Last week, California Governor Jerry Brown signed into law historic homeowner-rights mortgage legislation that offers some of the country’s strongest borrower protections against bank foreclosure practices. The protections, part of a Homeowner Bill of Rights sponsored by California Attorney General Kamala Harris, include the following:
- the prohibition of “dual tracking”—banks’ practice of negotiating loan modifications while simultaneously pursuing foreclosures
- the banning of robo-signing (as well as the creation of a private right of action if banks violate the law under certain conditions; state agencies and private citizens may recover compensation, including damages of up to $50,000, if lenders willfully, intentionally, or recklessly violate the law); and
- the requirement that lenders assign a single representative for borrowers to work with through the loan modification process.
This overhaul of foreclosure laws doesn’t apply to strategic defaulters (those who can afford to pay their underwater mortgages but choose to walk away) and only offers protection to borrowers who own and occupy their properties of four units or less.
To read the text of the new law, go to the California Legislative Information website and search for bill number SB-900 or AB-278.