMW Program shall be suspended. If the borrower cures the noncompliance to the satisfaction of the administrator within 10 days of notice of failure to comply, the administrator shall rescind suspension of the conciliation sessions and the FMW Program will be continued. If the borrower fails to cure noncompliance, the FMW program shall be suspended and unused conciliation fees shall be refunded to the mortgagee, trustee, beneficiary, or authorized agent.
(f) If a mortgagee, trustee, beneficiary, or authorized agent fails to meaningfully participate in the FMW Program, the FMW Program shall be suspended. During the suspension of the program for failure to meaningfully participate, the mortgagee, trustee, beneficiary, or authorized agent may not pursue further foreclosure actions until such time as the mortgagee, trustee, beneficiary, or authorized agent cures the noncompliance.

2946.11.
 A mortgagee, trustee, beneficiary, or authorized agent shall not report negative credit information about a borrower to a credit reporting agency if the borrower has successfully participated in the FMW Program and a mortgage loan modification has been accepted.

2946.12.
 A borrower shall not be responsible for fees, late payment charges, or other monetary penalties while the FMW Program or final report is pending.

2946.13.
 The neutral conciliation officer shall use reasonable efforts to ensure that each FMW Program is completed within 60 calendar days of the conciliator’s nomination.

2946.14.
 (a) The neutral conciliation officer’s final report shall be submitted to the administrator within 10 days of completion of the conciliation session and shall state whether a mutually acceptable resolution was reached between the parties.
(b) The final report shall be sent by first-class mail or via electronic means to the borrower, mortgagee, trustee, beneficiary, or authorized agent, and the administrator and shall include a statement that the FMW Program has been completed.

2946.15.
 (a) (1) The administrator shall report quarterly to the Legislature regarding the performance of the FMW Program, including all of the following information:
(A) The number of homeowners who attend a conciliation session prior to notice of default.
(B) The number of homeowners who attend a conciliation session after receiving a notice of default.
(C) The number of conciliation sessions suspended because of lack of meaningful participation by the borrower.
(D) The number of conciliation sessions suspended because of lack of meaningful participation on the part of the mortgagee, trustee, beneficiary, or authorized agent.
(E) The number of conciliation sessions that result in a loan modification.
(F) The number of conciliation sessions that result in a solution other than a loan modification.
(2) (A) The requirement for submitting a report pursuant to paragraph (1) is inoperative on January 1, 2015, pursuant to Section 10231.5 of the Government Code.
(B) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
(b) Each mortgagee, trustee, beneficiary, or authorized agent participating in the FMW Program shall post public data reports on a quarterly basis on its Internet Web site detailing the following:
(1) The number of loans that have been modified through the FMW Program and the type of modification.
(2) The final disposition of loans that were in the FMW Program but not modified.
(3) The final disposition of loans that did not go through in the FMW Program.
(A) The type of loans in a portfolio serviced by others, delineated by prime, subprime, and nontraditional.
(B) The loans in a portfolio or serviced by others that are securitized.
(C) The number of home retention actions.
(D) Redefault rates for portfolio loans and loans serviced for others.
(E) The default rates for portfolio loans and loans serviced for others.
(F) The default rates of loans modified in 2008 by changes in payment.
(G) Newly initiated home retention actions compared with foreclosure actions.
(H) Completed foreclosures and other home forfeiture actions.
(I) The overall portfolio performance by percentage.
(J) The performance of government guaranteed loans, by percentage.
(K) The performance of government sponsored enterprise loans, by percentage.
(L) Seriously delinquent mortgages, by percentage.
(M) Home Affordable Modification Program actions by investor and risk category.
(N) Changes in loan terms made by modifications during 2009.
(O) Changes in monthly principal and interest payments owing to modification, by the number of modifications.
(P) The number of modified loans, 30 or more days delinquent.
(Q) The number of modified loans, 60 or more days delinquent.
(R) The number of modified loans, 90 or more days delinquent.

2946.16.
 Nothing in this article shall prevent a mortgagee, trustee, beneficiary, or authorized agent from requesting mediation under the FMW program.

2946.17.
 This article shall become inoperative on January 1, 2014.

SEC. 3.

 The provisions imposing obligations upon borrowers, mortgagees, trustees, beneficiaries, and authorized agents under this act shall become operative only upon issuance of a notice to the Governor by the administrator declaring that the rules, standards, forms, training, lists, collection, and payment provisions required by Section 2946.2 have been completed such that the administrator has the capacity to make the program available to any borrower in every county of the state who desires to participate. The notice required under this section shall be sent to the Chair of the Assembly Committee on Judiciary and the Chair of the Senate Committee on Judiciary, as well as the Chair of the Assembly Committee on Banking and Finance and the Chair of the Senate Committee on Banking, Finance and Insurance, and posted on the Internet Web site of the administrator.

SEC. 4.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

SEC. 5.

 This act shall become operative only upon the receipt of federal funding for all costs.
SECTION 1.Section 2923.5 of the Civil Code is amended to read:
2923.5.

(a)(1)A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after initial contact is made as required by paragraphs (2) and (3) or 30 days after satisfying the due diligence requirements as described in subdivision (f).

(2)(A)A mortgagee, trustee, beneficiary, or authorized agent shall inform the borrower, via certified mail accompanying a notice of delinquency, that the borrower may request to participate in the Mediated Mortgage Workout Program under Article 1.7 (commencing with Section 2946). The notice shall include, in boldface type, the telephone number, e-mail address, and Internet Web site for the administrator of the Mediated Mortgage Workout Program.

(B)(i)A borrower shall have 30 days from receipt of the notice to request participation in the Mediated Mortgage Workout Program.

(ii)If a borrower chooses to participate in the Mediated Mortgage Workout Program, the requirements in paragraph (3) shall be deemed to be completed.

(iii)A notice of default may not be filed while the borrower participates in the Mediated Mortgage Workout Program under Article 1.7 (commencing with Section 2946).

(3)A mortgagee, trustee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee, trustee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, trustee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower’s financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically.

(b)A notice of default filed pursuant to Section 2924 shall include a declaration that the mortgagee, trustee, beneficiary, or authorized agent has contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required pursuant to subdivision (g).

(c)If a mortgagee, trustee, beneficiary, or authorized agent had already filed the notice of default prior to the enactment of this section and did not subsequently file a notice of rescission, then the mortgagee, trustee, beneficiary, or authorized agent shall, as part of the notice of sale filed pursuant to Section 2924f, include a declaration that either:

(1)States that the borrower was contacted to assess the borrower’s financial situation and to explore options for the borrower to avoid foreclosure.

(2)Lists the efforts made, if any, to contact the borrower in the event no contact was made.

(d)A mortgagee’s, trustee’s, beneficiary’s, or authorized agent’s loss mitigation personnel may participate by telephone during any contact required by this section.

(e)A borrower may designate, with consent given in writing, a HUD-certified housing counseling agency, attorney, or other adviser to discuss with the mortgagee, trustee, beneficiary, or authorized agent, on the borrower’s behalf, the borrower’s financial situation and options for the borrower to avoid foreclosure. That contact made at the direction of the borrower shall satisfy the contact requirements of paragraph (2) of subdivision (a). Any loan modification or workout plan offered at the meeting by the mortgagee, trustee, beneficiary, or authorized agent is subject to approval by the borrower.

(f)A notice of default may be filed pursuant to Section 2924 when a mortgagee, trustee, beneficiary, or authorized agent has not contacted a borrower as required by paragraph (2) of subdivision (a) provided that the failure to contact the borrower occurred despite the due diligence of the mortgagee, trustee, beneficiary, or authorized agent. For purposes of this section, “due diligence” shall require and mean all of the following:

(1)A mortgagee, trustee, beneficiary, or authorized agent shall first attempt to contact a borrower by sending a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

(2)(A)After the letter has been sent, the mortgagee, trustee, beneficiary, or authorized agent shall attempt to contact the borrower by telephone at least three times at different hours and on different days. Telephone calls shall be made to the primary telephone number on file.

(B)A mortgagee, trustee, beneficiary, or authorized agent may attempt to contact a borrower using an automated system to dial borrowers, provided that, if the telephone call is answered, the call is connected to a live representative of the mortgagee, trustee, beneficiary, or authorized agent.

(C)A mortgagee, trustee, beneficiary, or authorized agent satisfies the telephone contact requirements of this paragraph if it determines, after attempting contact pursuant to this paragraph, that the borrower’s primary telephone number and secondary telephone number or numbers on file, if any, have been disconnected.

(3)If the borrower does not respond within two weeks after the telephone call requirements of paragraph (2) have been satisfied, the mortgagee, beneficiary, or authorized agent shall then send a certified letter, with return receipt requested.

(4)The mortgagee, trustee, beneficiary, or authorized agent shall provide a means for the borrower to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours.

(5)The mortgagee, trustee, beneficiary, or authorized agent has posted a prominent link on the homepage of its Internet Web site, if any, to the following information:

(A)Options that may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure, and instructions to borrowers advising them on steps to take to explore those options.

(B)A list of financial documents borrowers should collect and be prepared to present to the mortgagee, beneficiary, or authorized agent when discussing options for avoiding foreclosure.

(C)A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure with their mortgagee, beneficiary, or authorized agent.

(D)The toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

(g)Subdivisions (a), (c), and (f) shall not apply if any of the following occurs:

(1)The borrower has surrendered the property as evidenced by either a letter confirming the surrender or delivery of the keys to the property to the mortgagee, trustee, beneficiary, or authorized agent.

(2)The borrower has contracted with an organization, person, or entity whose primary business is advising people who have decided to leave their homes on how to extend the foreclosure process and avoid their contractual obligations to mortgagees or beneficiaries.

(3)A case has been filed by the borrower under Chapter 7, 11, 12, or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case, or granting relief from a stay of foreclosure.

(4)The borrower has completed participation in the Mediated Mortgage Workout Program, and participation did not result in a mortgage loan modification, or other result mutually agreed to by the borrower and the mortgagee, trustee, beneficiary, or authorized agent.

(h)This section shall apply only to mortgages or deeds of trust recorded from January 1, 2003, to December 31, 2007, inclusive, that are secured by owner-occupied residential real property containing no more than four dwelling units. For purposes of this subdivision, “owner-occupied” means that the residence is the principal residence of the borrower as indicated to the lender in loan documents.

(i)For purposes of this section, a “borrower” includes a mortgagor or trustor.

(j)This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.

SEC. 2.Article 1.7 (commencing with Section 2946) is added to Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code, to read:
1.7.Mediated Mortgage Workout Program
2946.

For purposes of this article:

(a)“Administrator” means the administrator of the Mediated Mortgage Workout (MMW) Program.

(b)“Borrower” includes a mortgagor, trustor, or owner of the residential real estate property described in the notice of default sent pursuant to Section 2924.

(c)“Meaningful participation” shall be defined as the following:

(1)Attendance at all mediation sessions.

(2)Presentation of all required documents and payment of all required fees.

(d)“Residential real estate property” means residential real property consisting of one- to four-family dwelling units. Owner-occupied condominiums shall be considered residential real estate property within the scope of this program, regardless of the number of family dwelling units in any single homeowners’ association, complex, or community.

2946.1.

(a)This article shall apply to a loan secured by residential real property that is the primary residence of the borrower and for which a notice of default has been filed pursuant to Section 2924.

(b)Chapter 2 (commencing with Section 1115) of Division 9 and Section 703.5 of the Evidence Code shall apply to a mediation conducted pursuant to this article.

2946.2.

(a)The administrator shall be appointed by the Governor and confirmed by the Senate.

(b)The administrator shall do all of the following in order to carry out this article:

(1)Implement rules and standards for choosing qualified mediators.

(2)Implement rules and standards for the removal of mediators for good cause.

(3)Develop standards for forms and reports, as may be required to implement the MMW Program.

(4)Require additional training for mediators to meet the goals of this article.

(5)Collect all moneys and fees as may be required to implement this program.

2946.3.

(a)A notice of default sent pursuant to Section 2924 to a borrower of residential real property that is subject to this chapter shall include all of the following:

(1)(A)A separate notice, entitled “Opportunity to Meet Face-to-Face with Your Lender/Loan Servicer and a Neutral Professional in a Mediated Mortgage Workout Program,” advising the borrower of his or her right to participate in an MMW Program to explore options for the borrower to avoid foreclosure. This notice and all of the documents required to be included with the notice of default shall be printed in large, boldface type and shall be printed in English, Spanish, Chinese, Tagalog, and Korean. This separate notice shall be sent to all borrowers of record. This notice shall be recorded, in addition to the notice of default, in the office of the appropriate county recorder.

(B)The notice described in subparagraph (A) shall do all of the following:

(i)Explain the requirements for participation in the MMW Program and advise the borrower of the procedures that are to be followed to make an election to participate in the program.

(ii)Include the name, address, telephone number, facsimile number, and e-mail address of the mortgagee, trustee, beneficiary, or authorized agent, and the administrator of the MMW Program, as well as two or more local housing counseling agencies that are approved by the United States Department of Housing and Urban Development.

(iii)Advise the borrower that loan counselors are prohibited from collecting an advance fee.

(2)Three copies of an election form, as developed and approved by the administrator of the MMW Program, upon which the borrower may indicate his or her election to either participate in, or waive participation in, the MMW Program.

(3)Two separate envelopes, one addressed to the mortgagee, trustee, beneficiary, or authorized agent and one addressed to the administrator of the MMW Program, for use by the borrower to advise the mortgagee, trustee, beneficiary, or authorized agent and the administrator of the borrower’s election to participate in the MMW Program.

(b)This section shall not apply to borrowers who have previously completed the MMW Program.

2946.4.

(a)If the borrower elects to participate in the MMW Program, the borrower shall complete the election form and mail a copy of the election form to the mortgagee, trustee, beneficiary, or authorized agent and to the administrator not later than 30 calendar days after receipt of the notice of default. The election form shall be sent by certified mail, return receipt requested.

(b)The administrator may allow the borrower to elect to participate in the MMW Program by completing the election form on an Internet Web site, by submitting the form via e-mail, or by completing the form over the telephone. The administrator shall maintain a platform that responsibly records and gives the borrower a hard copy record of his or her election to participate in the MMW Program and that record shall be in compliance with recognizable standards for recording and storing critical electronic information.

(c)Within 10 days of requesting to participate in the MMW Program, the borrower shall submit all of the following to the administrator:

(1)Tax returns filed for the prior tax year, if the borrower was required to file a tax return for that year.

(2)Payroll or other income verification for the previous two months.

(3)First deposit of funds in accordance with Section 2946.7.

(d)Within 10 days of receiving notice that the borrower has elected to participate in the MMW Program, the mortgagee, trustee, beneficiary, or authorized agent shall submit all of the following documents to the administrator:

(1)The applicable Pooling and Service Agreement, if any.

(2)The loan application, loan origination documents, appraisal, and payment history.

(3)The original note and assignments or certificate regarding a lost document.

(4)Documentary evidence of current ownership or chain of custody of the mortgage note.

(5)The net present value formula that the mortgagee, trustee, beneficiary, or authorized agent uses.

(e)When a borrower has elected to participate in the MMW Program, the timelines set forth in Section 2924 shall be suspended for the duration of, and no further action may be taken to exercise the power of sale until the completion of, the MMW Program, as evidenced by the mediator’s final report as described in Section 2946.14.

2946.5.

A mediator shall be compensated by the administrator, from payment made by the parties in advance of the mediation, for his or her services at the hourly rate of one hundred fifty dollars ($150). This compensation shall initially be paid by the mortgagee, trustee, beneficiary, or authorized agent and, in the event that the mortgage loan is modified, the borrower shall reimburse the mortgagee, trustee, beneficiary, or authorized agent for one-half of the total compensation paid to the mediator. The borrower’s share of the mediator’s fees may be added to the principal balance of the loan if requested by the borrower. If the parties’ efforts to modify the loan fail and the property is sold, the mortgagee, trustee, beneficiary, or authorized agent, alone, shall be responsible for the expense of the mediator’s fees.

2946.6.

(a)Upon receipt of a borrower’s form whereby he or she elects to participate in the MMW Program the administrator shall randomly appoint an individual from a list of qualified mediators available to serve in the county in which the property is located to act as the mediator for the borrower and the mortgagee, trustee, beneficiary, or authorized agent. The mediator shall contact the parties within 15 days of his or her appointment to schedule the first session of the MMW Program.

(b)(1)The administrator shall notify the mortgagee, trustee, beneficiary, or authorized agent of the borrower’s election to participate in the MMW Program within 15 days of receipt of the borrower’s election to participate in the program. The mortgagee, trustee, beneficiary, or authorized agent shall submit an administrative fee of five hundred dollars ($500), as well as a minimum deposit in the amount of six hundred dollars ($600) to be applied toward mediation fees and all required documentation, to the administrator within 10 days of the administrator’s notification of the borrower’s election. In the event that the mortgage loan is modified, as part of the modification plan, the borrower shall reimburse the mortgagee, trustee, beneficiary, or authorized agent two hundred fifty dollars ($250) as partial reimbursement of this fee according to the same terms as set forth in Section 2946.5. In the event that the parties’ efforts to modify the loan fail and the property is sold by the mortgagee, trustee, beneficiary, or authorized agent, the mortgagee, trustee, beneficiary, or authorized agent, alone, shall be responsible for the program fee.

(2)Failure of the mortgagee, trustee, beneficiary, or authorized agent to deposit the fee within 10 days of the administrator’s notification of the borrower’s election to participate shall result in a stay of foreclosure proceedings and delay of the MMW Program until the fee is deposited with an additional penalty of one hundred dollars ($100) per day for each day after the deadline that the fee has not been deposited.

2946.7.

Any borrower who elects to participate in the MMW Program shall deposit with the administrator 50 percent of the current mortgage payment every month during participation in the MMW Program. The first monthly deposit shall be made within 10 days after requesting participation in the MMW Program. If the borrower fails to comply with these terms, the borrower’s election shall be deemed to be canceled and the MMW Program shall be deemed to be completed.

2946.8.

A borrower who participates in the MMW Program shall not be required, as a condition of participation, or as a condition of acceptance of a modification, to waive any rights and remedies that may otherwise be available.

2946.10.

(a)The borrower or borrowers and mortgagee, trustee, beneficiary, or authorized agent shall attend the MMW Program sessions in person.

(b)In the event of exigent circumstances, the administrator may allow either party to be represented by a person with a power of attorney or other written authorization to represent and bind the party. In addition, each party may be represented by an attorney or housing counselor. However, no attorney, other representative, or loan counselor appearing on behalf of the borrower may receive an advance fee for any services rendered in connection with the MMW Program.

(c)No request for a continuance of an MMW Program session may be granted, except upon showing of extraordinary circumstances. A request shall be made to the administrator, at least 15 days prior to the scheduled mediation detailing the extraordinary circumstances that require the continuance. Any request for continuance that occurs within 15 days of the scheduled mediation shall be accompanied by a three-hundred-dollar ($300) deposit to apply toward the mediator’s fee. If the requested continuance is granted, the administrator shall levy a fee of three hundred dollars ($300) for the benefit of the mediator.

(d)The borrower and mortgagee, trustee, beneficiary, or authorized agent may agree on the terms of a loan modification which may include any or all of the following features:

(1)An interest rate reduction for a fixed term of at least five years.

(2)An extension of the mortgage term, not to exceed 40 years from the original date of the loan.

(3)Deferral of a portion of the principal amount of the unpaid principal balance until maturity of the loan.

(4)Reduction of the principal balance.

(5)Compliance with a federally mandated loan modification program.

(6)Other alternatives that may reduce the borrower’s monthly payment to 31 percent or less of the borrower’s debt-to-income ratio and that are designed to meet long-term sustainability for the borrower.

(7)Nothing in this section shall be construed to prevent a creditor from offering or accepting alternatives in writing to foreclosure, such as a short sale or deed-in-lieu of foreclosure, but only if the borrower requests these alternatives, rejects a loan modification offered pursuant to this section, or does not qualify for a loan modification pursuant to this section.

(e)If a borrower has failed to meaningfully participate in the MMW Program, the MMW Program shall be suspended. If the borrower cures the noncompliance to the satisfaction of the administrator within 10 days of notice of failure to comply, the administrator shall rescind suspension of the mediation sessions and the MMW Program will be continued.

(f)If a mortgagee, trustee, beneficiary, or authorized agent fails to meaningfully participate in the MMW Program, the MMW Program shall be suspended. During the suspension of the program for failure to meaningfully participate, the mortgagee, trustee, beneficiary, or authorized agent may not pursue further foreclosure actions until such time as the mortgagee, trustee, beneficiary, or authorized agent cures the noncompliance.

2946.11.

A mortgagee, trustee, beneficiary, or authorized agent shall not report negative credit information about a borrower to a credit reporting agency if the borrower has successfully participated in the MMW Program and a mortgage loan modification has been accepted.

2946.12.

A borrower shall not be responsible for fees, late payment charges, or other monetary penalties while the MMW Program or final report is pending.

2946.13.

The mediator shall use reasonable efforts to ensure that each MMW Program is completed within 60 calendar days of the mediator’s appointment.

2946.14.

(a)The mediator’s final report shall be submitted to the administrator within 10 days of completion of the mediation and shall state whether a mutually acceptable resolution was reached between the parties.

(b)The final report shall be sent by first-class mail or via electronic means to the borrower, mortgagee, trustee, beneficiary, or authorized agent, and the administrator and shall include a statement that the MMW Program has been completed.

2946.15.

(a)(1)The administrator shall report quarterly to the Legislature regarding the performance of the MMW Program, including all of the following information:

(A)The number of homeowners who attend mediation prior to notice of default.

(B)The number of homeowners who attend mediation after receiving a notice of default.

(C)The number of mediations suspended because of lack of meaningful participation by the borrower.

(D)The number of mediations suspended because of lack of meaningful participation on the part of the mortgagee, trustee, beneficiary, or authorized agent.

(E)The number of mediations that result in a loan modification.

(F)The number of mediations that result in a solution other than a loan modification.

(2)(A)The requirement for submitting a report pursuant to paragraph (1) is inoperative on January 1, 2015, pursuant to Section 10231.5 of the Government Code.

(B)A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.

(b)Each mortgagee, trustee, beneficiary, or authorized agent participating in the MMW Program shall post public data reports on a quarterly basis on its Internet Web site detailing the following:

(1)The number of loans that have been modified through the MMW Program and the type of modification.

(2)The final disposition of loans that were in the MMW Program but not modified.

(3)The final disposition of loans that did not go through in the MMW Program.

(A)The type of loans in a portfolio serviced by others, delineated by prime, subprime, and nontraditional.

(B)The loans in a portfolio or serviced by others that are securitized.

(C)The number of home retention actions.

(D)Redefault rates for portfolio loans and loans serviced for others.

(E)The default rates for portfolio loans and loans serviced for others.

(F)The default rates of loans modified in 2008 by changes in payment.

(G)Newly initiated home retention actions compared with foreclosure actions.

(H)Completed foreclosures and other home forfeiture actions.

(I)The overall portfolio performance by percentage.

(J)The performance of government guaranteed loans, by percentage.

(K)The performance of government sponsored enterprise loans, by percentage.

(L)Seriously delinquent mortgages, by percentage.

(M)Home Affordable Modification Program actions by investor and risk category.

(N)Changes in loan terms made by modifications during 2009.

(O)Changes in monthly principal and interest payments owing to modification, by the number of modifications.

(P)The number of modified loans, 30 or more days delinquent.

(Q)The number of modified loans, 60 or more days delinquent.

(R)The number of modified loans, 90 or more days delinquent.

SEC. 3.

If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.