Western Banker July/August 2022

tizes institutional investors that may be situated to offer the highest price, have the fewest contingencies and/or rely on the least amount of financing. This result is counter to the Legisla ture’s more recent focus of discour aging institutional investors and pri oritizing first-time, owner-occupant homebuyers. Just stepping through a standard sales transaction, under SB 1323, who signs seller’s disclosures or a grant deed? In fact, a trustee would be unable to accurately make repre sentations as to the condition of the property required in typical seller’s disclosures. Further, given that the measure requires the property be listed at appraised market value, questions have been raised on how to establish that value if the borrower isn’t cooperative. Proponents think they have resolved that concern too by requiring the appraisal be based on an exterior-only appraisal if a complete visual inspection of the interior and exterior is impossible because the borrower denies the ap praiser access.

Given the trend over the past many years, where mortgage borrowers rights have been strengthened, it’s astonishing that the Legislature is poised to strip borrowers of their rights through this proposal. Instead, why not advance a public policy so lution that incentivizes the borrower to take action and control, particu larly when they have equity in the property? CBA and other real estate trades have been trying to find common ground with the proponents. While we don’t think the current approach is work able, we have offered an alternative that puts the borrower in control. The counterproposal postpones a trustee’s sale if the borrower pro vides a valid listing agreement, gives the borrower time to close escrow if there is a valid purchase agreement and establishes a minimum bid re quirement aimed at preserving the borrower’s equity if a trustee’s sale occurs. Unfortunately, the propo nents have rejected this counterpro posal and are moving forward with their approach.

At this stage, the measure has passed the Assembly Committee on Judi ciary and is pending action on the Assembly Floor. Since the bill was amended in the Assembly, it will re turn to the Senate for a concurrence vote. Should it pass at each of these points, the measure will be sent to the Governor for consideration.

Kevin Gould is the Executive Vice President and Director of Government Relations for the California Bankers Associa tion. He joined the CBA in 2004, bringing with him more than

seven years of legislative experience. In his role, he oversees the management and operation of CBA’s state and federal government relations department and serves as one of CBA’s three registered lobbyists. Gould’s advocacy responsibilities and issues focus mainly in the areas of bank operations, commercial lending, and wealth management issues. You can reach him at kgould@calbankers.com.

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WesternBanker | Issue 4 2022