The California State Legislature approved two bills today, Senate Bill 900 and Assembly Bill 278, which will enact the California Homeowner Bill of Rights.
Senator Fran Pavley jointly authored Senate Bill 900, which is designed to provide a more fair and reasonable process for Californians struggling to stay in their homes. Almost three million Californians have already lost their homes through foreclosure. “We are doing everything we can to help our communities recover from this terrible economic recession”, she said.
This legislation builds on the protections provided by the national mortgage settlement agreed to by five of the country’s largest banks. Borrowers will gain new protections in two key areas.
SB 900/AB278 will ban the practice of so-called “dual tracking.” This provision requires lenders to halt foreclosure proceedings once a borrower completes a loan modification application. The mortgage lender will be required to render a decision on a loan modification application before advancing the foreclosure process.
Senator Pavley said, “we’ve all heard of cases where a borrower working on a modification with one bank representative suddenly receives notice that a separate bank representative is initiating a foreclosure. This won’t happen again once these bills take effect.”
For borrowers potentially eligible for a loan modification, mortgage lenders must provide a “single point of contact,” which may include a team of individuals who are knowledgeable of the borrower’s status, have access to decision-makers on the loan, and will coordinate the flow of documentation between the borrower and mortgage servicer. No longer will borrowers experience the endless passing of the buck from customer service representative to customer service representative while their family’s home hangs in the balance.
As a result of more than 20 hours of public hearings and weeks of negotiations involving banking representatives, consumer advocates and other stakeholders, struggling homeowners will have a much better chance of staying their homes.