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TITLE 19. COVID-19 Small Landlord and Homeowner Relief Act

SEC. 13.  Title 19 (commencing with Section 3273.01) is added to Part 4 of Division 3 of the Civil Code, to read:

CHAPTER 1. Title and Definitions

3273.01. This title is known, and may be cited, as the “COVID-19 Small Landlord and Homeowner Relief Act of 2020.”
3273.1. For purposes of this title:
(a)

1. (1) “Borrower” means any of the following:
   • (A) A natural person who is a mortgagor or trustor or a confirmed successor in interest, as defined in Section 1024.31 of Title 12 of the Code of Federal Regulations.
   • (B) An entity other than a natural person only if the secured property contains no more than four dwelling units and is currently occupied by one or more residential tenants.
2. (2) “Borrower” shall not include an individual who has surrendered the secured property as evidenced by either a letter confirming the surrender or delivery of the keys to the property to the mortgagee, trustee, beneficiary, or authorized agent.
   (3) Unless the property securing the mortgage contains one or more deed-restricted affordable housing units or one or more affordable housing units subject to a regulatory restriction limiting rental rates that is contained in an agreement with a government agency, the following mortgagors shall not be considered a “Borrower”:
   • (A) A real estate investment trust, as defined in Section 856 of the Internal Revenue Code.
   • (B) A corporation.
   • (C) A limited liability company in which at least one member is a corporation.
3. (4) “Borrower” shall also mean a person who holds a power of attorney for a Borrower described in paragraph (1).

(b) “Effective time period” means the time period between the operational date of this title and April 1, 2021.
(c)

1. (1) “Mortgage servicer” or “lienholder” means a person or entity who directly services a loan or who is responsible for interacting with the Borrower, managing the loan account on a daily basis, including collecting and crediting periodic loan payments, managing any escrow account, or enforcing the note and security instrument, either as the current owner of the promissory note or as the current owner’s authorized agent.
2. (2) “Mortgage servicer” or “lienholder” also means a subservicing agent to a master servicer by contract.
3. (3) “Mortgage servicer” shall not include a trustee, or a trustee’s authorized agent, acting under a power of sale pursuant to a deed of trust.

3273.2.

(a) The provisions of this title apply to a mortgage or deed of trust that is secured by residential property containing no more than four dwelling units, including individual units of condominiums or cooperatives, and that was outstanding as of the enactment date of this title.

(b) The provisions of this title shall apply to a depository institution chartered under federal or state law, a person covered by the licensing requirements of Division 9 (commencing with Section 22000) or Division 20 (commencing with Section 50000) of the Financial Code, or a person licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code.

CHAPTER 2. Mortgages

3273.10.

(a) If a mortgage servicer denies a forbearance request made during the effective time period, the mortgage servicer shall provide written notice to the Borrower that sets forth the specific reason or reasons that forbearance was not provided, if both of the following conditions are met:

1. (1) The Borrower was current on payment as of February 1, 2020.
2. (2) The Borrower is experiencing a financial hardship that prevents the Borrower from making timely payments on the mortgage obligation due, directly or indirectly, to the COVID-19 emergency.

(b) If the written notice in subdivision (a) cites any defect in the Borrower’s request, including an incomplete application or missing information, that is curable, the mortgage servicer shall do all of the following:

1. (1) Specifically identify any curable defect in the written notice.
2. (2) Provide 21 days from the mailing date of the written notice for the Borrower to cure any identified defect.
3. (3) Accept receipt of the Borrower’s revised request for forbearance before the aforementioned 21-day period lapses.
4. (4) Respond to the Borrower’s revised request within five business days of receipt of the revised request.

(c) If a mortgage servicer denies a forbearance request, the declaration required by subdivision (b) of Section 2923.5 shall include the written notice together with a statement as to whether forbearance was or was not subsequently provided.

(d) A mortgage servicer, mortgagee, or beneficiary of the deed of trust, or an authorized agent thereof, who, with respect to a Borrower of a federally backed mortgage, complies with the relevant provisions regarding forbearance in Section 4022 of the federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) (Public Law 116-136), including any amendments or revisions to those provisions, shall be deemed to be in compliance with this section. A mortgage servicer of a nonfederally backed mortgage that provides forbearance that is consistent with the requirements of the CARES Act for federally backed mortgages shall be deemed to be in compliance with this section.

3273.11.

(a) A mortgage servicer shall comply with applicable federal guidance regarding Borrower options following a COVID-19 related forbearance.

(b) Any mortgage servicer, mortgagee, or beneficiary of the deed of trust, or authorized agent thereof, who, with respect to a Borrower of a federally backed loan, complies with the guidance to mortgagees regarding Borrower options following a COVID-19-related forbearance provided by:

• the Federal National Mortgage Association (Fannie Mae),
• the Federal Home Loan Mortgage Corporation (Freddie Mac),
• the Federal Housing Administration of the United States Department of Housing and Urban Development,
• the United States Department of Veterans Affairs, or
• the Rural Development division of the United States Department of Agriculture,

including any amendments, updates, or revisions to that guidance, shall be deemed to be in compliance with this section.

(c) With respect to a nonfederally backed loan, any mortgage servicer, mortgagee, or beneficiary of the deed of trust, or authorized agent thereof, who, regarding Borrower options following a COVID-19 related forbearance, reviews a customer for a solution that is consistent with the guidance to servicers, mortgagees, or beneficiaries provided by

• the Federal National Mortgage Association (Fannie Mae),
• the Federal Home Loan Mortgage Corporation (Freddie Mac),
• the Federal Housing Administration of the United States Department of Housing and Urban Development,
• the United States Department of Veterans Affairs, or
• the Rural Development division of the United States Department of Agriculture,

including any amendments, updates or revisions to such guidance, shall be deemed to be in compliance with this section.

3273.12. It is the intent of the Legislature that a mortgage servicer offer a Borrower a postforbearance loss mitigation option that is consistent with the mortgage servicer’s contractual or other authority.

3273.14. A mortgage servicer shall communicate about forbearance and postforbearance options described in this article in the Borrower’s preferred language when the mortgage servicer regularly communicates with any Borrower in that language.

3273.15.

(a) A Borrower who is harmed by a material violation of this title may bring an action to obtain injunctive relief, damages, restitution, and any other remedy to redress the violation.

(b) A court may award a prevailing Borrower reasonable attorney’s fees and costs in any action based on any violation of this title in which injunctive relief against a sale, including a temporary restraining order, is granted. A court may award a prevailing Borrower reasonable attorney’s fees and costs in an action for a violation of this article in which relief is granted but injunctive relief against a sale is not granted.

(c) The rights, remedies, and procedures provided to Borrowers by this section are in addition to and independent of any other rights, remedies, or procedures under any other law. This section shall not be construed to alter, limit, or negate any other rights, remedies, or procedures provided to Borrowers by law.

3273.16. Any waiver by a Borrower of the provisions of this article is contrary to public policy and shall be void.

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