JULY 12, 2012


"We're done. We're done with robo-signing. We're done with false promises. We're done with the runaround," Attorney General Kamala Harris, D-California, said.

THE FIRST GOVERNMENT OFFICIAL WHO DELIVERED SOMETHING REAL FOR CALIFORNIANS. SHE KEPT HER WORD. 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 .

California Governor Jerry Brown
Photo by Noah Berger

Governor Brown signed into law the nation's toughest protections for homeowners facing foreclosure. Much of the national mortgage settlement agreed to by five banks earlier this year now apply to all mortgage providers doing business in California and make the terms permanent. "I find it almost incomprehensible that so many smart people and so many rich people could screw things up so profoundly and cause so much suffering and get off in many cases," Brown said. Beginning January 1, 2013 the Homeowner Bill of Rights will:
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Ban "dual-tracking" (which is when banks pursued foreclosure even though the homeowner was seeking a loan modification) Require one contact person per customer Increase penalties for robo-signing (which automatically approves foreclosure without anyone reading documents) Let homeowners sue for violations

The legislature made significant changes to Civil Code 2924. The blaring changes in Civil Code 2924 are new provisions that allow borrowers private right of action to sue for damages for wrongful foreclosure if 2924 is not complied with. 2924 is very different. The new statute expressly states that a borrower may still sue for damages even after the sale has occurred. Now that's some statute that has teeth in it which 2923.5 doesn't. And the penalty can be severe for the lender if the violation is willful or reckless in which case the borrower may sue for actual damages or $50,000, whichever is greater plus reasonable attorney's fees and costs (which is also missing in 2923.5). Finally a statute that empowers a borrower to go after the lender for willfully ignoring the borrower's right to be considered for loan modification or other foreclosure alternatives. No wonder the new statute is named "Homeowners Bill Of Rights."

Disclaimer: take no action on this information until you have consulted an attorney in the appropriate jurisdiction. This is not legal advice. This is for informational & educational purposes only.