MBA Compliance Essentials Successor-In-Interest State Report - California

1. Successor-In-Interest
State Report
CALIFORNIA
Nanci Weissgold
Partner
Alston & Bird LLP
Margaret Scott
Partner
Alston & Bird LLP
mba.org/compliance
THE TOOLS YOU WANT. THE TRAINING YOU NEED.
17335
MBA COMPLIANCE ESSENTIALS℠

2. Updated as of 5.15.2017
LEGAL02/37158013v4
COPYRIGHT
©2017 Alston & Bird LLP. This report is being provided to you with a limited license for
use solely within your organization. This report and its content may only be accessed
by the purchasing organization. These materials may not be downloaded, reproduced,
forwarded, or otherwise distributed in any form or by any means outside of your
organization, including outside counsel. Your organization will be entitled to comply with
a subpoena or other validly-issued administrative or judicial process that may request
information from this book, to the extent required by law. Unauthorized reproduction,
forwarding, distribution, or display of this copyrighted work is subject to criminal and civil
penalties under federal law. For more information, please contact:
David Upbin
Associate Vice President, Education Operations and Programming, and MBA Strategy
Mortgage Bankers Association
1919 M Street, NW
Washington, DC 20036
202-557-2931
www.mba.org
If you would like to order additional reports or are interested in additional product or
training offerings, please contact education@mba.org.

3. 2
LEGAL02/37158013v4
AUTHOR AND COMPANY BIOGRAPHIES
Nanci Weissgold is a member of Alston & Bird's Financial Services & Products Team and a co-leader of
the Consumer Finance Regulatory Compliance Team. She advises financial
institutions and financial service providers on issues relating to mortgage
lending and mortgage servicing, valuation and other consumer lending issues
as part of her national regulatory compliance practice.
Nanci is a frequent speaker and presenter at legal and industry conferences
and webinars, and has published numerous articles on mortgage banking,
valuation and consumer finance related topics. She served as articles editor of
the Administrative Law Journal at American University. She has been named a
Fellow of the American College of Consumer Financial Services Lawyers, and
she is peer rated in the Martindale-Hubbell® directory as AV Preeminent®, the
highest level of professional excellence.
Margaret W. Scott concentrates her practice on estate planning, fiduciary and tax litigation, estate
settlement, trust administration, charitable planning, charitable solicitation law and exempt organizations.
Margaret is a fellow of the American College of Trusts and Estates Counsel.
She is the chair of the Nonprofit Law Section of the State Bar of Georgia and
serves on the Executive Committee of the Fiduciary Law Section. She is also
on the board of the Atlanta Estate Planning Council.
She serves as the secretary of the Charles Loridans Foundation and the
secretary/treasurer of the Vasser Woolley Foundation. She serves on the
Emory University Board of Visitors and the boards of the Atlanta Volunteer
Lawyers Foundation and Chastain Park Conservancy. Margaret founded
Alston & Bird’s Wills Program for emergency services personnel and indigent
Atlantans and annually provides wills trainings for volunteer attorneys. She has
been selected to the Georgia Rising Stars list by Super Lawyers magazine three times.
⃰⃰ ⃰ ⃰
Founded in 1893, Alston & Bird is a leading national law firm with offices in Atlanta, Beijing, Brussels,
Charlotte, Dallas, Los Angeles, New York, Research Triangle, Silicon Valley and Washington, D.C. The
firm’s attorneys provide a full range of services to domestic and international clients conducting business
around the world. Counseling clients from what was initially a local context quickly expanded to regional,
then national levels, and now spans a global economic environment. Alston & Bird has overlaid its broad
range of legal skills and business knowledge with a commitment to innovation and technology.
Alston & Bird has been ranked on Fortune magazine’s “100 Best Companies to Work For” list for 17
consecutive years, an unprecedented accomplishment among law firms in the United States. The
recognition speaks to the culture of the firm and the environment in which we practice law and provide
service to clients. Alston & Bird has been consistently recognized in the BTI Client Service A-Team
Report. This recognition is reserved for the top-performing firms in the industry that provide superior client
service, a select group culled from the 650 core law firms that serve the Fortune 1000.
Alston & Bird’s core practice areas are corporate, tax, intellectual property and complex litigation, with
national industry focuses that include financial services, technology, health care, manufacturing, life
sciences and energy.

4. 3
LEGAL02/37158013v4
SUCCESSOR IN INTEREST MATRIX
Pursuant to the Final Mortgage Servicing Rules
Effective April 19, 2018
CALIFORNIA
DISCLAIMER: The information contained herein is for general informational purposes only, does not constitute legal
advice in any particular circumstance or fact situation, and does not necessarily reflect the opinions of Alston & Bird LLP or
any of its attorneys or clients. This matrix is not intended to create, and does not create, an attorney-client relationship
between you and Alston & Bird LLP or any of its attorneys, and is not intended as a solicitation. You should consult your
own attorney to obtain advice with respect to any specific issue or problem. Alston & Bird LLP expressly disclaims all liability
for actions taken or not taken based on any or all of the contents of this publication.
Pursuant to the Consumer Finance Protection Bureau’s 2016 Final Mortgage Servicing
Rules (“CFPB Rules”), a successor in interest means a person to whom an ownership interest in
a property securing a mortgage loan is transferred from a borrower, provided that the transfer
falls into one of five categories. These categories set forth in the CFPB Rules, as discussed
below, generally align with the categories in section 341(d) of Garn–St. Germain Depository
Institutions Act of 1982.1
A person does not have to assume or otherwise be liable on the
mortgage in order to be considered a successor in interest. The documents a servicer may require
to confirm a successor in interest’s identity and ownership interest must be reasonable in light of
the laws of the relevant jurisdiction, the specific situation of the potential successor in interest,
and the documents already in the servicer’s possession. This matrix is designed to guide a
servicer in identifying the documents to request from potential successors in interest in a manner
that is reasonable in light of the laws of the state of California.
The CFPB Rules are set forth in both Regulation X2
and Regulation Z.3
The successor in
interest rules in Regulation X generally apply to a federally related mortgage loan, but not
including open-end lines of credit.4
The successor in interest rules in Regulation Z generally
apply to closed-end consumer credit transactions secured by a dwelling.5
Once a successor in
interest is confirmed, the exemptions and scope limitations of the CFPB Rules apply to a
confirmed successor in interest.6
Servicers should comply with the CFPB Rules as described
1
12 CFR § 1024.31 and 12 U.S.C.A. § 1701j - 3(d).
2
78 FR 10695 (Feb. 14, 2013), as amended by 78 FR 44685 (July 24, 2013), 78 FR 60381 (Oct. 1, 2013), 78 FR
62993 (Oct. 23, 2013), and 81 FR 72160 (Oct. 19, 2016).
3
78 FR 10901 (Feb. 14, 2013), as amended by 78 FR 44685 (July 24, 2013), 78 FR 60381 (Oct. 1, 2013), and 78 FR
62993 (Oct. 23, 2013), 79 FR 65299 (Nov. 3, 2014), and 81 FR 72160 (Oct. 19, 2016).
4
12 CFR 1024.2. Generally speaking, a federally related mortgage loan is any loan, other than temporary financing
such as a construction loan, that is secured by a first or second line on residential real property, subject to the
exemptions in 12 CFR 1024.5(b).
5
12 CFR 1026.2(a)(12) and (a)(19).
6
Although beyond the scope of the matrix, note that certain aspects of the CFPB Rules exempt particular types of
mortgage loans, such as reverse mortgage transactions, timeshare plans and open-end loans. “Small servicers,” as
that term is defined in the rules, also are exempt from certain provisions. In addition, certain provisions may have
limited scope. For example, the scope of Regulation X’s early intervention, continuity of contact and loss mitigation
provisions are limited to mortgage loans secured by a borrower’s principal residence. These exemptions and scope
limitations also apply to a confirmed successor in interest. Thus, those confirmed as successors in interest will
generally receive the same protections under the CFPB Rules as the original borrower (for purposes of Regulation
X) or consumer (for purposes of Regulation Z).

5. 4
LEGAL02/37158013v4
in this matrix to determine the identities of successors in interest in California. Although
California law7
includes provisions defining successors in interest and their legal rights,
beginning on April 19, 2018, servicers can comply with the CFPB Rules to satisfy relevant
provisions of Cal. Civ. Code § 2920.7.8
Assuming a servicer has determined that the successor in interest rules apply to a given
transfer, how does a servicer know which state’s matrix to use? Here are some general
guidelines:
Principal Residence. In cases in which the real property at issue is the borrower’s principal
residence, and a borrower can only have one principal residence, the servicer should expect that
the applicable law would be the laws of the state of the borrower’s domicile, which would also
be the state in which the real property is located. It is possible that if the property is owned in
trust or other entity, other state laws could have relevance, but in all cases involving a
borrower’s principal residence, our recommendation is that the servicer first consult the
matrix for the state of the borrower’s domicile.
Second Homes. In cases in which the real property at issue is the borrower’s vacation or second
home, then it is entirely possible that the real property will be located in a state other than the one
in which the borrower lives. Which state law applies is a fact-specific determination – there are
multiple possibilities: the laws of the state in which the property is located could apply, the laws
governing the entity that owns the property could apply, or the laws of the state in which the
borrower is domiciled could apply. For second homes, our recommendation is that the
servicer start with the matrix for the state in which the property is located. In all cases,
regardless of the type of transfer, this will lead the servicer to examine the deed for the property.
Depending on the type of transfer and how the property is titled, it may be necessary to consult
the law of another state, but the starting point should be the state in which the property is located.
READ THIS FIRST: COMMUNITY PROPERTY
SPECIAL NOTE REGARDING DOMESTIC PARTNERSHIPS IN CALIFORNIA:
Unlike many other community property states, California treats unmarried partners involved
in a registered domestic partnership the same way it treats spouses for purposes of community
property laws.9
7
Cal. Civ. Code § 2920.7 became effective on January 1, 2017 and is due to sunset on January 1, 2020.
8
See Cal. Civ. Code § 2920.7 (k). Specifically, upon the effective date of the CFPB Final Mortgage Servicing
Rules, April 19, 2018, “[a]ny mortgage servicer, mortgagee, or beneficiary of the deed of trust, or an authorized
agent thereof, who, with respect to the successor in interest or person claiming to be a successor in interest, complies
with the relevant provisions regarding successors in interest of Part 1024 of Title 12 of the Code of Federal
Regulations (12 C.F.R. Part 1024), known as Regulation X, and Part 1026 of Title 12 of the Code of Federal
Regulations (12 C.F.R. Part 1026), known as Regulation Z, including any revisions to those regulations, shall be
deemed to be in compliance with this section.”
9
Cal. Fam. Code § 297.5; Cal. Prob. Code § 100.

6. 5
LEGAL02/37158013v4
California is a community property state.10
As a general matter, community property laws
dictate that a borrower’s spouse (including a registered domestic partner)11
has rights to the
property that supersede the probate, family, and real property laws that would otherwise
govern property rights upon transfer of the property. If property is titled in the name of the
borrower and his or her spouse as “community property” or “community property with a right
of survivorship,” the property is automatically considered community property.12
If the
property is titled as community property or community property with a right of survivorship
and the borrower is living, the borrower’s spouse has a current ownership interest in the
property.13
If the borrower is deceased, his or her surviving spouse is a successor in interest.
Even if the property is not titled as community property, the borrower’s interest in the
property can still be community property. The threshold question in California in that case is
whether the borrower was married at the time he or she acquired an interest in the subject real
property.14
If the answer is yes, the next question to ask is how the borrower acquired his or her interest
in the property. Only real property the borrower purchased during the marriage using marital
funds is automatically considered community property under default California law.15
If the
borrower acquired his or her interest in the property using nonmarital funds or by gift, bequest,
devise, or descent, the borrower’s interest in the property is not community property, even if
acquired during the marriage, unless otherwise contractually agreed upon by the borrower and
the borrower’s spouse.16
Thus, for purposes of the CFPB Rules, if the property is titled as community property or
community property with a right of survivorship, or if the borrower was married at the time he
or she purchased an interest in the property using marital funds and the spouses have not
contracted otherwise, the borrower’s spouse has a current ownership interest in the property
and if the borrower is deceased, his or her surviving spouse is automatically considered a
successor in interest.
A. Step One: Does the Deed List the Borrower and the Spouse as Owning the
Property as Community Property or Community Property with a Right of
Survivorship?
1. If YES, the borrower’s spouse/surviving spouse has an ownership
interest in the property and is a successor in interest.17
2. If NO, proceed to Step Two below.
10
Cal. Fam. Code §§ 760, 770; Cal. Prob. Code § 100.
11
Spouse is defined for purposes of California community property law to include registered domestic partners.
Cal. Fam. Code § 297.5; Cal. Prob. Code § 100.
12
Cal. Fam. Code § 750.
13
Cal. Fam. Code § 751.
14
Cal. Fam. Code §§ 760, 770; In re Marriage of Dekker, 17 Cal. App. 4th 842, 850 (1993).
15
Cal. Fam. Code §§ 760, 770.
16
Cal. Fam. Code §§ 760, 770, 1500.
17
Cal. Fam. Code §§ 750, 751.

7. 6
LEGAL02/37158013v4
B. Step Two: Do Community Property Laws Still Apply? Was the Borrower
Married at the Time He or She Acquired an Interest in the Property?
1. If NO to any question in this Step Two, proceed to the analysis in the
remainder of this matrix.
2. If YES, did the borrower acquire his or her interest in the property by
purchase with marital funds?
(a) If YES, the borrower’s spouse/surviving spouse has an
ownership interest in the property and is a successor in interest
unless the spouses contractually agreed otherwise.18
DOCUMENTS:
1. If the borrower is deceased, ask for a document to verify the borrower’s
death. This is preferably established by a certified copy of the
borrower’s death certificate, but if not available, it can be provisionally
established by a copy of a court order establishing death, a newspaper
notice, obituary, or other similar means in the discretion of the servicer;
and
2. Copy of Most Recent Deed. Request and review a copy of the most
recent deed to ensure that the borrower owned an interest in the
property and to see how the property is titled (the deed may or may not
reference community property). In California, deeds (also called
“grants”) do not need to be recorded anywhere to be valid, but as a
practical matter, since there is a mortgage on the property, it is likely
the deed was recorded.19
California law also recognizes “Revocable
Transfer on Death” deeds as valid as long as they are properly executed,
recorded, and effectuate a transfer of property at the grantor’s death.20
When deeds are recorded, they can be found in the office of the county
recorder of the county in which the property is located.21
Note that
California law does not recognize property owned as “tenants by
the entirety” and instead treats property so titled as community
property;22
and
3. Affidavit (if the Deed Does Not Identify the Property as Community
Property or Community Property with a Right of Survivorship). If the
deed is silent on whether the property is community property, request a
signed, witnessed, and notarized affidavit from the borrower if available
or the spouse stating that they were married at the time the borrower
purchased the property with marital funds, and that he or she is not
18
Cal. Fam. Code §§ 751, 760, 770.
19
Cal. Civ. Code §§ 1054, 1213; Fujifilm Corp. v. Yang, 223 Cal. App. 4th 326 (2014).
20
Cal. Prob. Code §§ 5614, 5622, 5624, 5626.
21
Cal. Civ. Code § 1169.
22
Tischhauser v. Tischhauser, 298 P.2d 551, 553 (Cal. App. 2d Dist. 1956).

8. 7
LEGAL02/37158013v4
aware of any contractual agreement or court order that alters the
spouse’s rights under applicable community property laws.
Note: The borrower and his or her spouse can override default community
property law via a premarital agreement, postnuptial agreement, property
settlement agreement, or other contractual agreement, which is why a statement
in the affidavit that no such agreement exists to the affiant’s knowledge is
recommended.23
If such an agreement exists, successors in interest may differ
from those under default state law. The servicer should see Section IV and
consult local counsel if necessary.
Note: If a married borrower is domiciled in a community property state other
than California24
and purchases a second home in California, it is likely that the
domiciliary state’s community property laws will apply to the borrower’s
interest in the second home. If the borrower is domiciled in California or in a
non-community property state, this matrix should govern the analysis, but note
that state-specific quasi-community property laws could apply.25
Consult local
counsel as necessary.
I. TRANSFER DUE TO DEATH OF BORROWER – TRANSFER BY DEVISE,
DESCENT OR OPERATION OF LAW ON THE DEATH OF A JOINT TENANT
OR TENANT BY THE ENTIRETY
Note: This category of transfer presumes that the deceased borrower owned the
property jointly at the time of his or her death. Significantly, this category does NOT
require that the joint owner be the relative of the borrower. Depending on how it is
titled, jointly held property can pass by operation of law or through the deceased
borrower’s estate.
A. Step One: Establish Death of Borrower. As a threshold matter, it is first
necessary to verify the death of the borrower.
DOCUMENTS: Verification of a borrower’s death is preferably established by a
certified copy of the borrower’s death certificate, but if not available, it can be
provisionally established by a copy of a court order establishing death, a newspaper
notice, obituary, or other similar means in the discretion of the servicer.
This step must be completed before moving on to confirm the rights of any
claiming successor in interest to a deceased borrower.
B. Step Two: Identify the Form of Joint Ownership. The type of joint ownership
dictates what happens to the property at the owner’s death.
23
Cal. Fam. Code §§ 1500, 1612, 1620.
24
There are nine community property states – Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas,
Washington and Wisconsin. Alaska has an optional community property system.
25
Cal. Fam. Code §§ 125, 912, 2660.

9. 8
LEGAL02/37158013v4
DOCUMENTS: Copy of Most Recent Deed. Request and review a copy of the most
recent deed showing property ownership. In California, deeds (also called “grants”) do
not need to be recorded anywhere to be valid, but as a practical matter, since there is a
mortgage on the property, it is likely the deed was recorded.26
When deeds are recorded,
they can be found in the office of the county recorder of the county in which the property
is located.27
1. JOINT TENANCY. Does the deed list the borrower and the claiming
successor in interest as JOINT TENANTS, JOINT TENANTS WITH
RIGHT OF SURVIVORSHIP, JTWROS, or JOINT TENANTS and NOT
AS TENANTS IN COMMON?28
(a) If YES, the property is transferred by operation of law to the
surviving joint tenant. The deed must have the words “JOINT
TENANTS” or “JOINT TENANTS WITH RIGHT OF
SURVIVORSHIP” or “JOINT TENANTS and NOT AS
TENANTS IN COMMON” for a transfer at death to be by
operation of law. If the property is titled in the borrower’s name
along with the claiming successor in interest (could be, but need
not be, a relative) in one of the listed forms, then upon the death of
the borrower, title to the property is automatically vested in the
surviving joint tenant by operation of law. Once confirmed, the
surviving joint tenant is the successor in interest.
Note: If property held as joint tenants with right of survivorship by non-
spouses is purchased using funds that are community property of one joint
tenant and his or her spouse, consult local counsel to identify successors in
interest.
2. TWO OR MORE LISTED OWNERS WITH NO DESIGNATION
OR AS CO-TENANTS OR TENANTS IN COMMON. Does the deed
list the borrower and the claiming successor in interest as CO-TENANTS
or TENANTS IN COMMON or just list two or more names and no
designation at all? Under California law, co-tenancy is presumed when
two or more persons are entitled to the simultaneous possession of
property.29
(a) If YES, follow the procedure for Section II to confirm the
successor(s) in interest. The transfer is not by operation of law.
Disposition of property held in this form passes to the beneficiaries
under a borrower’s will, or if the borrower died without a will, to
the borrower’s intestate heirs.
26
Cal. Civ. Code §§ 1054, 1213; Fujifilm Corp. v. Yang, 223 Cal. App. 4th 326 (2014).
27
Cal. Civ. Code § 1169.
28
Cal. Civ. Code § 683; In re Davis Estate, 88 Cal. App. 2d 704, 706 (1948).
29
Cal. Civ. Code §§ 685, 686.

10. 9
LEGAL02/37158013v4
3. TENANCY BY THE ENTIRETY. California law does not recognize
property owned as “tenants by the entirety” and instead treats property so
titled as community property.30
See COMMUNITY PROPERTY section.
4. REVOCABLE TRANSFER ON DEATH DEED. California law
recognizes “Revocable Transfer on Death” deeds, including those that
effectuate a transfer of the borrower’s interest in jointly owned property at
the borrower’s death.31
Does the deed state that the transfer of the
borrower’s interest in the property to the designated beneficiary or
beneficiaries is to occur at the borrower’s death?32
(a) If YES, is the deed signed by the borrower, properly executed, and
recorded in the public records in the office of the county recorder
of the county in which the property is located?33
If YES, the borrower’s interest in the property is
transferred by operation of law to the beneficiary or
beneficiaries designated on the deed, who is/are a
successor in interest.
Note: If the borrower’s interest in the property is community property, the
borrower’s surviving spouse is the successor in interest to one-half of the
borrower’s interest in the property, even if the interest is subject to a
Revocable Transfer on Death deed to a different beneficiary or
beneficiaries.34
The successor(s) in interest to the other half of the
borrower’s interest in the property is the beneficiary or beneficiaries
designated on the deed as described in paragraph (a) above.35
5. COMMUNITY PROPERTY IF CLAIMING SUCCESSOR IN
INTEREST IS NOT A SPOUSE. REMINDER: GO TO
COMMUNITY PROPERTY SECTION IF CLAIMING SUCCESSOR IN
INTEREST IS A SPOUSE. Non-spouse successors in interest to
community property are possible. If property is community property and
the deed shows that the borrower owned an interest in the property at
death jointly with one or more non-spouse owners, those non-spouse
owners are successors in interest. In addition, successors in interest to the
borrower’s interest may be identified in a premarital agreement,
postnuptial agreement, property settlement agreement, or other contractual
agreement, the borrower’s will, or California intestacy law. See Section II
to identify successors in interest to the borrower’s interest if not specified
by agreement.
30
Tischhauser v. Tischhauser, 298 P.2d 551, 553 (Cal. App. 2d Dist. 1956).
31
Cal. Prob. Code § 5614.
32
Cal. Prob. Code §§ 5614, 5652.
33
Cal. Civ. Code § 1169; Cal. Prob. Code §§ 5614, 5622, 5624, 5626.
34
Cal. Fam. Code §§ 760, 770; Cal. Prob. Code § 100.
35
Cal. Prob. Code § 5614.

11. View more MBA Compliance Essentials resource guides at mba.org/compliance