California Governor Jerry Brown has signed into law a homeowners bill of rights. The new law provides additional options for homeowners that are facing foreclosure and are being unduly hassled by bill and loan collectors. The law comes as new data shows that California leads the nation in foreclosures, with the highest rate since 2005.
The Homeowner Bill of Rights has four major components:
- Prohibiting “dual track” foreclosures that occur when a servicer continues foreclosure while also reviewing a homeowner’s application for a loan modification;
- Creating a single point of contact for homeowners who are negotiating a loan modification;
- Expanding notice requirements that must be provided to a borrower before taking action on a loan modification application or pursuing foreclosure; and
- Allowing injunctions against foreclosure until violations are corrected and permitting civil penalties against servicers that file multiple, inaccurate mortgage documents or commit reckless or willful violations of law.
These new laws make California the first state in the nation to take provisions in the National Mortgage Settlement, which covered the nation’s five largest mortgage loan servicers, and apply those rules to all mortgage servicers.
In addition, the bill ensures that homeowners will have a single point of contact while they are working through the loan modification process. Borrowers may also sue to stop foreclosure until the lender corrects any material violation. Borrowers can also receive treble damages up to $50,000 if servicers act intentionally or recklessly in violating the law.
More homeowners may need this bill. California foreclosure starts for June rose 18 percent from a year ago to boost the Golden State to the top berth in the U.S., according to a report released today, by RealtyTrac. One housing unit in every 177 in San Bernardino and Riverside counties was in a phase of foreclosure in June, according to the report.
The town of San Bernardino, recently filed for municipal bankruptcy and other cities are expected to follow.