Summary
Onerous laws and regulations continuously create wiggle room, which feeds the court system and lawyers but damages property rights, property owners, and trust-deed investors. The period to complete a foreclosure has been significantly extended, if not doubled, from 120 days to 240 (+/-) days.
Overview:
The Law focuses on making loans to single-family owners of occupied properties and on tightening the requirements for fraud allegations by a defaulting Borrower to hold the mortgage broker accountable for fraud. The Law invites borrowers and hungry lawyers to sue lenders and mortgage brokers for fraud. The broker may be found guilty of violating the section and imprisoned in a county jail for up to 1 year, with significant implications for the foreclosure process. It’s crucial to be aware of these legal changes to navigate the foreclosure process effectively.
Suppose a Borrower defaults and wants to forestall losing their property in foreclosure. In that case, they are invited to file an ex parte application for court jurisdiction and make claims, including substantive disregard for the kitchen sink, which refers to the inclusion of all possible arguments, even those that are not relevant or significant. Judges love this material and gobble it up, as most are ideologically driven and blatantly disregard the rule of Law.
The shift from non-judicial to judicial foreclosure can significantly prolong the foreclosure process, potentially allowing the Borrower to remain on the property for an extended period without making payments. This can force the lender or broker to incur substantial costs, typically between $50,000 and $100,000. It’s essential to be aware of these potential risks and challenges, as they reflect the prevailing entitlement consciousness in today’s legal landscape.
Lowers the Bar”
- Meaning: The statute reduces the mental state or evidentiary threshold required to prove a violation.
- Example in AB 3108: Changing from “deliberate” falsity to “material misstatement known to the filer” means prosecutors no longer need to show intent to defraud—just knowledge of falsity.
- Effect: Makes enforcement easier because the government needs less proof of subjective purpose. It does not mean anyone can accuse without basis; the state still must prove knowledge beyond a reasonable doubt.
“Open Invitation to Accusing a Broker of a Criminal Act”
- Meaning: Suggests the Law is so broad or vague that it encourages frivolous or retaliatory accusations.
- Risk: If statutory language is unclear (e.g., what counts as “material”), it could lead to over-reporting or misuse by competitors, disgruntled clients, or even political actors.
- Effect: While accusations may increase, actual convictions still require proof of the statutory elements. However, the cost and stress of defending against allegations—even if unfounded—can be significant.
✅ Key Difference:
- Lowers the bar = legal threshold for conviction drops (easier for prosecutors to prove guilt).
- Open invitation = practical risk of more complaints or charges, even if many lack merit, because the Law appears expansive or ambiguous.
The California Legislature has passed onerous laws that harm property owners of single-family 1-4 rental properties and other residential properties.
Gavin Newsom has passed several laws to thwart the non-judicial process and delay the eventual foreclosure date. You can find specific instances by reading articles on my website; search for SB-1079, AB-130, AB-3108, and AB-2424. Each article will discuss how the government has imposed cumbersome time barriers that delay the inevitable—namely, the lack of foreclosure moratoriums during the COVID pandemic.
There are separate articles on SB-1079, AB-130, and AB-2424 on my website. All real estate practitioners, including mortgage brokers, lawyers, title representatives, escrow holders, and trustees, must be familiar with these onerous bills, which are now state Law.
An excellent lawyer will be necessary to guide the accused party through the complex judicial process and the unexpected side punch of an ex parte motion accusing the broker of creating fraud.
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB3108