AB 130: California Attacks Junior Liens
DOSS LAW ALERT
Contact Your Representatives ASAP
All hands on deck! We are asking you to contact your representatives as soon as possible to help stop a bill that could be passed by this afternoon or tomorrow if we do not bring massive awareness to its ridiculous outcomes.
SB 681 was intended to deal with the problem of zombie mortgages; however, if passed, among other unintended consequences, SB 681 would make all junior liens unenforceable in California. Our lobbyist for the California Mortgage Association (“CMA”), Mike Belote, has been working tirelessly with other industry groups to draft language to thwart these possible nightmare outcomes. While Mr. Belote was working on alternative language, the author of SB 681 decided to slip the language of SB 681 into the 215 page budget trailer bill named AB 130. The reckless language is in Section 2 of the bill, starting around page 30, and adding Civil Code Section 2924.13.
Key Talking Points
The CMA outlined key points to include in your message to your representatives:
- If the provisions of AB 130 involving subordinate liens are passed, it will make enforcing a junior lien completely impossible.
- If subordinate liens cannot be foreclosed upon in California, lenders will stop making junior liens and extending second-position lines of credit. In today’s housing market, with many people locked into 3% loans, this will make tapping into one’s home equity virtually impossible.
- Private trust deed investors, many on a fixed income, will find the 2nd liens that they invested in, unenforceable virtually overnight.
- Bill allows for retroactive setting aside of foreclosures sales from years ago, which is destabilizing to the real estate market.
In under 3 minutes, watch Mr. Belote zealously advocating on behalf of the CMA and the United Trustees Association on June 25, 2025. [Click here to watch.]
California Today, Could Be Your State Tomorrow
This bill affects California borrowers and lenders with loans secured by California real estate, but as we have seen before, California law has a persuasive impact on laws in other states. Many times, California law leads, and other states follow so if you live outside of California, this could be coming to your state soon if we do not put a stop to it. The ripple effects could quickly turn into a tidal wave. We appreciate everyone doing what they can to bring awareness to this thoughtless bill.
This bill will cause damages for all borrowers in California who cannot refinance their low 1st mortgage and need to get a 2nd mortgage from the equity in their homes. Likewise, this bill will send shockwaves of harm through the entire mortgage industry in California. We all have a dog in this fight and must deliver immediate opposition to all our corresponding representatives.
