California Foreclosure Bill Signed Into Law - Governor signs legislation modeled after multi-state settlement
2012-07-12 — mortgagedaily.com
The state senate passed SB 900 last week by a vote of 25 to 13. California's assembly passed AB 278 the same day by a vote of 25 to 13.
The legislation, dubbed the Homeowner Bill of Rights, prohibits dual track foreclosures -- where a servicer simultaneously moves forward with a foreclosure while processing a loan modification request. It also requires that lenders establish a single point of contact for borrowers applying for modifications, and expands notice requirements before servicers take action on a modification application or pursue foreclosure.
In addition, the bill allows injunctions against foreclosure until violations are corrected and permits civil penalties against servicers that file multiple, inaccurate foreclosure documents or recklessly violate the law. Treble damages up to $50,000 can be awarded to borrowers when servicers are found to have recklessly violated the law.
The Mortgage Bankers Association's Mortgage Action Alliance Inc. urged its members in May to take action in supporting the California MBA's effort to defeat the legislation, warning that it was "highly flawed, and will not accomplish these objectives. Consumer costs will increase and force California families to pay more for fewer choices. If enacted, the legislation also has great potential to seriously damage lenders, servicers and the fragile state economy."
The Center for Responsible Learning, however, says that the new law will fix mortgage lending abuses and speed economic recovery. The group said the bill will fix rampant abuses in loan servicing and reduce foreclosures.''
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