Published July 11, 2012 11:00
July 11, 2012-- At a signing ceremony in Los Angeles this morning, Governor Jerry Brown signed landmark legislation that reforms bank’s foreclosure practices and creates a fairer foreclosure process for California’s homeowners. This legislation brings accountability to the banks for harmful foreclosure practices and allows homeowners to protect themselves from the commonplace violations that banks have exhibited in this foreclosure crisis.
This law ends the “dual track” process, where banks foreclose on homeowners while they are negotiating for a loan modification with their bank, and the pernicious practice of “robosigning”. In addition, homeowners will no longer have to speak to a different person at the bank every time they call and resubmit the same mountain of paperwork to different people at the same institution. If a bank cannot follow these simple procedural rules, California homeowners will be able to enforce their rights by taking the bank to court. This will encourage servicers to follow the law, and when they do not, it will allow victimized homeowners to get their homes back where possible, or get some financial relief.
“The legislation extends the impact of the National Mortgage Settlement so that all homeowners in California, regardless of which bank services of their loan, have the same protections and rights,” said Kevin Stein of the California Reinvestment Coalition. “This legislation should serve as a national model for other states looking to enforce the Settlement and protect homeowners.”
This is a major victory for California homeowners, and a blow to banks that have spent millions of dollars to combat this legislation over the last three years. This is the third consecutive year that the California Legislature has been faced with legislation that would end “dual track” and bring accountability to the foreclosure process (SB 729 in 2011, SB 1275 in 2010). Many California groups—nonprofit housing counselors, public interest lawyers, faith-based groups, organizers, online groups, and consumer and policy groups—worked tirelessly for three years to convince the State Legislature to pass this bill to bring fairness, decency, and reason to the foreclosure process, and let families and their communities rebound. Thanks to the tireless work of community advocates and the leadership of Attorney General Kamala Harris and a number of Assemblymembers and Senators, Californians finally have protections that help them prevent foreclosure and protect themselves from unfair banking practices.
Introduced by Attorney General Kamala Harris and championed by consumer advocates and homeowners, the California Foreclosure Reduction Act— AB 278 (Eng, Feuer, Mitchell) & SB 900 (Leno, Corbett, DeSaulnier, Evans, Pavley, Steinberg)—passed 53-25 in the Assembly and 25-13 in the Senate last week. The bill will take effect on January 1, 2013.