Section 7938 - Foreclosure(a) Whenever a notice of default and intent to sell an assisted dwelling unit is issued pursuant to Civil Code Section 2924 alleging that a recipient has defaulted in performing its obligations under the agreements required by Section 7914, the recipient shall be notified in writing of its right to contest the grounds for declaring such a default in a hearing before the Department.(b) The notice of right to a hearing shall be issued concurrently with the issuance of a notice of default. The notice of right to a hearing shall include a form prescribed by the Department which the recipient shall use to notify the Department of its intention to contest the basis for declaring a default. The notice of hearing shall provide as follows: (1) it shall require the recipient to specify in the prescribed form the grounds upon which the recipient relies in disputing the alleged default;(2) it shall specify a date by which the prescribed form must be postmarked or returned to the Department and must allow the recipient at least fourteen (14) days to respond; and(3) it shall specify that if the prescribed form is not received or postmarked by the specified date, the recipient shall have waived its right to a hearing before the Department.(c) Upon receipt of a request for a hearing, the Department shall immediately notify the recipient of the date set for the hearing. The notice of hearing shall be mailed at least fourteen (14) days prior to the date set for the hearing and shall inform the recipient of the following; (1) the date, time and place for the hearing;(2) the right of the recipient to present at the hearing any evidence or arguments in support of its position;(3) the right of the recipient to examine or copy, at the recipient's expense, all documents, records, and regulations relating to the disputed default;(4) the right to be represented by counsel or other person chosen by the recipient as its personal representative; and(5) the right of the recipient to submit its evidence and arguments in writing prior to the hearing date in lieu of a personal appearance at the hearing.(d) The hearing shall be conducted informally by the General Counsel of the Department or the General Counsel's designee. The following procedures shall govern hearings before the Department: (1) The recipient shall be given the opportunity to confront or examine and controvert all witnesses and documents upon which the claimed default is based. The opportunity to confront a witness is not required where both parties have expressly agreed in writing that the appearance of such a witness is unnecessary.(2) Oral or documentary evidence relevant to the facts and issues raised by the recipient may be received without regard to admissibility under judicial rules of evidence, but with appropriate regard to credibility, authenticity, relevance and materiality. At the conclusion of the hearing the General Counsel shall review all the evidence and arguments presented and, within seven (7) days thereafter, shall prepare a tentative ruling on the issue of default which shall be submitted to the Director for a final determination.
(e) In the event a recipient fails to appear at a hearing, the Department may decide that the recipient has waived its right to a hearing and the General Counsel may proceed to make his/her findings and recommendation to the Director.(f) After receipt of a tentative ruling, the Director shall review the record of the proceedings and the findings of the General Counsel and shall decide whether the recipient has defaulted in its obligations and whether the notice of default shall be rescinded. (1) If the Director finds there is no default by the recipient, the notice of default shall immediately be rescinded and the contested action to foreclose terminated.(2) If the Director finds that the recipient has defaulted in performance of its obligations under Section 7914: (A) the notice of default shall remain effective and the action to foreclose shall continue; or(B) the Director, in his/her discretion, may permit the recipient to cure its default and have the notice of default rescinded.(g) The provisions of this section shall not apply to any mortgage lender making loans to recipients in conjunction with the State, but not utilizing the same note and deed of trust as the State is using to secure its loan. Where the State and a mortgage lender are making a joint mortgage loan utilizing the same note and deed of trust this section shall be applicable, except that the Director may not exercise his/her discretion under subdivision (f)(2)(b) when the recipient has defaulted in its obligation to make payments on the mortgage lender's portion of the assisted loan or defaulted in its obligation to make required tax and insurance payments in connection with the assisted unit and the mortgage lender will not agree to permit the recipient to cure.Cal. Code Regs. Tit. 25, § 7938
1. Repealer and new section filed 11-13-80 as an emergency; effective upon filing (Register 80, No. 46). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 3-13-81.
2. Certificate of Compliance transmitted to OAL 3-13-81 and filed 4-14-81 (Register 81, No. 16).
3. Amendment filed 6-11-81 as an emergency; effective upon filing (Register 81, No. 25).
4. Order of Repeal of 6-11-81 emergency order filed 6-19-81 by OAL pursuant to Government Code Section 11349.6 (Register 81, No. 25).
5. Amendment of subsections (f) and (g) filed 7-6-81 as an emergency; effective upon filing (Register 81, No. 28). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 11-3-81.
6. Certificate of Compliance as to 7-6-81 order transmitted to OAL 10-23-81 and filed 11-18-81 (Register 81, No. 47). Note: Authority cited: Section 50406, Health and Safety Code. Reference: Sections 50775, 50776 and 50777, Health and Safety Code.
1. Repealer and new section filed 11-13-80 as an emergency; effective upon filing (Register 80, No. 46). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 3-13-81.
2. Certificate of Compliance transmitted to OAL 3-13-81 and filed 4-14-81 (Register 81, No. 16).
3. Amendment filed 6-11-81 as an emergency; effective upon filing (Register 81, No. 25).
4. Order of Repeal of 6-11-81 emergency order filed 6-19-81 by OAL pursuant to Government Code Section 11349.6 (Register 81, No. 25).
5. Amendment of subsections (f) and (g) filed 7-6-81 as an emergency; effective upon filing (Register 81, No. 28). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 11-3-81.
6. Certificate of Compliance as to 7-6-81 order transmitted to OAL 10-23-81 and filed 11-18-81 (Register 81, No. 47).