A bill that would aim to prevent foreclosures in Los Angeles and throughout the state is nearing passage in the California Legislature.
Los Angeles Foreclosure Defense Lawyer Vincent Howard understands that twin measures were sent to the floors of both the Senate and the Assembly.
The whole concept is known as the Homeowner Bill of Rights, though it's being packaged in two separate bills simultaneously: AB 278 and SB 900.
The vote to do so came at a time when the state's financial woes were particularly acute, with Stockton becoming the largest city ever in the country to file for bankruptcy. A lot of the problems that led to Stockton's filing can be directly traced back to the housing bust, which made the city the foreclosure capital of the country.
Bankers and mortgage lenders oppose the bill, but that's likely because strips them of some of their power and enacts specific provisions to protect homeowners - the ones who have really suffered in this crisis.
The two main ways that this bill of rights would aid homeowners:
1. It would an end to dual tracking. This is when the servicing agency of a mortgage loan is allowed to push forward with a foreclosure at the same time a homeowner is applying for a home loan modification. This creates a compelling incentive for banks to work with homeowners. Additionally, it requires that these servicing agencies create a single point of contact for homeowners who are trying to negotiate a loan modification. The idea is to eliminate the headache of a bureaucratic run-around.
2. It gives homeowners the right to sue their bank if they have cause to show the lender violated the law. Now, there are a lot of provisions with this part of the law, but it stems from the robo-signing debacle, in which banks foreclosed upon thousands of homes for which they had no actual proof they owned.
This Homeowner Bill of Rights would be separate from the $26 billion settlement agreement reached earlier this year by the five largest banks and attorneys general from 49 states.
Backers of the measure, including State Attorney General Kamala Harris, say these efforts will offer fairness and transparency to homeowners in the state at a level they have never before had.
Bankers and mortgage lenders say the measures are too complicated, aren't legally clear and have the potential to result in a number of lawsuits that aren't necessary.
But at the end of the day, these financial institutions have proven themselves untrustworthy to protect the greater good of the people. That's why these measures are necessary.
If they are in fact approved, they would take effect on Jan. 1, 2013. Gov. Jerry Brown hasn't said whether he supports the measure, but backers say there hasn't been any indication that he plans to veto it.
Los Angeles Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.