SACRAMENTO -- California lawmakers on Monday approved legislation hailed as the nation's most comprehensive push to strengthen homeowner rights since the housing meltdown, acting despite opposition from the banking and finance industry.
The legislation sent to Gov. Jerry Brown's desk would make California the first state to put key terms of an $18 billion national mortgage settlement reached with five major banks into state law.
"I think that this legislation is going to be a catalyst for a change across the country," said Assemblyman Mike Feuer, D-Los Angeles, a member of the committee that drafted the bill. "Because now every resident of every state is going to demand of their elected officials the same protections that we're delivering for Californians today."
The proposal, which would take effect in January, would ban lenders from engaging in "dual tracking" by starting or continuing foreclosure proceedings during loan modification negotiations. It would prohibit the use of robo-signed documents to speed the foreclosure process and require that large institutions provide borrowers with a single department or group of employees to deal with their lending issues.
Supporters say those provisions, as well as the option to take legal action against misdeeds by the banks that go unresolved, will help keep Californians with sufficient means in their homes.
"… We gave those families some promise that they can be in a system that allows them a fair opportunity to be the responsible homeowners that they want to be, so that they can keep that home and the shelter where they raised their children, that place where they expect to retire and to live with dignity," said Attorney General Kamala Harris, who pushed for the bill as part of a package of foreclosure relief legislation.
It is unclear how many of the estimated 700,000 Californians going through the foreclosure process will benefit from the law's protections. Harris said she believes "informed" homeowners will be able to take advantage of the law come January and hopes that banks will proactively implement the bill's provisions even sooner.
Since the foreclosure mess began in late 2006, about 27,200 Stanislaus County homes have been repossessed by lenders or purchased in auctions on the courthouse steps. Nearly 9 percent of Stanislaus County houses with mortgages are 90 days or more delinquent on payments.
In San Joaquin County, more than 36,000 homes have been foreclosed since 2006. In Merced County, 14,600 homes have been lost to mortgage default.
The language approved Monday was crafted by a Democrat-controlled, two-house conference committee that was created after opposition from banks and business interests threatened to derail an earlier, more far-reaching proposal from Harris.
A memo to members signed by a coalition that includes the California Bankers Association, the California Chamber of Commerce and the California Financial Services Association calls for more work, saying the current provisions "leave several major issues unaddressed and fail to focus remedies on truly injured borrowers."
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