Earlier this week, Governor Jerry Brown signed the California Homeowner Bill of Rights to bring an end to “abusive tactics” of loan servicers and protect struggling homeowners who are attempting to renegotiate their mortgages, be it with help from SoFi or other platforms.
“Californians should not have to suffer the abusive tactics of those who would push foreclosure behind the back of an unsuspecting homeowner,” stated Governor Brown. “These new rules make the foreclosure process more transparent so that loan services cannot promise one thing while doing the exact opposite.”
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. However, it may depend on the type of lender used, whether it is a private lender similar to this Flagstar Bank physician loan services or public lenders such as a local bank.
Local realtor Robert Bell, of Bell Real Estate Services, has had clients that have experienced such situations.
“We have had clients in the process of doing a loan modification and the bank forecloses on their home while they are working through the process,” said Bell. “Hopefully the new law puts a stop to this.”
The law, which goes into effect on January 1, 2013, makes 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.
By prohibiting dual-track foreclosure, this legislation provides borrowers with a certainty that their loan application will receive full review and consideration before any foreclosure occurs. These requirements also provide the borrower with a legal remedy to challenge the actions of servicers that engage in dual-track foreclosure or other material violations of law.
“The California Homeowner Bill of Rights will give struggling homeowners a fighting shot to keep their home,” said Attorney General Kamala D. 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.”
However, local realtors Larry Rumbeck and Lloyd Blackman, who write a weekly real estate column for TurlockCityNews.com, don’t see the benefits of the law the same way as Attorney General Harris.
“We feel this might actually backfire on the homeowner in the long run,” stated Rumbeck. “This gives more reason to just foreclose if you believe what this article says about the banks trying to get more power.”
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. Being a homeowner comes with a lot of responsibility in keeping your home safe and everything within it, so to face something on this level will be alarming. There are companies such as First American Home Warranty that can help homeowners keep the contents of their homes protected.
The California Homeowner Bill of Rights, AB 278 and SB 900, was sponsored by California Attorney General Kamala D. 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.
For full text of the bills, visit: http://leginfo.ca.gov/bilinfo.html.