California Bankers Association Issues Statement on Senate Bill 1150
SACRAMENTO – Today the California Bankers Association, (CBA) released the following statement regarding our opposition to Senate Bill 1150:
“Fundamentally, we believe that this bill is premature given the forthcoming regulations dealing explicitly with successors in interest that is pending at the federal level with the Consumer Financial Protection Bureau. These regulations, expected to be issued in mid-2016 focus on the same issues Senate Bill 1150 attempts to address, but does so on a national, uniform basis. If proponents believe there are deficiencies in the regulations put forth by the CFPB, that would be the appropriate time to discuss refinements to the process. Having a separate state law is unnecessary unless one of the primary motivating factors of the proponents is to create a private right of action, which is a central component of this bill.
“As currently drafted, Senate Bill 1150 creates numerous and substantive compliance issues for mortgage servicers. The measure mandates that a servicer possibly circumvent the probate court process and negotiate with more than one successor interest. The bill offers no clarity on how to manage such a scenario where multiple family members may come forward each with a claim on the property. The measure also appears to force mortgage servicers to allow a successor in interest to assume the loan without first evaluating their creditworthiness. Senate Bill 1150 also is not just limited to widows and orphans, and instead applies to any natural person that is a personal representative, trustee or beneficiary of the mortgage holder, which may include individuals without any familial relation.
“In attempting to advance this measure, proponents have conveniently drawn upon the Homeowner Bill of Rights (HBOR). As drafted this measure vastly exceeds the original scope of the HBOR to apply to circumstances where a successor in interest doesn’t occupy the property as their principal residence. Extending these rights to an investment property of a successor in interest is a significant departure from existing law, and does not meet the HBOR threshold that the property be owner-occupied and the principal residence.
“We have long advocated for legislation that is precise and unambiguous. The lack of clarity and definition contained in Senate Bill 1150, combined with its provision allowing a private right of action, will undoubtedly lead to litigation, which seems to be the underlying and greater focus of this bill.”
About the CBA
Established 125 years ago, the California Bankers Association (CBA) is one of the largest state banking trade associations in the country. CBA leads the way in developing relevant educational and legislative solutions to some of California’s more pressing financial and banking issues, including adult financial empowerment, identity theft, financial privacy, and elder financial abuse. CBA’s membership includes the majority of California’s commercial, community banks and savings associations. For more information, visit www.calbankers.com.