Georgia should consider enacting a similar version of California’s new statute.California's new Preforeclosure statute, Cal. Civ. Code § 2923.5, requires lender to contact residential borrowers thirty (30) days before filing a Notice of Default. It places the loan servicer in the middle (not as an advocate merely for the lender) if a loan modification is agreed to by the lender and borrower. The person living in the property gets a statutory notice of the foreclosure. It gives residential tenants sixty (60) days to move out after foreclosure. California now requires purchasers of foreclosure property to maintain the exterior of purchased residential property or they can be fined $1,000 per day.
And, California requires that a new foreclosure notice be tacked on the property to be foreclosed. That notice states:
Foreclosure process has begun on this property, which may affect your right to continue to live in this property. Twenty days or more after the date of this notice, this property may be sold at foreclosure. If you are renting this property, the new property owner may either give you a new lease or rental agreement or provide you with a 60-day eviction notice. However, other laws may prohibit an eviction in this circumstance or provide you with a longer notice before eviction. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights you may have. Cal. Civ. Code § 2924.8. (This notice must be posted in Six (6) languages stated in the Code.)
Georgia:
Many states are moving to more advance notice to borrowers and tenants prior to tenants - well except, perhaps, Georgia. Unless you consider an additional fifteen (15) days to be "additional notice." OCGA § 44-14-162.2, Georgia has not moved. (Georgia).
For a number of years now, I have written on and encouraged the Bar and the General Assembly to include more notice in the foreclosure statutes. Other than the recent addition of fifteen (15) days to the process, there has been little change in Georgia law.
While many commentators write that California's notice statute has been a failure (I disagree), consider how it differs from Georgia law.
Georgia has no requirement that the lender contact the borrower. All Georgia requires is that the address and phone number of a contact appear in the legal address. California requires actual (or attempts at actual) contact and discussion with the borrower whether they can enter into a loan modification.
Georgia allows a lender to accelerate and send a notice of default with a 10 day notice to pay 100% or suffer all attorney's fees with the foreclosure. Under California's new statute, no default notice may even be mailed until the borrower has been contacted.
Georgia does not require the property to be posted, thus neighbors and third parties have no idea the property is headed to the courthouse stairs. California (perhaps challenging borrower's privacy concerns) now requires the property be tacked prior to foreclosure.
Georgia requires no notice to tenants; however, most all firms provide notice to "occupant." California requires specific notice to the tenants, which in my opinion is a significant deficiency of the Georgia law.
Thousands and thousands of marginally educated Georgians, some of whom I have represented, have been cheated out of millions and millions of dollars collectively, by failure of this one provision of the foreclosure law. The fraud (or bad credit in the absence of fraud) goes like this: Owner of home wants to move out. He/she convinces individual to move in under a "pay to own" scheme. That is the credit poor individual makes payments to the "Owner," and the "Owner" makes payment to the lender (first deed to secure debt holder). Eventually, due to the "Owners" drug habit, Vegas gambling losses or some other calamity, the "Owner" quits paying the first deed lender. The occupant purchaser still pays the "Owner," unaware that the first mortgage is in serious default. No one opens the Certified Mail to the "Owner," and the house goes into default and foreclosure. The purchaser makes 3, 4, 5 or 6 more payments to "Owner," after the foreclosure until the foreclosing lawfirm gets around to filing an eviction. Sometime at or near eviction, the purchaser becomes aware that they have been scammed. The house is gone and now owned by some other party and the "Owner" has converted 10+ to 12+ months of mortgage payments made by the purchaser in "good faith."
If Georgia would simply require formal legal notice to occupants and tenants and require proof of service, this type of fraud and scam would cease or be substantially curtailed.
Georgia has no move out "safe harbor" for tenants (except the seven (7) days in the eviction statute). California specifically allows for a sixty (60) day move out period post foreclosure. While this provision could be "gamed," [enter into a six (6) month lease with your cousin "Vinney," one day before foreclosure. You would get an additional 60 days post foreclosure by law], it seems better if it would happen in Georgia, rather than not exist.
Both states are severely deficient in not requiring actual notice to second mortgages of record prior the foreclosure. Why states persist in not giving notice to subordinate second and third mortgages is beyond me. I am not advocating notice to lien holders - that is too cumbersome. However, giving notice to the second mortgage may get the mortgage current.
California will now fine a purchaser (up to $1,000 per day) who does not maintain the exterior of the property. All Georgia has is county code ordinance violation to police the continuing blight of foreclosed properties on Georgia municipalities.
While no "notice" statute is perfect, providing borrowers, tenants and second mortgage holders would prevent many of the harms occurring month by month on the courthouses of Georgia courthouses.
Hugh Wood
Atlanta, GA
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California Statutes
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CALIFORNIA CODES
CALIFORNIA CIVIL CODE
Division 3. OBLIGATIONS
Part 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS
Title 14. LIEN
Chapter 2. MORTGAGE
Article 1. Mortgages in General
Current through 2009
§ 2923.5.
(a) (1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in subdivision (g).
(2) A mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting and, if requested, the mortgagee, beneficiary, or authorized agent shall schedule the meeting to occur within 14 days. The assessment of the borrower's financial situation and discussion of options may occur during the first contact, or at the subsequent meeting scheduled for that purpose. In either case, the borrower shall be provided the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency. Any meeting may occur telephonically.
(b) A notice of default filed pursuant to Section 2924 shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower, tried with due diligence to contact the borrower as required by this section, or the borrower has surrendered the property to the mortgagee, trustee, beneficiary, or authorized agent.
(c) If a mortgagee, trustee, beneficiary, or authorized agent had already filed the notice of default prior to the enactment of this section and did not subsequently file a notice of rescission, then the mortgagee, trustee, beneficiary, or authorized agent shall, as part of the notice of sale filed pursuant to Section 2924f, include a declaration that either: (1) States that the borrower was contacted to assess the borrower' s financial situation and to explore options for the borrower to avoid foreclosure.
(2) Lists the efforts made, if any, to contact the borrower in the event no contact was made.
(d) A mortgagee's, beneficiary's, or authorized agent's loss mitigation personnel may participate by telephone during any contact required by this section.
(e) For purposes of this section, a "borrower" shall include a mortgagor or trustor.
(f) A borrower may designate a HUD-certified housing counseling agency, attorney, or other advisor to discuss with the mortgagee, beneficiary, or authorized agent, on the borrower's behalf, options for the borrower to avoid foreclosure. That contact made at the direction of the borrower shall satisfy the contact requirements of paragraph (2) of subdivision (a). Any loan modification or workout plan offered at the meeting by the mortgagee, beneficiary, or authorized agent is subject to approval by the borrower.
(g) A notice of default may be filed pursuant to Section 2924 when a mortgagee, beneficiary, or authorized agent has not contacted a borrower as required by paragraph (2) of subdivision (a) provided that the failure to contact the borrower occurred despite the due diligence of the mortgagee, beneficiary, or authorized agent. For purposes of this section, "due diligence" shall require and mean all of the following: (1) A mortgagee, beneficiary, or authorized agent shall first attempt to contact a borrower by sending a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.
(2) (A) After the letter has been sent, the mortgagee, beneficiary, or authorized agent shall attempt to contact the borrower by telephone at least three times at different hours and on different days. Telephone calls shall be made to the primary telephone number on file.
(B) A mortgagee, beneficiary, or authorized agent may attempt to contact a borrower using an automated system to dial borrowers, provided that, if the telephone call is answered, the call is connected to a live representative of the mortgagee, beneficiary, or authorized agent.
(C) A mortgagee, beneficiary, or authorized agent satisfies the telephone contact requirements of this paragraph if it determines, after attempting contact pursuant to this paragraph, that the borrower's primary telephone number and secondary telephone number or numbers on file, if any, have been disconnected.
(3) If the borrower does not respond within two weeks after the telephone call requirements of paragraph (2) have been satisfied, the mortgagee, beneficiary, or authorized agent shall then send a certified letter, with return receipt requested.
(4) The mortgagee, beneficiary, or authorized agent shall provide a means for the borrower to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours.
(5) The mortgagee, beneficiary, or authorized agent has posted a prominent link on the homepage of its Internet Web site, if any, to the following information: (A) Options that may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure, and instructions to borrowers advising them on steps to take to explore those options.
(B) A list of financial documents borrowers should collect and be prepared to present to the mortgagee, beneficiary, or authorized agent when discussing options for avoiding foreclosure.
(C) A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure with their mortgagee, beneficiary, or authorized agent.
(D) The toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.
(h) Subdivisions (a), (c), and (g) shall not apply if any of the following occurs: (1) The borrower has surrendered the 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.
(2) The borrower has contracted with an organization, person, or entity whose primary business is advising people who have decided to leave their homes on how to extend the foreclosure process and avoid their contractual obligations to mortgagees or beneficiaries.
(3) The borrower has filed for bankruptcy, and the proceedings have not been finalized.
(i) This section shall apply only to loans made from January 1, 2003, to December 31, 2007, inclusive, that are secured by residential real property and are for owner-occupied residences. For purposes of this subdivision, "owner-occupied" means that the residence is the principal residence of the borrower.
(j) This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.
History. Added by Stats 2008 ch 69 (SB 1137), s 2, eff. 7/8/2008, op. 9/6/2008.
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Georgia Statutes
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§ 44-14-162.2. Sales Made On Foreclosure Under Power Of Sale -- Mailing Of Notice To Debtor -- Procedure For Mailing Notice.
(a) Notice of the initiation of proceedings to exercise a power of sale in a mortgage, security deed, or other lien contract shall be given to the debtor by the secured creditor no later than 30 days before the date of the proposed foreclosure. Such notice shall be in writing, shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor, and shall be sent by registered or certified mail or statutory overnight delivery, return receipt requested, to the property address or to such other address as the debtor may designate by written notice to the secured creditor. The notice required by this Code section shall be deemed given on the official postmark day or day on which it is received for delivery by a commercial delivery firm. Nothing in this subsection shall be construed to require a secured creditor to negotiate, amend, or modify the terms of a mortgage instrument.
(b) The notice required by subsection (a) of this Code section shall be given by mailing or delivering to the debtor a copy of the notice of sale to be submitted to the publisher.
History. Amended by 2008 Ga. Laws 576, § 2, eff. 5/13/2008.
§ 44-14-162. Sales Made On Foreclosure Under Power Of Sale -- Manner Of Advertisement And Conduct Necessary For Validity.
(a) No sale of real estate under powers contained in mortgages, deeds, or other lien contracts shall be valid unless the sale shall be advertised and conducted at the time and place and in the usual manner of the sheriff's sales in the county in which such real estate or a part thereof is located and unless notice of the sale shall have been given as required by Code Section 44-14-162.2. If the advertisement contains the street address, city, and ZIP Code of the property, such information shall be clearly set out in bold type. In addition to any other matter required to be included in the advertisement of the sale, if the property encumbered by the mortgage, security deed, or lien contract has been transferred or conveyed by the original debtor to a new owner and an assumption by the new owner of the debt secured by said mortgage, security deed, or lien contract has been approved in writing by the secured creditor, then the advertisement should also include a recital of the fact of such transfer or conveyance and the name of the new owner, as long as information regarding any such assumption is readily discernable by the foreclosing creditor. Failure to include such a recital in the advertisement, however, shall not invalidate an otherwise valid foreclosure sale.
(b) The security instrument or assignment thereof vesting the secured creditor with title to the security instrument shall be filed prior to the time of sale in the office of the clerk of the superior court of the county in which the real property is located.
History. Amended by 2008 Ga. Laws 576, § 1, eff. 5/13/2008.
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Hugh Wood
hwood@woodandmeredith.com
404-633-4100
Fax 404-633-0068
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