The More Things Change

By Michael D. Belote, Esq.
CMA Legislative Advocate

The 2023-2024 two-year session of the California Legislature began on December 5, following the November 2022 general elections. In some very important respects, the new session is emblematic of the old adage that the more things change, the more they stay the same. As legal briefs say, “to wit”:

Turnover: The combination of term limits and good old-fashioned pandemic burnout have resulted in significant turnover in both the Assembly and Senate. For perhaps the first time ever, a number of legislators who could have run again in November under the state’s term limits law, elected not to seek reelection, instead returning to their districts and their previous occupations. Some of these legislators held positions important to CMA, including Mark Stone from Santa Cruz, who had served as Chair of the very influential Assembly Judiciary Committee.

When the election dust settled, 31 of the 120 members of the combined Assembly and Senate are brand-new to the legislative process. Interestingly, in 2024 another one-third of the members will be termed out of office. This means that by January 1, 2025, nearly two-thirds of the entire legislature will be brand-new or nearly-new. Why does this matter? Because that means that CMA must educate over 70 newcomers about the unique role that CMA members play in real estate lending. These members may have a perception that all loans come from banks or well-known mortgage banks.

Democratic Supermajorities: Going into the November general elections, the ratio of Democrats to Republicans in the 80-member Assembly was 61 Democrats, 18 Republicans and one independent. The ratio in the 40 member Senate was 31 Democrats to 9 Republicans. After the elections, the new ratios are 62 Democrats and 18 Republicans for a supermajority of 77.5%; in the Senate Democrats increased their supermajorities to 32-8, for a 80% rate. Why does this matter? Because two-thirds votes are required to raise taxes, place initiatives on the ballot, and override gubernatorial vetos. Two-thirds is 54 votes in the Assembly and 27 in the Senate, so Democrats are quite comfortably over the two-thirds requirements.

More broadly, enormous supermajorities make it far more difficult to defeat bad legislation. Most bills require simple majority votes, 41 in the Assembly and 21 in the Senate. To defeat a Democrat’s bill in the Assembly, we must convince at least 22 Democrats to turn their backs on their Democratic colleagues, whose votes they will need to pass their own bills. Most lobbyists agree that better policy is made when ratios are closer and compromise is required.

Surfeit of Bills: The California Legislature is nothing less than a bill factory. Every year approximately 2500 new bills are introduced, covering every imaginable issue affecting our state. Each bill, and every amendment to each bill, must be read for possible impact on CMA members. Inevitably dozens are identified for our association, on such diverse subjects as loan regulation, licensing, taxes, foreclosure, taxes, and more. In a fast-moving legislative environment, finding these bills can be a little like looking for needles in haystacks, and missing something important can have severe consequences.

With the deadline for introduction of new bills is set for February 17, we will soon know what is in store for this legislative year. Almost certainly one or more bills will be introduced relating to remote online notarization, however, following up on repeated unsuccessful bills from the past.

Also, we anticipate that one or more bills will be introduce in the area of foreclosures. Last year SB 1323 proposed a quite radical reform of nonjudicial foreclosures, requiring trustees to list and sell properties in default without the involvement of the actual owner. CMA participated in a very large coalition opposed to the bill, which died in the Assembly very late in the legislative year. An agreement was reached on the outlines of a compromise for 2023, which would delay residential foreclosures in the owner has listed the property for sale, and delay again if the house is in contract for sale. It is the hope and expectation of CMA and other coalition partners that the compromise will be enacted this year, but given the large number of new legislators, nothing is ever assured.

What is assured is that important issues will be raised, and CMA will be at the table.