California lawmakers passed two identical bills yesterday that make up key components of the state’s Homeowner Bill of Rights.
Both the Assembly and Senate, by votes of 53-25 and 25-13, respectively, approved the Foreclosure Reduction Act that provides protections for homeowners as well as reforms to the mortgage and foreclosure process.
The act prohibits dual tracking, in which a foreclosure happens even while a borrower is seeking a loan modification. Additionally, lenders would be required to provide borrowers with a single point of contact for loan modifications.
Another part of the two bills, AB 278 and SB 900, necessitates that a lender produce proper documentation before initiating a foreclosure. Civil penalties, with a maximum fine of $7,500, can be imposed against a lender for the repeated filing of foreclosure documents without verifying their accuracy, also known as robo-signing.
For any lender that violates the Foreclosure Reduction Act, homeowners can enforce legal action after a notice of default has been filed against them.
“The package approved by the Legislature today is a major victory for California’s consumers,” said Assembly Speaker John Perez. “We impose tough new regulations on banks and lenders to stop the abusive practices we’ve seen since the collapse of the housing market, and this package will bring relief to hundreds of thousands of California homeowners.”
Gov. Jerry Brown now has the final vote whether the Homeowner Bill of Rights will go into effect starting in January 2013. After yesterday’s decision by the Legislature, the governor issued a statement saying that these key provisions “establishes important consumer protections that are long overdue.”
