CA Enacts Law Requiring Mortgage Service Transferees to Honor Certain Agreements to Repair Property

The Governor of California recently signed into law Senate Bill 455 (the Bill) which requires a transferor mortgage servicer that services a mortgage secured by property within the geographic limits of a proclaimed state of emergency or local emergency to deliver to a transferee mortgage servicer any material written records between the borrower and mortgage servicer that relate to the borrower’s election to use insurance proceeds to repair or replace property damaged by the disaster for which the state of emergency or local emergency was proclaimed.

The Bill further requires a transferee mortgage servicer that receives such material written records to honor the written agreement made prior to the transfer to repair property.  The Bill does not prohibit a mortgage servicer from delivering to a transferee mortgage servicer any material written records relating to a borrower’s election to use insurance proceeds to repair or replace damaged property that was not caused by a disaster for which a state of emergency or local emergency was proclaimed.

The Bill goes into effect on January 1, 2024.