Scope of California Homeowner Bill of Rights Narrowed by Recent Negotiations
California’s proposed Homeowner Billrnof Rights, originally proposed by the state’s attorney general Kamala Harrisrnand covered here</ahas been modified extensively following what the Center for Responsible Lendingrn(CRL) calls six weeks of intense negotiation with banks, legislators, thernattorney general and consumer groups. </p
Among the changes reported by CRL isrna narrowed scope for both the loans and servicers covered by the bill. The only loans to which the bill will nowrnapply are first mortgages on owner occupied one-to-four family houses and onlyrnservicers who process more than 175 foreclosures per year will be subject tornmany of its requirements.</p
Earlier versions of the billrnrequired the lender or servicer to record and provide evidence of allrnassignments as part of the chain of title to foreclose. The current version requires that onlyrnevidence of the last assignment be available to the borrower. The current bill also includes an express andrncomprehensive right to cure until the notice of trustee sale is filed. A servicer can avoid liability by curing arnviolation before the foreclosure sale.</p
Originally the bill providedrnpost-sale minimum statutory damages of the greater of actual damages orrn$10,000; the new version allows only actual damages with triple damages or arnminimum of $50,000 available only in cases of intentional reckless violationsrnor willful misconduct.</p
Unlike the National MortgagernSettlement the California bill allows for multiple contact persons as long asrnthey have the access and authority of a single point of contact. Prohibitions against dual tracking and falserndocuments remain as in the original law, however the enforcement provisionsrnsunset after five years.</p
CRL says that this Homeowner Bill ofrnRights remains critical for large number of borrowers, their communities, andrnthe California housing market. Itrnensures that borrowers in owner-occupied homes applying for loan modificationsrnget full and fair consideration for those modifications before the foreclosurernprocess begins. This will allow thernforeclosure process to move more quickly for those who do not qualify for homernretention alternatives while preventing unnecessary foreclosures on borrowersrnwho do. </p
CRL released a new study ofrnCalifornia delinquencies with three principal findings. First, loan modifications work well to keeprnborrowers in their homes. More than 80 percent</bof California homeowners who received modifications in 2010 stayed current andrnavoided re-default despite the continued recession. Only 2 percent of those modified loans endedrnin foreclosure.</p
Second, large numbers of borrowersrnremain at risk with nearly 700,000 California mortgages in some state of delinquencyrnor foreclosures. This is one out of ninernborrowers.</p
Third, middle class, AfricanrnAmericans, and Latinos are the hardest hit. rnThe delinquency rates for African Americans and Latinos are 11.1 andrn10.7 percent respectively while for Asians and whites the rates are 7 and 7.3rnpercent. Delinquencies are concentratedrnamong middle class borrowers, those making between $42,000 and $120,000rnannually.</p
“California policymakers will soon have thernchance to extend key servicing reforms from the National Mortgage Settlement tornall California borrowers, said Paul Leonard, CRL’s California Director. rn”Our legislators have an historic opportunity to overcome intense oppositionrnfrom the big banks and ensure that all Californians get a fair shot at loanrnmodifications.”
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