Foreclosed out homeowners not to be contacted for 90 days regarding surplus funds

Added Calif. Civil Code §2924.21

Effective date: July 18, 2024

Bill text: AB 295

Why this matters: Owners entitled to surplus funds remaining from the foreclosure sale of their residence are chased by individuals attempting to make a claim on the surplus funds. Now surplus fund chasers are barred from contacting the owners for 90 days after the trustee’s deed is recorded to better protect California homeowners in a vulnerable position.

Deterring foreclosure surplus chasers

Surplus fund chasers are individuals or entities who contact homeowners after a foreclosure of their residence to convince the homeowners to pay the chaser the surplus funds due the owner which remain from the price the trustee received at the foreclosure sale.

Surplus funds are disbursed by the foreclosure trustee to the homeowner from proceeds of the trustee’s sale remaining after the following payments:

the costs and expenses of the trustee’s sale, and the trustee’s fees;
the debt owed the foreclosing mortgage holder; and
the outstanding balance of junior lienholders secured by the property. [Calif. Civil Code §2924k(a)]

Now, individuals and entities are prohibited from contacting, soliciting or initiating communication with a foreclosed-upon homeowner until 90 days after the foreclosure sale has been recorded. [CC §2924.21]

Additionally, procedural changes were made to the foreclosure process affecting foreclosure trustees and mortgage servicers.

The changes include:

liability protection for trustees when responding in good faith to lender requests for payoff or reinstatement information. [CC §2924(b)]
increases the permitted fee a trustee may charge for each postponement of a trustee’s sale from $50 to $100 to keep up with inflation. [CC 2924c(c)]
the trustee’s sale is perfected when an eligible bidder submits a notice of intent to bid. [CC §2924h(c)]
a trustee is to transmit the trustee’s deed to the Attorney General upon the deed’s execution. [CC §2924m(6)(i)]
a mortgage servicer’s denial for mortgage forbearance requests made during the 2020 recession only needs to be documented when the forbearance request was made in 2020 and 2021. [CC §3273.10]

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