On Thursday Gov. Jerry Brown signed the California Homeowner Bill of Rights to halt the “abusive tactics” of loan servicers and protect struggling homeowners who are trying, in good faith, to renegotiate their mortgages.
“Californians should not have to suffer the abusive tactics of those who would push foreclosure behind the back of an unsuspecting homeowner,” said Gov. Brown. “These new rules make the foreclosure process more transparent so that loan servicers cannot promise one thing while doing the exact opposite.”
“The California Homeowner Bill of Rights will give struggling homeowners a fighting shot to keep their home,” said Attorney General Kamala Harris. “This legislation will make the mortgage and foreclosure process more fair and transparent, which will benefit homeowners, their community, and the housing market as a whole.”
The California Homeowner Bill of Rights, AB 278 and SB 900, was sponsored by Attorney General Harris. AB 278 was authored by Assembly Members Eng, Feuer, Mitchell and John A. Pérez. SB 900 was authored by Senators Leno, Evans, Corbett, DeSaulnier, Pavley and Steinberg.
These new laws make California the first state in the nation to take provisions in the National Mortgage Settlement, which covered the nation’s five largest mortgage loan servicers, and apply those rules to all mortgage servicers.
The laws offer hope for homeowners in communities like Lake County, where between 2008 and 2011 there were 3,000 foreclosures – meaning one out of every 12 homes was lost to the process – according to a recent oped authored by Harris.
The Homeowner Bill of Rights prohibits a series of inherently unfair bank practices that have needlessly forced thousands of Californians into foreclosure.
The law restricts dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home.
It also guarantees struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers, and imposes civil penalties on fraudulently signed mortgage documents.
In addition, homeowners may require loan servicers to document their right to foreclose.
The laws will go into effect on January 1, 2013, and borrowers can access courts to enforce their rights under this legislation.
The Homeowner Bill of Rights builds upon and extends reforms first negotiated in the recent national mortgage settlement between 49 states and leading lenders.
Attorney General Harris secured up to $18 billion for California homeowners in that agreement, and has also built a Mortgage Fraud Strike Force to investigate crime and fraud associated with mortgages and foreclosures.
The California Homeowner Bill of Rights also contains a variety of bills outside of the conference committee process.
These will enhance law enforcement responses to mortgage and foreclosure-related crime, in part by empowering the attorney general to call a grand jury in response to financial crimes spanning multiple jurisdictions.
Additional elements will help communities fight blight related to foreclosure, and provide enhanced protections for tenants in foreclosed homes.
To learn more about how the bills impact California homeowners, visit www.oag.ca.gov .