Many of our subscribers have been calling in to ask why there has been such a sudden drop in the number of NOD and NTS recordings in September. The answer is California Senate Bill 1137. SB 1137 was signed July 08, 2008 by Govenor Schwarzenegger under urgency legislation to address the "foreclosure problem" in California (for a copy of the legislation, click on "Foreclosure Processing" on the left hand navigation bar, then go to the forms section).
Basically, SB 1137 sets forth new and modified foreclosure procedures on loans made between 1/01/2003 and 12/31/2007. Provision #2, which took effect on 9/6/08, states that on owner occuped loans the Trustee, beneficiary or authorized agent may not file a Notice of Default until 30 days after contact with the borrower (or satisfying Due Diligence provisions for attempted contact). In cases where the NOD had already been filed but not an NTS, the trustee, beneficiary or authorized agent must now include a declaration with the NTS stating the borrower has been contacted (or contact attempts have been made) to assess their situation and to explore options for them to avoid foreclosure.
While contact with a delinquent borrower to assess their situation is a standard operating procedure for lenders, the format and procedural steps put forth in this new bill (and documenting them) are not. Consequently, there has been a huge drop in NOD's as well as NTS, as everyone scrambles to become compliant with the new law. There was a huge surge in filings the week before the law went into effect (September 2 thru 5), and then the numbers dropped.
In the last couple weeks, the numbers are increasing again as lenders become compliant with the law, and I would suspect that within 30 days the numbers will be back where they were pre SB1137.
