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Homeowner Bill of Rights Contains Significant Mortgage And Foreclosure Reforms

California Homeowner Bill of Rights

Gov. Jerry Brown signs the Homeowner Bill of Rights

On July 11, 2012, California Governor Jerry Brown signed the California Homeowner Bill of Rights into law.

The law goes into effect on January 1, 2013. The Homeowner Bill of Rights is actually a series or package of bills designed to protect homeowners and communities.

The California Homeowner Bill of Rights is designed to bring fairness, accountability and transparency to the California’s mortgage and foreclosure process. The bill marks the third step in Attorney General Kamala D. Harris’ response to the state’s foreclosure and mortgage crisis. Her first step was to create the Mortgage Fraud Strike Force, which has been investigating and prosecuting misconduct at all stages of the mortgage process. The second step was to extract a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers. The settlement contained thoughtful reforms but are only applicable for three years, and only to loans serviced by the settling banks.

More than one million California homes were lost to foreclosure between 2008 and 2011—with an additional 700,000  homes currently in the foreclosure pipeline!

Seven of the nation’s 10 hardest-hit cities by foreclosure rate in 2011 were in California.

What Bills are in the California Homeowners Bill Of Rights?

How will The California Homeowners Bill of Rights help protect homeowners?

Two key bills of the Homeowner Bill of Rights contain significant mortgage and foreclosure reforms. The major provisions of AB 278 (Eng/Feuer/Mitchell) and SB 900 (Leno/Corbett/DeSaulnier/Evans) include:

Dual track foreclosure ban: Dual tracking is when the bank continues its foreclosure proceedings even while a homeowner is working on a short sale or loan modification. This new law will prohibit lenders from misleading borrowers who are trying to obtain a loan modification or short sale approval and the lender still proceeds with the foreclosure process. In many instances homeowners believe they are days away from receiving a loan modification – allowing them to keep their homes – only to find out the home was sold at public auction.This law will ban foreclosure dual tracking. Mortgage servicers will now be required to render a decision on a loan modification application before advancing the foreclosure process by filing a notice of default or notice of sale, or by conducting a trustee’s sale. The foreclosure process is essentially paused upon the completion of a loan modification (or Short Sale) application for the duration of the lender’s review of that application.

Single point of contact: Mortgage servicers will be required to designate a “single point of contact” for borrowers who are potentially eligible for a federal or proprietary loan modification application. The single point of contact is an individual or team with knowledge of the borrower’s status and foreclosure prevention alternatives, access to decision makers, and the responsibility to coordinate the flow of documentation between borrower and mortgage servicer.

Enforceability: Borrowers will have authority to seek redress of “material” violations of the California Homeowner Bill of Rights. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale.

Verification of documents: The recording and filing of multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Enforcement will also be allowed under a violator’s licensing statute by the Department of Corporations, Department of Real Estate or Department of Financial Institution.

More information is available at http://oag.ca.gov/hbor

What else will change in Short Sales in 2013? for one thing, California Short Sale Tax – What are the California Short Sale Tax Rules?

Questions on your particular situation? Contact us today at Forth Hoyt’s Sacramento Short Sale Center.

 

 

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