California Code of Regulations › Title 10 - Investment › Chapter 6 - Real Estate Commissioner › Article 16.5 - California Foreclosure Prevention Act › Subarticle 1 - Requirements › Section 2850.6 - Other Requirements for Comprehensive Loan Modification Programs

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) If a loan
				  modification consists solely of a repayment plan, a servicer must be able to
				  validate that the borrower has a housing-related debt to gross income ratio of
				  38% or less, and that under customary underwriting analysis and criteria or
				  current industry standards the servicer has reasonable grounds to support the
				  ability of the borrower to repay the loan. For purposes of this subsection, a
				  repayment plan means a plan or arrangement where loan amounts past due,
				  including principal, interest, late fees or other penalties, are added to the
				  principal amount due on a loan and re-aged so that the loan is no longer
				  delinquent, and no other loan concessions as described in Civil Code Section
				  2923.53(a)
				  are provided to a borrower.
(b) A
				  servicer shall consider all eligible loans under this article unless prohibited
				  by the rules of the applicable pooling and servicing agreement or other
				  investor servicing agreements.
(c)
				  A servicer shall use reasonable efforts to remove any prohibitions and obtain
				  waivers or approvals from all necessary parties, including but not limited to
				  junior lien holders and investors.
(d) For any request to modify a loan made by
				  a borrower and received by the mortgage loan servicer prior to the expiration
				  of 3 months following the recording of a notice of default, a servicer shall
				  act on the request within a reasonable time period, and shall have procedures
				  and processes in place to ensure that delays in the process not caused by a
				  borrower do not adversely impact a borrower in the modification or foreclosure
				  process. For purposes of this subsection, a mortgage loan servicer that
				  evaluates a loan modification request in accordance with the time periods
				  recommended in the HOPE NOW Mortgage Servicing Guidelines dated June 9, 2008,
				  and hereby incorporated by reference, shall be deemed to be acting on a loan
				  modification request in a reasonable time. Every mortgage loan servicer shall
				  have a process in place to provide a borrower an acknowledgement of the receipt
				  of a loan modification request. Nothing herein is intended to prevent a
				  mortgage loan servicer from accepting and processing a borrower loan
				  modification request received after three months from the date the notice of
				  default is recorded.
(e) If a
				  borrower fails to participate in the modification process by providing
				  documentation within a reasonable time or otherwise abandoning the borrower's
				  loan modification request, a servicer may decline the request and pursue other
				  remedies such as foreclosure sale. For purposes of this subsection, a borrower
				  that provides documentation within 2 weeks of a request by a servicer shall be
				  presumed to have provided documentation within a reasonable time. A servicer
				  shall notify a borrower in writing of the time period to respond to a request
				  for information and the potential consequence of failing to provide information
				  in a reasonable time, prior to declining a loan modification request because of
				  a borrower's undue delay.
(f) A
				  comprehensive loan modification program may include other foreclosure
				  alternatives for borrowers who do not qualify for a loan modification or who no
				  longer wish to remain in the property, such as short sales or deeds-in-lieu of
				  foreclosure.
(g) A servicer is not
				  required to modify a loan more than once, regardless of whether the
				  modification was entered into prior to the operative date of the California
				  Foreclosure Prevention Act (Civil Code Section
				  2923.52 et
				  seq.) or thereafter pursuant to a comprehensive loan modification program
				  approved by the Commissioner, provided that the initial modification reduced
				  the borrower's monthly payments.
1. New
					 section filed 6-1-2009 as an emergency; operative 6-1-2009 (Register 2009, No.
					 23). A Certificate of Compliance must be transmitted to OAL by 11-30-2009 or
					 emergency language will be repealed by operation of law on the following
					 day.
2. New section refiled 12-1-2009 as an emergency; operative
					 12-1-2009 (Register 2009, No. 49). A Certificate of Compliance must be
					 transmitted to OAL by 3-1-2010 or emergency language will be repealed by
					 operation of law on the following day.
3. Certificate of Compliance
					 as to 12-1-2009 order, including amendment of subsection (b), transmitted to
					 OAL 2-22-2010 and filed 4-6-2010 (Register 2010, No.
					 15).
Note: Authority cited: Section
						2923.53(d),
						Civil Code. Reference: Sections
						2923.52 and
						2923.53, Civil
						Code.