by Tucker Wade
California Assembly Bill 2424
This past September, California Assembly Bill 2424 was signed into law, introducing important changes to the state’s foreclosure rules. Starting January 1, 2025, the new law will amend and supplement existing foreclosure requirements for mortgage loans, including for loans secured by residential 1-4 unit properties. The goal of the law is straightforward: to provide mortgagors with more time and protections to help prevent foreclosure.
One of the key changes for loans secured by a residential 1-4 unit property is that lenders must now provide mortgagors with a written disclosure explaining that a third party (such as a family member, attorney, or a U.S. Department of Housing and Urban Development-certified housing counselor) may record a request to receive copies of certain foreclosure-related notices, specifically notices of default and sale. This notice must be given to the mortgagor before they sign the deed of trust.
What does this mean for commercial lenders?
The new law applies to both residential and commercial (business-purpose) mortgage loans. This means commercial lenders must follow the updated rules, both during the foreclosure process (e.g., the timing of the foreclosure sale and sale price limitations imposed on the trustee) and at the time of closing. For example, the required mortgagor notice must be provided at the right time, as specified in the law.
Prior to January 1, lenders should work with their legal counsel, mortgage servicers, and trustees to understand how these changes affect their foreclosure practices and ensure that their loan documents include the new disclosure requirements when applicable.
At GoDocs, we believe best-in-class, attorney-driven commercial loan documents, and their 50-state legal compliance are not mutually exclusive. As the January 1 deadline approaches, our customers can rest assured that our California loan documents will continue to be legally compliant, including with these new requirements.
Rest easy with GoDocs – we’ve got your compliance needs covered.
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Senior Director of Legal and Compliance at GoDocs
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