California to Mortgage Lenders: The Party’s Over!

by on July 3, 2012 · 0 comments

in California, Civil Rights, Economy

From San Diego Free Press

California became the first state in the country yesterday to enact tough consumer protection legislation holding to a higher standard that will help financially troubled borrowers stay in their homes. The legislation, SB 900 and AB 278, will make California the first state to prohibit lenders from “dual tracking,” the practice of negotiating with clients to modify a mortgage while concurrently pursuing foreclosure, outlaw “robosigning”, allow state agencies and private citizens to sue financial companies if lenders willfully or recklessly violate the law, and simplify dealings between homeowners and banks by requiring a single customer representative for consumers to work with. The bill requires all lenders to abide by a number of provisions of the national mortgage settlement negotiated by state attorneys general earlier this year to rein in foreclosure abuses.

The Assembly approved the legislation on a 53-25 vote, and the Senate voted 25-13.

Today’s UT San Diego reporting included the following:

“The bank lobby is really powerful,” said David Lagstein, the San Diego leader of grass-roots group Alliance of Californians for Community Empowerment. “This is a case of the voice of thousands of people actually paving the way to victory.”

The protections would benefit all California homeowners, not just those whose mortgages are with the five banks that signed the national settlement in February. And many of the restrictions would become permanent, while those in the nationwide agreement will end after five years.

It applies to all owner-occupied residences, but not to commercial or rental properties.

“Californians are still at risk of losing their homes to abusive foreclosure practices,” said Norma Garcia, manager of Consumers Union’s financial services program. “This bill is long overdue and will help curb unfair lending practices so that more Californians can avoid foreclosure and can keep their homes. Reducing foreclosures will help stabilize the state’s housing market and help limit the terrible impacts this crisis has had on families, communities and our economy.”

California has been particularly hard hit by the foreclosure crisis. Over 900,000 foreclosures occurred in California between 2007 and 2011. Last year, 38 of the top 100 ZIP codes hit hardest by foreclosures were in California. California’s foreclosure crisis has hurt property values throughout the state and resulted in less revenue for schools, public safety, and other vital public services.


 From San Diego Free Press

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