Question:
What is a beneficiary statement? Can I use first tuesday’s beneficiary statement outside California?
Answer:
A beneficiary statement is a written disclosure made by a mortgage holder regarding the condition of a debt owed to them, usually evidenced by a note. In a mortgage, the debt is secured by a trust deed lien on the real estate described in the trust deed. [See first tuesday Form 415 included below]
A complete beneficiary statement includes information and data regarding:
- the amount of the unpaid balance;
- the interest rate of the debt;
- the total of all overdue payments of principal and/or interest;
- the amounts of any periodic payments;
- the due date for final/balloon payoff of the debt;
- the date to which real estate taxes and special assessments have been paid, if known;
- the amount of hazard insurance and its term and premium, if known;
- any impound balance reserve for the payment of taxes and insurance;
- the amount of any additional charges incurred by the beneficiary that have become part of the mortgage; and
- whether it is possible for the mortgage to be assumed by a new owner (added following federal deregulation of lenders in 1982). [Calif. Civil Code §2943(a)(2); see Form 415]
Who makes the request?
A written request for a beneficiary statement needs to be made by an entitled person before the mortgage holder is required to respond. An entitled person includes:
- the original borrower (property owner) on the mortgage;
- the successor-in-interest (new property owner) to the original borrower; or
- an authorized agent of either, such as a real estate broker, attorney or escrow agent. [CC §2943(a)(4)]
Delivery of a beneficiary statement
The holder of any type of mortgage is required to prepare and deliver a beneficiary statement within 21 days of the receipt of the written request from an entitled person. [CC §§2943(b)(1), 2943(e)(6)]
The mortgage holder’s intentional failure to send the statement within 21 days of receipt of request results in the mortgage holder’s forfeiture of $300 to the person making the request. Also, the mortgage holder is liable for all money losses resulting from its intentional failure to comply. [CC §2943(e)(4)]
However, the mortgage holder’s failure to timely deliver the statement must be proven to be an intentional failure without legal excuse before the entitled person making the request may recover a penalty — a difficult task.
Can I use first tuesday’s beneficiary statement outside of California?
The content of first tuesday’s beneficiary statement is governed by California Civil Code §2943, as indicated in the subtitle of the form. It may be accepted in other states, but is not designed for that purpose.
Related Realtipedia Volume: Real Estate Finance, Chapter 18: Beneficiary statements and payoff demands.
Editor’s note — Recent modifications have been made to improve first tuesday’s beneficiary statement. [See Form 415]
A blank §12 has been added to provide space for the entry of additional language specific to the requirements of the form user.
Additionally, an “Interest only” line has been added to §7.1 to accommodate a monthly payment of only interest. Further, the Monthly payment section has been revised to automatically calculate the total at the end of the itemized items.
Per the new first tuesday convention, a descriptive section has been added to the top of the form describing who is to use the form, when and for what purpose. The coloration of the footer and header has been reversed to white, making the form easier to print.
