California Attorney General Kamala Harris announced that the Homeowner Bill of Rights, which will protect homeowners and borrowers during the mortgage and foreclosure process, was signed into law by Gov. Edmund Brown Jr.
The Homeowner Bill of Rights prohibits a series of inherently unfair bank practices that have needlessly forced thousands of Californians into foreclosure. The law restricts dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home. It also guarantees struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers, and imposes civil penalties on fraudulently signed mortgage documents.
In addition, homeowners may require loan servicers to document their right to foreclose. The legislation subjects the recording and filing of multiple unverified documents to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. It also allows enforcement under a violator’s licensing statute by the Department of Corporations, Department of Real Estate or Department of Financial Institutions.
The laws will go into effect on Jan. 1, 2013, and borrowers can access courts to enforce their rights under this legislation.
“The California Homeowner Bill of Rights will give struggling homeowners a fighting shot to keep their home,” Harris said. “This legislation will make the mortgage and foreclosure process more fair and transparent, which will benefit homeowners, their community, and the housing market as a whole.”
“Californians should not have to suffer the abusive tactics of those who would push foreclosure behind the back of an unsuspecting homeowner,” Brown said. “These new rules make the foreclosure process more transparent so that loan servicers cannot promise one thing while doing the exact opposite.”
The Homeowner Bill of Rights consists of a series of related bills, including two identical bills that were passed on July 2 by the state Senate and Assembly: AB 278 and SB 900.
The California Homeowner Bill of Rights also contains a variety of 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 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 Feb. 29, at a press conference featuring Assembly Speaker John Pérez and Senate President pro tem Darrell Steinberg and bill authors from the Assembly and Senate.