There has been a recent round of investigations by at least one government agency looking into whether trustees violated California Civil Code Section 2923.3(c)(1) and (d)(1) when they record a Notice of Default or a Notice of Sale that does not have the single-sentence translation required by that statute appearing on the first page. This investigation appears to be based on an incomplete interpretation of the statute.
Section 2923.3 was passed to help provide non-English speaking borrowers the same level of notice concerning foreclosures as tenants receive. It was not passed to add a new (meaningless) requirement on documents sent for recordation. As the Legislature explained when debating the enacting bill:
Home borrowers who are not proficient in English are entitled by law to a summary translation of their mortgage loan when the contract is negotiated in one of the five dominant languages in California other than English. When that home is subject to foreclosure, however, there is currently no translation obligation. By contrast, tenants in foreclosure are entitled to receive translations of important legal notices, as are homeowners and tenants whose utilities are subject to shut-off. This bill would rectify that surprising disparity by requiring that the two key legal documents that constitute the non-judicial foreclosure process—the notice of default at the outset, and the notice of sale at the conclusion—be accompanied by a summary translation.
AB 1599 Assembly Bill – Bill Analysis, April 17, 2012 (emphasis added).
To achieve the goal of giving non-English fluent homeowners the same level of notice as renters, the Legislature decided to have a summary of the Notices of Default and Sale translated into five different foreign languages. This summary was then to be attached to the copies of these Notices mailed to the borrowers.
During the debates, there was discussion over whether the translated summaries should also be recorded. And the Legislature decided to reject this requirement for two reasons. First, recording the translations would not serve the intended goal because borrowers do not normally go down to the county recorder’s office to review daily filings to see if they are in default. Second, the summaries add another ten pages to the Notices, which means if they were recorded, (a) the borrowers would ultimately have to pay more in recording fees to the county recorders, and (b) the load on the county recorders’ document management/storage systems would increase by five to six times.
Thus, the Legislature decided that there was no need to record the summaries–as Section 2923.3(a) clearly states: “These summaries are not required to be recorded or published.”
Then the Legislature turned to the question of where to attach the translated summaries. It concluded that it was best to place the summaries at the back, so as to avoid the risk of a borrower reading only the summary and nothing more:
f. Will the Summaries Be Separate Documents, or Part of the NOD and NTS? . . . Committee staff is concerned that, if the summaries are included at the front of the actual documents, we run the risk that individuals will read the summaries, and fail to read the actual documents. The actual documents (i.e., the NOD and NTS) are legal documents, which are critically important to the people receiving them. It would do a disservice to borrowers if the provision of a summary of the NOD or NTS caused them to skip the actual document, when something in that document could have been useful to them.
The risk of borrowers reading the summaries and not the documents they are describing is minimized, if the summary is provided at the end of the document, but providing them at the end runs the risk that they will be overlooked.
AB 1599 Assembly Bill – Bill Analysis, June 27, 2012 hearing (emphasis added).
Because the Legislature was concerned that the summaries at the end would be overlooked, they added a single sentence to the first page of each Notice, translated into the five foreign languages, to alert non-English fluent borrowers that there is a summary in their language attached to the end:
It should be noted that while the summary would be at the end of both the Notice of Default and Notice of Sale, the beginning of the document would include the following statement: “NOTE: THERE IS A SUMMARY OF THE INFORMATION IN THIS DOCUMENT AT THE END OF THE ENGLISH SECTION.” Since that sentence would be translated as well, the first thing that non-English speakers will see when receiving a Notice of Default or Notice of Sale is the sentence informing them to look to the bottom of the document for a summary in one of the five languages described in Civil Code Section 1632.
AB 1599 Assembly Bill – Bill Analysis, July 3, 2012 hearing (emphasis added).
In sum, the single sentence translation was added to the first page in order to let borrowers who received the mailed Notices know that there are translated summaries attached to the end of the document they received.
This single sentence was not designed to help provide any kind of notice to whomever may go down to the county recorder’s office to dig through recently filed foreclosure documents. The copy of the recorded Notice would not have the translation attached, so telling such individuals that “THERE IS A SUMMARY OF THE INFORMATION IN THIS DOCUMENT AT THE END OF THE ENGLISH SECTION” would be nonsensical. They would flip to the back of the recorded Notice and find nothing.
One of the governing principles of statutory interpretation is that the Legislature is presumed not to pass statutes requiring meaningless acts. See People v. York, 60 Cal. App. 4th 1499, 1507-08 (1998). Requiring trustees to add the one sentence translation to all recorded Notices of Default and Sale would be a meaningless act. It literally does nothing. Thus, reading Section 2923.3 to impose such a requirement is a flawed interpretation of the statute.
Responding to government inquiries and subpoenas is rarely an easy task. However, in the case where a trustee is facing a request from such an entity claiming there has been a violation of Section 2923.3 and a demand for statutory penalties based on it, there is certainly more than sufficient basis to explain to the agency why their interpretation of the statute is contrary to the intent of the body that actually wrote it.
For more information about Section 2923.3, contact Sunny S. Huo at email@example.com.