AB 278 Summary

• Requires mortgage servicers to contact borrowers and explore foreclosure alternatives before recording a notice of default, with 30-day waiting period and specified due diligence requirements including written notice, three phone call attempts, and certified letter if needed.

• Prohibits recording notice of default or conducting foreclosure sales while a complete first lien loan modification application is pending, and requires written denial notices with appeal rights of at least 30 days for denied applications.

• Establishes single point of contact requirement for borrowers requesting foreclosure prevention alternatives, with direct communication access and responsibility for coordinating loss mitigation options.

• Prohibits collection of application fees and late fees during loan modification consideration periods, and requires subsequent mortgage servicers to honor previously approved foreclosure prevention alternatives.

• Authorizes borrowers to seek injunctive relief and damages (actual damages or greater of treble damages or $50,000 if intentional/reckless) for violations, with attorney's fees for prevailing borrowers; violations by licensed entities constitute licensing law violations.

• Applies only to owner-occupied residential properties with 1-4 dwelling units and, until January 1, 2018, only to entities conducting more than 175 foreclosure sales annually (with exceptions for smaller servicers and entities under 175-foreclosure threshold).