Mortgage lenders in California typically take an “assignment of rents” from the borrower when they originate loans.  However, if the borrower fails to pay timely, many California lenders are quick to start trustee’s sale or foreclosure proceedings but are reluctant to make rent demands as allowed by their assignments of rents.  Why?

I think some of the reluctance is historical, because the relevant law was significantly changed in 1996.  Even though that seems a long time ago, the California real property markets were so buoyant from 1996 through 2006 (but for a relatively small hiccup in 2001 or so) that many practitioners have never really learned the new laws, which are much more favorable to lenders.

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