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TITLE 14. LIEN
CHAPTER 2. MORTGAGE
Article 2. Mortgage of Real Property
California Civil Code Section 2947-2955.5




2947.  Any interest in real property which is capable of being
transferred may be mortgaged.



2948.  A mortgage of real property may be made in substantially the
following form:


         This mortgage, made the ____ day of ________,
     in the year ____, by A B, of _____, mortgagor, to
     C D, of ______; mortgagee, witnesseth:
         That the mortgagor mortgages to the mortgagee
     (here describe the property), as security for the
     payment to him of _______ dollars, on (or before)
     the _____ day of ________, in the year ____, with
     interest thereon (or as security for the payment
     of an obligation, describing it, etc.)

                                                A B.



2948.5.  Interest on the principal obligation of a promissory note
secured by a mortgage or deed of trust on real property improved with
one-to-four residential dwelling units shall not commence to accrue
prior to close of escrow if the loan proceeds are paid into escrow
or, if there is no escrow, the date upon which the loan proceeds have
been made available for withdrawal as a matter of right, as
specified in subdivision (d) of Section 12413.1 of the Insurance
Code.
   This section does not apply if the loan proceeds are paid or made
available, as the case may be, in cash or by a check, cashier's
check, negotiable order of withdrawal, share draft, traveler's check,
or money order issued by, or drawn on, a financial institution, the
accounts of which are insured by an agency or instrumentality of the
United States, and which has an office in this state from which
payment may be obtained.



2949.  (a) No mortgage or deed of trust on real property containing
only a single-family, owner-occupied dwelling may be declared in
default, nor may the maturity date of the indebtedness secured
thereby be accelerated, solely by reason of the owner further
encumbering the real property or any portion thereof, with a junior
mortgage or junior deed of trust.
   (b) As used in this section, "single-family, owner-occupied
dwelling" means a dwelling which will be owned and occupied by a
signatory to the mortgage or deed of trust secured by such dwelling
within 90 days of the execution of such mortgage or deed of trust.



2950.  When a grant of real property purports to be an absolute
conveyance, but is intended to be defeasable on the performance of
certain conditions, such grant is not defeated or affected as against
any person other than the grantee or his heirs or devisees, or
persons having actual notice, unless an instrument of defeasance,
duly executed and acknowledged, shall have been recorded in the
office of the County Recorder of the county where the property is
situated.


2952.  Mortgages and deeds of trust of real property may be
acknowledged or proved, certified and recorded, in like manner and
with like effect, as grants thereof; provided, however, that a
mortgage or deed of trust of real property may be recorded and
constructive notice of the same and the contents thereof given in the
following manner:
   Any person may record in the office of the county recorder of any
county fictitious mortgages and deeds of trust of real property.
Those fictitious mortgages and deeds of trust need not be
acknowledged, or proved or certified to be recorded or entitled to
record.  Those mortgages and deeds of trust shall have noted upon the
face thereof that they are fictitious.  The county recorder shall
index and record fictitious mortgages and deeds of trust in the same
manner as other mortgages and deeds of trust are recorded, and shall
note on all indices and records of the same that they are fictitious.
  Thereafter, any of the provisions of any recorded fictitious
mortgage or deed of trust may be included for any and all purposes in
any mortgage or deed of trust by reference therein to any of those
provisions, without setting the same forth in full; provided, the
fictitious mortgage or deed of trust is of record in the county in
which the mortgage or deed of trust adopting or including by
reference any of the provisions thereof is recorded.  The reference
shall contain a statement, as to each county in which the mortgage or
deed of trust containing such a reference is recorded, of the date
the fictitious mortgage or deed of trust was recorded, the county
recorder's office wherein it is recorded, and the book or volume and
the first page of the records in the recorder's office wherein and at
which the fictitious mortgage or deed of trust was recorded, and a
statement by paragraph numbers or any other method that will
definitely identify the same, of the specific provisions of the
fictitious mortgage or deed of trust that are being so adopted and
included therein.  The recording of any mortgage or deed of trust
which has included therein any of those provisions by reference as
aforesaid shall operate as constructive notice of the whole thereof
including the terms, as a part of the written contents of the
mortgage or deed of trust, of those provisions so included by
reference as though the same were written in full therein.  The
parties bound or to be bound by provisions so adopted and included by
reference shall be bound thereby in the same manner and with like
effect for all purposes as though those provisions had been and were
set forth in full in any mortgage or deed of trust.
   The amendment to this section enacted by the 1957 Regular Session
of the Legislature does not constitute a change in, but is
declaratory of, the preexisting law.



2953.  Any express agreement made or entered into by a borrower at
the time of or in connection with the making of or renewing of any
loan secured by a deed of trust, mortgage or other instrument
creating a lien on real property, whereby the borrower agrees to
waive the rights, or privileges conferred upon him by Sections 2924,
2924b, 2924c of the Civil Code or by Sections 580a or 726 of the Code
of Civil Procedure, shall be void and of no effect.  The provisions
of this section shall not apply to any deed of trust, mortgage or
other liens given to secure the payment of bonds or other evidences
of indebtedness authorized or permitted to be issued by the
Commissioner of Corporations, or is made by a public utility subject
to the provisions of the Public Utilities Act.



2953.1.  As used in this section:
   (a) "Real property security instrument" shall include any mortgage
or trust deed or land contract in or on real property.
   (b) "Subordination clause" shall mean a clause in a real property
security instrument whereby the holder of the security interest under
such instrument agrees that upon the occurrence of conditions or
circumstances specified therein his security interest will become
subordinate to or he will execute an agreement subordinating his
interest to the lien of another real property security instrument
which would otherwise be of lower priority than his lien or security
interest.
   (c) "Subordination agreement" shall mean a  separate agreement or
instrument whereby the holder of the security interest under a real
property security instrument agrees that (1) his existing security
interest is subordinate to, or (2) upon the occurrence of conditions
or circumstances specified in such separate agreement his security
interest will become subordinate to, or (3) he will execute an
agreement subordinating his interest to, the lien of another real
property security instrument which would otherwise be of lower
priority than his lien or security interest.



2953.2.  Every real property security instrument which contains or
has attached a subordination clause shall contain:
   (a) At the top of the real property security instrument there
shall appear in at least 10-point bold type, or, if typewritten, in
capital letters and underlined, the word "SUBORDINATED" followed by a
description of the type of security instrument.
   (b) A notice in at least eight-point bold type, or, if
typewritten, in capital letters, shall appear immediately below the
legend required by subdivision (a) of this section reading as
follows:  "NOTICE:  This (insert description of real property
security instrument) contains a subordination clause which may result
in your security interest in the property becoming subject to and of
lower priority than the lien of some other or later security
instrument."
   (c) If the terms of the subordination clause allow the obligor on
the debt secured by the real property security instrument to obtain a
loan, secured by another real property security instrument covering
all or any part of the same parcel of real property, the proceeds of
which may be used for any purpose or purposes other than defraying
the costs for improvement of the land covered by the real property
security instrument containing the subordination clause, a notice in
at least eight-point bold type, or, if typewritten, in capital
letters shall appear directly above the space reserved for the
signature of the person whose security interest is to be
subordinated, reading as follows:  "NOTICE:  This (insert description
of real property security instrument) contains a subordination
clause which allows the person obligated on your real property
security instrument to obtain a loan a portion of which may be
expended for other purposes than improvement of the land."



2953.3.  Every subordination agreement shall contain:
   (a) At the top of the subordination agreement there shall appear
in at least 10-point bold type, or, if typewritten, in capital
letters and underlined, the words "SUBORDINATION AGREEMENT."
   (b) A notice in at least eight-point bold type, or, if
typewritten, in capital letters, shall appear immediately below the
legend required by subdivision (a) of this section reading as
follows:
   "NOTICE:  This subordination agreement ("may result" or "results"
as appropriate) in your security interest in the property becoming
subject to and of lower priority than the lien of some other or later
security instrument."
   (c) If the terms of the subordination agreement provide that the
obligor on the debt secured by the real property security instrument
may either obtain a loan, or obtain an agreement from the holder of
the real property security which will allow him to obtain a loan, the
proceeds of which may be used for any purpose or purposes other than
defraying the actual contract costs for improvement of the land,
covered by the real property security instrument which is, or is to
become subordinated, a notice in at least eight-point bold type or,
if typewritten, in capital letters, shall appear directly above the
space reserved for the signature of the person whose security
interest is to be subordinated, reading as follows:  "NOTICE:  This
subordination agreement contains a provision which ("allows" or "may
allow" as appropriate) the person obligated on your real property
security to obtain a loan a portion of which may be expended for
other purposes than improvement of the land."



2953.4.  (a) Any subordination clause and any subordination
agreement which is executed after the effective date of this act and
which does not substantially comply with the provisions of Section
2953.2 or Section 2953.3 shall be voidable upon the election of the
person whose security interest is to be subordinated or his
successor-in-interest exercised within two years of the date on which
the instrument to which his security interest is subordinated is
executed; provided that such power of avoidance shall not be
exercisable by any person having actual knowledge of the existence
and terms of the subordination clause or agreement.
   (b) The person whose security interest was to be subordinated or
his successor-in-interest shall exercise his election to void the
subordination clause or subordination agreement provided by
subdivision (a) of this section by recording a notice stating that
the provisions of Civil Code Section 2953.2 or Civil Code Section
2953.3 have not been complied with, and that he is the holder of the
security instrument which is or was to become subordinated and that
he elects to avoid the effect of the subordination clause or
subordination agreement.
   (c) The provisions of this section may be waived by the subsequent
execution and recordation by the holder of the security interest
which is or may become subordinated, of a statement that he knows of
the existence of the subordination clause or agreement and of its
terms and that he waives the provisions of this section and the
requirements of Sections 2953.1, 2953.2, and 2953.3.



2953.5.  (a) Sections 2953.1 through 2953.4 shall not apply to any
subordination clause or subordination agreement which expressly
states that the subordinating loan shall exceed twenty-five thousand
dollars ($25,000).
   (b) Sections 2953.1 through 2953.4 shall not apply to any
subordination clause or subordination agreement which is executed in
connection with a loan which exceeds twenty-five thousand dollars
($25,000).



2954.  (a) No impound, trust or other type of account for payment of
taxes on the property, insurance premiums or other purposes relating
to the property shall be required as a condition of a real property
sale contract or a loan secured by a deed of trust or mortgage on
real property containing only a single-family, owner-occupied
dwelling, except:  (1) where required by a state or federal
regulatory authority; or (2) where a loan is made, guaranteed, or
insured by a state or federal governmental lending or insuring
agency; or (3) upon a failure of the purchaser or borrower to pay two
consecutive tax installments on the property prior to the
delinquency date for such payments; or (4) where the original
principal amount of such a loan is (i) 90 percent or more of the sale
price, if the property involved is sold, or is (ii) 90 percent or
more of the appraised value of the property securing the loan; or (5)
whenever the combined principal amount of all loans secured by the
real property exceeds 80 percent of the appraised value of the
property securing the loans.  Nothing contained in this section shall
preclude establishment of such an account on terms mutually
agreeable to the parties to the loan, if, prior to the execution of
the loan or sale agreement, the seller or lender has furnished to the
purchaser or borrower a statement in writing, which may be set forth
in the loan application, to the effect that the establishment of
such an account shall not be required as a condition to the execution
of the loan or sale agreement, and further, stating whether or not
interest will be paid on the funds in such an account.
   An impound, trust, or other type of account for the payment of
taxes, insurance premiums or other purposes relating to property
established in violation of this subdivision is voidable, at the
option of the purchaser or borrower, at any time, but shall not
otherwise affect the validity of the loan or sale.
   (b) Every mortgagee of real property, beneficiary under a deed of
trust on real property or vendor on a real property sale contract
upon the written request of the mortgagor, trustor or vendee shall
furnish to the mortgagor, trustor or vendee for each calendar year
within 60 days after the end of such year an itemized accounting of
moneys received for interest and principal repayment and received and
held in or disbursed from an impound or trust account, if any, for
payment of taxes on the property, insurance premiums or other
purposes relating to the property subject to the mortgage, deed of
trust or real property sale contract.  The mortgagor, trustor or
vendee shall be entitled to receive one such accounting for each
calendar year without charge and shall be entitled to additional
similar accountings for one or more months upon written request and
on payment in advance of fees as follows:
   (1) Fifty cents ($0.50) per statement when requested in advance on
a monthly basis for one or more years.
   (2) One dollar ($1) per statement when requested for only one
month.
   (3) Five dollars ($5) if requested for a single cumulative
statement giving all the information described above back to the last
statement rendered.
   If the mortgagee, beneficiary or vendor transmits to the
mortgagor, trustor or vendee a monthly statement or passbook showing
moneys received for interest and principal repayment and received and
held in and disbursed from an impound or trust account, if any, the
mortgagee, beneficiary or vendor shall be deemed to have complied
with this section.
   No increase in the monthly rate of payment of a mortgagor, trustor
or vendee on a real property sale contract for impound or trust
accounts shall be effective until after the mortgagee, beneficiary or
vendor has furnished the mortgagor, trustor or vendee with an
itemized accounting of the moneys presently held by it in the
accounts, and a statement of the new monthly rate of payment, and an
explanation of the factors necessitating the increase.
   The provisions of this section shall be in addition to the
obligations of the parties as stated by Section 2943 of this code.
   Every person who willfully or repeatedly violates this subdivision
shall be subject to punishment by a fine of not less than fifty
dollars ($50) nor more than two hundred dollars ($200).
   (c) As used in this section, "single-family, owner-occupied
dwelling" means  a dwelling which will be owned and occupied by a
signatory to the mortgage or deed of trust secured by such dwelling
within 90 days of the execution of such mortgage or deed of trust.



2954.1.  No lender or person who purchases obligations secured by
real property, or any agent of such lender or person, who maintains
an impound, trust, or other type of account for the payment of taxes
and assessments on real property, insurance premiums, or other
purposes relating to such property shall do any of the following:
   (a) Require the borrower or vendee to deposit in such account in
any month an amount in excess of that which would be permitted in
connection with a federally related mortgage loan pursuant to Section
10 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2609), as amended.
   (b) Require the sums maintained in such account to exceed at any
time the amount or amounts reasonably necessary to pay such
obligations as they become due.  Any sum held in excess of the
reasonable amount shall be refunded within 30 days unless the parties
mutually agree to the contrary.  Such an agreement may be rescinded
at any time by any party.
   (c) Make payments from the account in a manner so as to cause any
policy of insurance to be canceled or so as to cause property taxes
or other similar payments to become delinquent.
   Nothing contained herein shall prohibit requiring additional
amounts to be paid into an impound account in order to recover any
deficiency which may exist in the account.
   Any person harmed by a violation of this section shall be entitled
to sue to recover his or her damages or for injunctive relief; but
such violation shall not otherwise affect the validity of the loan or
sale.
   This section applies to all such accounts maintained after the
effective date of this act.



2954.2.  (a) Every mortgagee of record of real property containing
only a one- to four-family residence, when the mortgage is given to
secure payment of the balance of the purchase price of the property
or to refinance such a mortgage, shall furnish to the mortgagor
within 60 days after the end of each calendar year a written
statement showing the amount of moneys received for interest and
principal repayment, late charges, moneys received and held in or
disbursed from an impound account, if any, for the payment of taxes
on the property, insurance premiums, bond assessments, or other
purposes relating to the property, and interest credited to the
account, if any.  The written statement required to be furnished by
this section shall be deemed furnished if the mortgagee of record
transmits to the mortgagor of record cumulative statements or
receipts which, for each calendar year, provide in one of the
statements or receipts the information required by this section.  The
mortgagor, trustor or vendee shall be entitled to receive one such
statement for each calendar year without charge and without request.
Such statement shall include a notification in 10-point type that
additional accountings can be requested by the mortgagor, trustor, or
vendee, pursuant to Section 2954.
   (b) For the purposes of this section:
   (1) "Mortgagee" includes a beneficiary under a deed of trust, a
vendor under a real property sale contract, and an organization which
services a mortgage or deed of trust by receiving and disbursing
payments for the mortgagee or beneficiary.
   (2) "Mortgage" includes a first or second mortgage, a first or
second deed of trust, and a real property sale contract.
   (3) "Impound account" includes a trust or other type of account
established for the purposes described in subdivision (a).
   (c) The requirements of this section shall be in addition to the
requirements of Section 2954.
   (d) This section shall become operative on December 31, 1978, and
apply to moneys received by a mortgagee on and after January 1, 1978.



2954.4.  (a) A charge which may be imposed for late payment of an
installment due on a loan secured by a mortgage or a deed of trust on
real property containing only a single-family, owner-occupied
dwelling, shall not exceed either (1) the equivalent of 6 percent of
the installment due that is applicable to payment of principal and
interest on the loan, or (2) five dollars ($5), whichever is greater.
  No charge may be imposed more than once for the late payment of the
same installment; provided, however, that the imposition of a late
charge on any late payment does not eliminate or supersede late
charges imposed on prior late payments.  A payment is not a "late
payment" for the purposes of this section until at least 10 days
following the due date of the installment.
   (b) No late charge may be imposed on any installment which is paid
or tendered in full on or before its due date, or within 10 days
thereafter, even though an earlier installment or installments, or
any late charge thereon, may not have been paid in full when due.
For the purposes of determining whether late charges may be imposed,
any payment tendered by the borrower shall be applied by the lender
to the most recent installment due.
   (c) A late payment charge described in subdivision (a) is valid if
it satisfies the requirements of this section and Section 2954.5.
   (d) Nothing in this section shall be construed to alter in any way
the duty of the borrower to pay any installment then due or to alter
the rights of the lender to enforce the payment of such
installments.
   (e) This section is not applicable to loans made by a credit union
subject to the provisions of Division 5 (commencing with Section
14000) of the Financial Code, by an industrial loan company subject
to the provisions of Division 7 (commencing with Section 18000) of
the Financial Code, by a personal property broker subject to the
provisions of Division 9 (commencing with Section 22000) of the
Financial Code, by a consumer finance lender subject to the
provisions of Division 10 (commencing with Section 24000) of the
Financial Code, or by a commercial finance lender subject to the
provisions of Division 11 (commencing with Section 26000) of the
Financial Code, and is not applicable to loans made or negotiated by
a real estate broker subject to the provisions of Article 7
(commencing with Section 10240) of Chapter 3 of Part 1 of Division 4
of the Business and Professions Code.
   (f) As used in this section, "single-family, owner-occupied
dwelling" means a dwelling which will be owned and occupied by a
signatory to the mortgage or deed of trust secured by such dwelling
within 90 days of the execution of the mortgage or deed of trust.
   (g) This section shall apply to loans executed on and after
January 1, 1976.



2954.5.  (a) Before the first default, delinquency, or late payment
charge may be assessed by any lender on a delinquent payment of a
loan, other than a loan made pursuant to Division 9 (commencing with
Section 22000), Division 10 (commencing with Section 24000), or
Division 11 (commencing with Section 26000) of the Financial Code,
secured by real property, and before the borrower becomes obligated
to pay such a charge, the borrower shall either (1) be notified in
writing and given at least 10 days from mailing of such notice in
which to cure the delinquency, or (2) be informed, by a billing or
notice sent for each payment due on the loan, of the date after which
such a charge will be assessed.
   The notice provided in either paragraph (1) or (2) shall contain
the amount of such charge or the method by which it is calculated.
   (b) If a subsequent payment becomes delinquent the borrower shall
be notified in writing, before the late charge is to be imposed, that
the charge will be imposed if payment is not received, or the
borrower shall be notified at least semiannually of the total amount
of late charges imposed during the period covered by the notice.
   (c) Notice provided by this section shall be sent to the address
specified by the borrower, or, if no address is specified, to the
borrower's address as shown in the lender's records.
   (d) In case of multiple borrowers obligated on the same loan, a
notice mailed to one shall be deemed to comply with the provisions of
this section.
   (e) The failure of the lender to comply with the requirements of
this section does not excuse or defer the borrower's performance of
any obligation incurred in the loan transaction, other than his or
her obligation to pay a late payment charge, nor does it impair or
defer the right of the lender to enforce any other obligation
including the costs and expenses incurred in any enforcement
authorized by law.
   The provisions of this section as added by Chapter 1430 of the
Statutes of 1970 shall only affect loans made on and after January 1,
1971.
   The amendments to this section made at the 1975-76 Regular Session
of the Legislature shall only apply to loans executed on and after
January 1, 1976.


2954.6.  (a) If private mortgage insurance or mortgage guaranty
insurance, as defined in subdivision (a) of Section 12640.02 of the
Insurance Code, is required as a condition of a loan secured by a
deed of trust or mortgage on real property, the lender or person
making or arranging the loan shall notify the borrower whether or not
the borrower has the right to cancel the insurance.  If the borrower
has the right to cancel, then the lender or person making or
arranging the loan shall notify the borrower in writing of the
following:
   (1) Any identifying loan or insurance information necessary to
permit the borrower to communicate with the insurer or the lender
concerning the insurance.
   (2) The conditions that are required to be satisfied before the
private mortgage insurance or mortgage guaranty insurance may be
subject to cancellation, which shall include, but is not limited to,
both of the following:
   (A) If the condition is a minimum ratio between the remaining
principal balance of the loan and the original or current value of
the property, that ratio shall be stated.
   (B) Information concerning whether or not an appraisal may be
necessary.
   (3) The procedure the borrower is required to follow to cancel the
private mortgage insurance or mortgage guaranty insurance.
   (b) The notice required in subdivision (a) shall be given to the
borrower no later than 30 days after the close of escrow.  The notice
shall be set forth in at least 10-point bold type.
   (c) With respect to any loan specified in subdivision (a) for
which private mortgage insurance or mortgage guaranty insurance is
still maintained, the lender or person making, arranging, or
servicing the loan shall provide the borrower with a notice
containing the same information as specified in subdivision (a) or a
clear and conspicuous written statement indicating that (1) the
borrower may be able to cancel the private mortgage insurance or
mortgage guaranty insurance and (2) the borrower may contact the
lender or person making, arranging, or servicing the loan at a
designated address and telephone number to determine whether the
borrower has a right of cancellation and, if so, the conditions and
procedure to effect cancellation.  The notice or statement required
by this subdivision shall be provided in or with each written
statement required by Section 2954.2.  This subdivision shall become
operative on January 1, 1992.
   (d) The notice required under this section shall be provided
without cost to the borrower.
   (e) Any person harmed by a violation of this section may obtain
injunctive relief and may recover treble damages and reasonable
attorney's fees and costs.
   (f) This section shall not apply to any mortgage funded with bond
proceeds issued under an indenture requiring mortgage insurance for
the life of the loan nor to any insurance issued pursuant to Part 4
(commencing with Section 51600) of Division 31 of the Health and
Safety Code, or loans insured by the Federal Housing Administration
or Veterans Administration.



2954.65.  Within 30 days after notice of cancellation from the
insured, a private mortgage insurer or mortgage guaranty insurer
shall, if the policy is cancellable, refund the remaining portion of
the unused premium to the person or persons designated by the
insured.



2954.7.  Except when a statute, regulation, rule, or written
guideline promulgated by an institutional third party applicable to
notes or evidence of indebtedness secured by a deed of trust or
mortgage purchased in whole or in part by an institutional third
party specifically prohibits cancellation during the term of the
indebtedness, if a borrower so requests and the conditions
established by paragraphs (1) to (6), inclusive, of subdivision (a)
are met, a borrower may terminate future payments for private
mortgage insurance, or mortgage guaranty insurance as defined in
subdivision (a) of Section 12640.02 of the Insurance Code, issued as
a condition to the extension of credit in the form of a loan
evidenced by a note or other evidence of indebtedness which is
secured by a deed of trust or mortgage on the subject real property.

   (a) The following conditions shall be satisfied in order for a
borrower to be entitled to terminate payments for private mortgage
insurance or mortgage guaranty insurance:
   (1) The request to terminate future payments for private mortgage
insurance or mortgage guaranty insurance shall be in writing.
   (2) The origination date of the note or evidence of indebtedness
shall be at least two years prior to the date of the request.
   (3) The note or evidence of indebtedness shall be for personal,
family, household, or purchase money purposes, secured by a deed of
trust or mortgage on owner-occupied, one to four unit, residential
real property.
   (4) The unpaid principal balance owed on the secured obligation
that is the subject of the private mortgage insurance or mortgage
guaranty insurance shall not be more than 75 percent, unless the
borrower and lender or servicer of the loan agree in writing upon a
higher loan to value ratio, of either of the following:
   (A) The sale price of the property at the origination date of the
note or evidence of indebtedness, provided that the current fair
market value of the property is equal to or greater than the original
appraised value used at the origination date.
   (B) The current fair market value of the property as determined by
an appraisal, the cost of which shall be paid for by the borrower.
The appraisal shall be ordered and the appraiser shall be selected by
the lender or servicer of the loan.
   (5) The borrower's monthly installments of principal, interest,
and escrow obligations on the encumbrance or encumbrances secured by
the real property shall be current at the time the request is made
and those installments shall not have been more than 30 days past due
over the 24-month  period immediately preceding the request,
provided further, that no notice of default has been recorded against
the security real property pursuant to Section 2924, as a result of
a nonmonetary default by the borrower (trustor) during the 24-month
period immediately preceding the request.
   (b) This section does not apply to any of the following:
   (1) A note or evidence of indebtedness secured by a deed of trust
or mortgage, or mortgage insurance, executed under the authority of
Part 3 (commencing with Section 50900) or Part 4 (commencing with
Section 51600) of Division 31 of the Health and Safety Code.
   (2) Any note or evidence of indebtedness secured by a deed of
trust or mortgage that is funded in whole or in part pursuant to
authority granted by statute, regulation, or rule that, as a
condition of that funding, prohibits or limits termination of
payments for private mortgage insurance or mortgage guaranty
insurance during the term of the indebtedness.
   (3) Notes or evidence of indebtedness that require private
mortgage insurance and were executed prior to January 1, 1991.
   (c) If the note secured by the deed of trust or mortgage will be
or has been sold in whole or in part to an institutional third party,
adherence to the institutional third party's standards for
termination of future payments for private mortgage insurance or
mortgage guaranty insurance shall be deemed in compliance with the
requirements of this section.
   (d) For the purposes of this section, "institutional third party"
means the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, the Government National Mortgage
Association and other substantially similar institutions, whether
public or private, provided the institutions establish and adhere to
rules applicable to the right of cancellation of private mortgage
insurance or mortgage guaranty insurance, which are the same or
substantially the same as those utilized by the above-named
institutions.


2954.8.  (a) Every financial institution that makes loans upon the
security of real property containing only a one- to four-family
residence and located in this state or purchases obligations secured
by such property and that receives money in advance for payment of
taxes and assessments on the property, for insurance, or for other
purposes relating to the property, shall pay interest on the amount
so held to the borrower.  The interest on such amounts shall be at
the rate of at least 2 percent simple interest per annum. Such
interest shall be credited to the borrower's account annually or upon
termination of such account, whichever is earlier.
   (b) No financial institution subject to the provisions of this
section shall impose any fee or charge in connection with the
maintenance or disbursement of money received in advance for the
payment of taxes and assessments on real property securing loans made
by such financial institution, or for the payment of insurance, or
for other purposes relating to such real property, that will result
in an interest rate of less than 2 percent per annum being paid on
the moneys so received.
   (c) For the purposes of this section, "financial institution"
means a bank, savings and loan association or credit union chartered
under the laws of this state or the United States, or any other
person or organization making loans upon the security of real
property containing only a one- to four-family residence.
   (d) The provisions of this section do not apply to any of the
following:
   (1) Loans executed prior to the effective date of this section.
   (2) Moneys which are required by a state or federal regulatory
authority to be placed by a financial institution other than a bank
in a non-interest-bearing demand trust fund account of a bank.
   The amendment of this section made by the 1979-80 Regular Session
of the Legislature shall only apply to loans executed on or after
January 1, 1980.



2954.9.  (a) (1) Except as otherwise provided by statute, where the
original principal obligation is a loan for residential property of
four units or less, the borrower under any note or evidence of
indebtedness secured by a deed of trust or mortgage or any other lien
on real property shall be entitled to prepay the whole or any part
of the balance due, together with accrued interest, at any time.
   (2) Nothing in this subdivision shall prevent a borrower from
obligating himself, by an agreement in writing, to pay a prepayment
charge.
   (3) This subdivision does not apply during any calendar year to a
bona fide loan secured by a deed of trust or mortgage given back
during such calendar year to the seller by the purchaser on account
of the purchase price if the seller does not take back four or more
such deeds of trust or mortgages during such calendar year.  Nothing
in this subdivision shall be construed to prohibit a borrower from
making a prepayment by an agreement in writing with the lender.
   (b) Except as otherwise provided in Section 10242.6 of the
Business and Professions Code, the principal and accrued interest on
any loan secured by a mortgage or deed of trust on owner-occupied
residential real property containing only four units or less may be
prepaid in whole or in part at any time but only a prepayment made
within five years of the date of execution of such mortgage or deed
of trust may be subject to a prepayment charge and then solely as
herein set forth.  An amount not exceeding 20 percent of the original
principal amount may be prepaid in any 12-month period without
penalty.  A prepayment charge may be imposed on any amount prepaid in
any 12-month period in excess of 20 percent of the original
principal amount of the loan which charge shall not exceed an amount
equal to the payment of six months' advance interest on the amount
prepaid in excess of 20 percent of the original principal amount.
   (c) Notwithstanding subdivisions (a) and (b), there shall be no
prepayment penalty charged to a borrower under a loan subject to this
section if the residential structure securing the loan has been
damaged to such an extent by a natural disaster  for which a state of
emergency is declared by the Governor, pursuant to Chapter 7
(commencing with Section 8550) of Division 1 of Title 2 of the
Government Code, that the residential structure cannot be occupied
and the prepayment is causally related thereto.



2954.10.  An obligee which accelerates the maturity date of the
principal and  accrued interest, pursuant to contract, on any loan
secured by a mortgage or deed of trust on real property or an estate
for years therein, upon the conveyance of any  right, title, or
interest in that property, may not claim, exact, or collect any
charge, fee, or penalty for any prepayment resulting from that
acceleration.
   The provisions of this section shall not apply to a loan other
than a loan secured by residential real property or any interest
therein containing four units or less, in which the obligor has
expressly waived, in writing, the right to repay in whole or part
without penalty, or has expressly agreed, in writing, to the payment
of a penalty for prepayment upon acceleration.  For any loan executed
on or after January 1, 1984, this waiver or agreement shall be
separately signed or initialed by the obligor and its enforcement
shall be supported by evidence of a course of conduct by the obligee
of individual weight to the consideration in that transaction for the
waiver or agreement.


2954.11.  (a) As used in this section:
   (1) "Open-end credit plan" has the meaning set forth in Regulation
Z of the Federal Reserve System (12 C.F.R. 226.2(a)(20)).
   (2) "Installment loan" means any loan specified in subdivision (h)
extended under an installment loan feature.
   (3) "Installment loan feature" means a feature of an open-end
credit plan which provides for a separate subaccount of the open-end
credit plan pursuant to which the principal of, and interest on, the
loan associated with that subaccount are to be repaid in
substantially equal installments over a specified period without
regard to the amount outstanding under any other feature of the
open-end credit plan or the payment schedule with respect to the
other feature.
   (b) (1) Except as otherwise provided by statute, the borrower
under any installment loan shall be entitled to prepay the whole or
any part of the installment loan, together with any accrued interest,
at any time.
   (2) With respect to any installment loan, nothing in this section
shall preclude a borrower from becoming obligated, by an agreement in
writing, to pay a prepayment charge; but only a prepayment made
within five years of the date the installment loan is made may be
subject to a prepayment charge and then solely as herein set forth.
An amount not exceeding 20 percent of the original principal amount
of the installment loan may be prepaid in any one 12-month period
without incurring a prepayment charge.  A prepayment charge may be
imposed on any amount prepaid in any 12-month period in excess of 20
percent of the original principal amount of the installment loan,
which charge shall not exceed an amount equal to the payment of six
months' advance interest on the amount prepaid in excess of 20
percent of the original principal amount of the installment loan.
   (c) For purposes of subdivision (b):
   (1) If the deed of trust or mortgage secures repayment of more
than one installment loan, each of the installment loans shall be
deemed to have been separately made on the date that the proceeds of
the installment loan are advanced.
   (2) If the outstanding balance of a loan advanced pursuant to an
open-end credit plan thereafter becomes subject to an installment
loan feature of the credit plan, the loan shall be deemed to have
been made when the loan becomes subject to the installment loan
feature, whether the feature was available at the borrower's option
under original terms of the open-end credit plan or the feature
thereafter became available upon modification of the original terms
of the open-end credit plan.
   (d) Notwithstanding subdivision (b), no prepayment charge may be
imposed with respect to an installment loan subject to this section
if any of the following apply:
   (1) The residential structure securing the installment loan has
been damaged to such an extent by a natural disaster for which a
state of emergency is declared by the Governor, pursuant to Chapter 7
(commencing with Section 8550) of Division 1 of Title 2 of the
Government Code, that the residential structure cannot be occupied
and the prepayment is causally related thereto.
   (2) The prepayment is made in conjunction with a bona fide sale of
the real property securing the installment loan.
   (3) The lender does not comply with subdivision (e).
   (4) The term of the installment loan is for not more than five
years and the original principal amount of the installment loan is
less than five thousand dollars ($5,000).
   (e) (1) The lender receiving a borrower's obligation to pay a
prepayment charge authorized by subdivision (b) shall furnish the
borrower with a written disclosure describing the existence of the
prepayment charge obligation, the conditions under which the
prepayment charge shall be payable, and the method by which the
amount of the prepayment charge shall be determined.  If subdivision
(f) provides the borrower with a right to rescind the installment
loan and the related obligation to pay a prepayment charge, the
disclosure required by this subdivision shall also inform the
borrower of this right to rescind, how and when to exercise the
right, and where to mail or deliver a notice of rescission.
   (2) The amount of, or the method for determining the amount of,
the prepayment charge for an installment loan shall be set forth in
the agreement governing the open-end credit plan.
   (f) (1) The disclosure required by paragraph (1) of subdivision
(e) shall be furnished when or up to 30 days before the borrower
signs the agreement or other documents required by the lender for the
installment loan, or no earlier than 30 days before nor later than
10 days following the making of the installment loan, if made without
the borrower having to sign an agreement or other documentation,
such as may be the case if the installment loan may be made on the
basis of telephone or other discussions between the lender and the
borrower not taking place in person.  If the installment loan is made
before the borrower has been furnished with the disclosure required
by paragraph (1) of subdivision (e), the borrower shall have the
right to rescind the installment loan and the related obligation to
pay a prepayment charge by personally delivering or mailing notice to
that effect to the lender, by first-class mail with postage prepaid,
at the lender's location stated in its disclosure concerning the
right to rescind within 10 days following the furnishing of the
disclosure.
   (2) If the disclosure required by paragraph (1) of subdivision (e)
is included in the agreement or other document signed by the
borrower for the installment loan, the disclosure shall be deemed
given at that time.  In other cases, the disclosure shall be deemed
furnished when personally delivered to the borrower or three days
after it is mailed to the borrower, first-class mail with postage
prepaid, at the address to which billing statements for the open-end
credit plan are being sent.
   (3) The disclosure required by paragraph (1) of subdivision (e)
may be separately furnished or may be included in the agreement or
other document for the installment loan, provided that a copy of the
disclosure that the borrower may retain is furnished to the borrower.

   (4) If there is more than one borrower with respect to the
open-end credit plan, a disclosure to any one of them pursuant to
subdivision (e) shall satisfy the requirements of that subdivision
with respect to all of them.
   (g) If after an installment loan is made the lender receives the
borrower's timely notice of the rescission of the installment loan in
accordance with subdivision (f), the balance of the installment loan
shall be transferred to the open-end subaccount of the open-end
credit plan and the borrower shall be obligated to repay the amount
under the same terms and conditions, and subject to the same fees and
other charges, as would be applicable had the loan initially been
extended pursuant to the open-end credit plan or had the installment
loan never been made.
   (h) This section applies to any installment loan secured by a deed
of trust or mortgage or any other lien on residential property of
four units or less and Section 2954.9 does not apply to such
installment loans.  This section shall not apply to any loan that is
subject to Section 10242.6 of the Business and Professions Code.



2954.12.  (a) Notwithstanding Section 2954.7, and except when a
statute, regulation, rule, or written guideline promulgated by an
institutional third party applicable to notes or evidence of
indebtedness secured by a deed of trust or mortgage purchased in
whole or in part by an institutional third party specifically
prohibits cancellation during the term of the indebtedness, the
lender or servicer of a loan evidenced by a note or other evidence of
indebtedness that is secured by a deed of trust or mortgage on the
subject property may not charge or collect future payments from a
borrower for private mortgage insurance or mortgage guaranty
insurance as defined in subdivision (a) of Section 12640.02 of the
Insurance Code, if all of the following conditions are satisfied:
   (1) The loan is for personal, family, household, or purchase money
purposes, the subject property is owner-occupied, one-to-four unit
residential real property, and the outstanding principal balance of
the note or evidence of indebtedness secured by the senior deed of
trust or mortgage on the subject property is equal to or less than 75
percent of the lesser of (A) if the loan was made for purchase of
the property, the sales price of the property under such purchase; or
(B) the appraised value of the property, as determined by the
appraisal conducted in connection with the making of the loan.
   (2) The borrower's scheduled payment of monthly installments of
principal, interest, and escrow obligations is current at the time
the right to cancellation of mortgage insurance accrues.
   (3) During the 12 months prior to the date upon which the right to
cancellation accrues, the borrower has not been assessed more than
one late penalty for any scheduled payment and has not made any
scheduled payment more than 30 days late.
   (4) The loan evidenced by a note or evidence of indebtedness was
made or executed on or after January 1, 1998.
   (5) No notice of default has been recorded against the real
property pursuant to Section 2924, as a result of a nonmonetary
default on the extension of credit by the borrower during the last 12
months prior to the accrual of the borrower's right to cancellation.

   (b) This section does not apply to any of the following:
   (1) A note or evidence of indebtedness secured by a deed of trust
or mortgage, or mortgage insurance, executed under the authority of
Part 3 (commencing with Section 50900) or Part 4 (commencing with
Section 51600) of Division 31 of the Health and Safety Code.
   (2) Any note or evidence of indebtedness secured by a deed of
trust or mortgage that is funded in whole or in part pursuant to
authority granted by statute, regulation, or rule that, as a
condition of that funding, prohibits or limits termination of
payments for private mortgage insurance or mortgage guaranty
insurance during the term of the indebtedness.
   (c) If the note secured by the deed of trust or mortgage will be
or has been sold in whole or in part to an institutional third party,
adherence to the institutional third party's standards for
termination of future payments for private mortgage insurance or
mortgage guaranty insurance shall be deemed in compliance with the
requirements of this section.
   (d) For the purposes of this section, "institutional third party"
means the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, the Government National Mortgage
Association and other substantially similar institutions, whether
public or private, provided the institutions establish and adhere to
rules applicable to the right of cancellation of private mortgage
insurance or mortgage guaranty insurance, which are the same or
substantially the same as those utilized by the above-named
institutions.



2955.  (a) Money held by a mortgagee or a beneficiary of a deed of
trust on real property in this state, or held by a vendor on a
contract of sale of real property in this state, in an impound
account for the payment of taxes and assessments or insurance
premiums or other purposes on or relating to the property, shall be
retained in this state and, if invested, shall be invested only with
residents of this state in the case of individuals, or with
partnerships, corporations, or other persons, or the branches or
subsidiaries thereof, which are engaged in business within this
state.
   (b) Notwithstanding subdivision (a), a mortgagee or beneficiary of
a deed of trust, secured by a first lien on real property, may
deposit money held for the payment of taxes and assessments or
insurance premiums or other purposes in an impound account in an
out-of-state depository institution insured by the Federal Deposit
Insurance Corporation if the mortgagee or beneficiary is any one of
the following:
   (1) The Federal National Mortgage Association, the Government
National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Federal Housing Administration, or the Veteran's
Administration.
   (2) A bank or subsidiary thereof, bank holding company or
subsidiary thereof, trust company, savings bank or savings and loan
association or subsidiary thereof, savings bank or savings
association holding company or subsidiary thereof, credit union,
industrial bank or industrial loan company, commercial finance
lender, personal property broker, consumer finance lender, or insurer
doing business under the authority of and in accordance with the
laws of this state, any other state, or of the United States relating
to banks, trust companies, savings banks or savings associations,
credit unions, industrial banks or industrial loan companies,
commercial finance lenders, personal property brokers, consumer
finance lenders, or insurers, as evidenced by a license, certificate,
or charter issued by the United States or a state, district,
territory, or commonwealth of the United States.
   (3) Trustees of a pension, profit-sharing, or welfare fund, if the
pension, profit-sharing, or welfare fund has a net worth of not less
than fifteen million dollars ($15,000,000).
   (4) A corporation with outstanding securities registered under
Section 12 of the Securities Exchange Act of 1934, or a wholly owned
subsidiary of that corporation.
   (5) A syndication or other combination of any of the entities
specified in paragraphs (1) to (4), inclusive, that is organized to
purchase the promissory note.
   (6) The California Housing Finance Agency or a local housing
finance agency organized under the Health and Safety Code.
   (7) A licensed real estate broker selling all or part of the loan,
note, or contract to a lender or purchaser described in paragraphs
(1) to (6), inclusive, of this subdivision.
   (8) A licensed residential mortgage lender or servicer when acting
under the authority of that license.
   (c) A mortgagee or beneficiary of a deed of trust who deposits
funds held in trust in an out-of-state depository institution in
accordance with subdivision (b) shall make available, in this state,
the books, records, and files pertaining to those trust accounts to
the appropriate state regulatory department or agency, or pay the
reasonable expenses for travel and lodging incurred by the regulatory
department or agency in order to conduct an examination at an
out-of-state location.
   (d) The Attorney General may bring an action on behalf of the
people of California to enjoin a violation of subdivision (a) or
subdivision (b).



2955.1.  (a) Any lender originating a loan secured by the borrower's
separate interest in a condominium project, as defined in
subdivision (f) of Section 1351, which requires earthquake insurance
or imposes a fee or any other condition in lieu thereof pursuant to
an underwriting requirement imposed by an institutional third-party
purchaser shall disclose all of the following to the potential
borrower:
   (1) That the lender or the institutional third party in question
requires earthquake insurance or imposes a fee or any other condition
in lieu thereof pursuant to an underwriting requirement imposed by
an institutional third party purchaser.
   (2) That not all lenders or institutional third parties require
earthquake insurance or impose a fee or any other condition in lieu
thereof pursuant to an underwriting requirement imposed by an
institutional third party purchaser.
   (3) Earthquake insurance may be required on the entire condominium
project.
   (4) That lenders or institutional third parties may also require
that a condominium project maintain, or demonstrate an ability to
maintain, financial reserves in the amount of the earthquake
insurance deductible.
   (b) For the purposes of this section, "institutional third party"
means the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association, the Government National Mortgage
Association, and other substantially similar institutions, whether
public or private.
   (c) The disclosure required by this section shall be made in
writing by the lender as soon as reasonably practicable.



2955.5.  (a) No lender shall require a borrower, as a condition of
receiving or maintaining a loan secured by real property, to provide
hazard insurance coverage against risks to the improvements on that
real property in an amount exceeding the replacement value of the
improvements on the property.
   (b) A lender shall disclose to a borrower, in writing, the
contents of subdivision (a), as soon as practicable, but before
execution of any note or security documents.
   (c) Any person harmed by a violation of this section shall be
entitled to obtain injunctive relief and may recover damages and
reasonable attorney's fees and costs.
   (d) A violation of this section does not affect the validity of
the loan, note secured by a deed of trust, mortgage, or deed of
trust.
   (e) For purposes of this section:
   (1) "Hazard insurance coverage" means insurance against losses
caused by perils which are commonly covered in policies described as
a "Homeowner's Policy," "General Property Form," "Guaranteed
Replacement Cost Insurance," "Special Building Form," "Standard Fire,"
"Standard Fire with Extended Coverage," "Standard Fire with Special
Form Endorsement," or comparable insurance coverage to protect the
real property against loss or damage from fire and other perils
covered within the scope of a standard extended coverage endorsement.

   (2) "Improvements" means buildings or structures attached to the
real property.

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