California Homeowner Bill of Rights Passes Legislature, Bringing Mortgage Reforms One Step Closer to Law

SACRAMENTO, CA – July 3, 2012 – (RealEstateRama) — Attorney General Kamala D. Harris announced the California Homeowner Bill of Rights is one step closer to becoming law after key provisions passed the California Legislature today. The bills, which provide first of their kind protections for homeowners and reforms to the mortgage and foreclosure process, will now be sent to the desk of Governor Jerry Brown for consideration. The bills were approved 53 to 25 in the Assembly and 25 to 13 in the Senate.

“Passing these key elements of Homeowner Bill of Rights represents a significant step forward for struggling homeowners,” said Attorney General Harris. “These common-sense reforms will require banks to treat California homeowners more fairly and bring more transparency and accountability to their practices in our state. Responsible homeowners will have a better shot to keep their homes.”

“Californians will finally have a fighting chance to keep their homes, as this measure brings fairness to the loan modification and foreclosure process,” said Senate President pro Tem Darrell Steinberg. “At the same time, the protection gained by homeowners will help stabilize the housing sector of our economy. I applaud my colleagues for their hard work to protect consumers through this reasoned compromise.”

“The package approved by the Legislature today is a major victory for California’s consumers,” said Assembly Speaker John A. Pérez. “We impose tough new regulations on banks and lenders to stop the abusive practices we’ve seen since the collapse of the housing market, and this package will bring relief to hundreds of thousands of California homeowners.”

The California Homeowner Bill of Rights consists of a series of related bills, including two that were passed on June 26 by a two-house conference committee: AB 278 (Eng, Feuer, Pérez, Mitchell) and SB 900 (Leno, Evans, Corbett, DeSaulnier, Pavley, Steinberg).

The two identical bills passed by the conference committee contain key elements of the legislative package and provide protections for borrowers and struggling homeowners, including a restriction on dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home. The bills also guarantee struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers. For the first time, the Homeowner Bill of Rights imposes civil penalties, of up to $7,500, on the repeated filing of foreclosure documents without verifying their accuracy, a practice commonly known as “robo-signing.” In addition, homeowners may require loan servicers to document their right to foreclose.

Homeowners will also have a clearly-defined right to access the courts to protect themselves from violations of these protections.

The Homeowner Bill of Rights also consists of four 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 the crime that results, and provide enhanced protections for tenants in foreclosed homes. Please see the attached fact sheet for the status of these bills.

The California Homeowner Bill of Rights was introduced February 29, 2012 at a press conference featuring Assembly Speaker John A. Pérez and Senate President pro Tem Darrell Steinberg and bill authors from the Assembly and Senate. The Homeowner Bill of Rights codifies many of the core protections from the recent national mortgage settlement.

The California Homeowner Bill of Rights extends Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. Attorney General Harris created a Mortgage Fraud Strike Force in March, 2011 to investigate and prosecute misconduct related to mortgages and foreclosures. In February 2012 Attorney General Harris extracted a commitment from the nation’s five largest banks to dedicate an estimated $18 billion to mitigate financial harm to California borrowers caused by bank misconduct in the foreclosure process.

More details about the California Homeowner Bill of Rights are found on the attached fact sheet. To learn more about how the bills impact California homeowners, review the slideshow at: www.oag.ca.gov.

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