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With 305,000 California borrowers receiving notices of default and more than 170,000 families losing their homes to foreclosure in 2010, Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) are again pushing for legislation that would help prevent what they deem as ""wrongful foreclosures.""
[IMAGE]The two lawmakers have presented their chamber with the California Homeowner Protection Act (SB 729), which states that borrowers must be given a decision on a loan modification before the foreclosure process can begin. A similar bill authored by Leno and Steinberg in 2010, SB 1275, passed the Senate but failed in the Assembly.
""It was a major disappointment when last year's bill failed to pass the Assembly,"" said Paul Leonard, director of the California office of the ""Center for Responsible Lending"":http://www.responsiblelending.org/, a sponsor of this year's bill with the ""California Labor Federation"":http://www.calaborfed.org/ and ""California Reinvestment Coalition"":http://www.calreinvest.org/.
Leonard continued, ""Perhaps all the recent news of robo-signing, bank errors, and wrongful foreclosures will mean another chance at getting real protections for California homeowners.""
[COLUMN_BREAK]SB 1275 aimed to put an end to banks' pursuing foreclosures while considering loan modifications. Much like SB 1275, this year's bill targets wrongful foreclosures by requiring servicers to evaluate a borrower's modification application and give them a yes or no answer before commencing foreclosure proceedings.
""Banks should not foreclose on a family's home until they inform the owner whether the loan can be modified to an affordable level,"" said Sen. Leno. ""California homeowners who qualify for modifications should get them - not a foreclosure notice.""
According to the Center for Responsible Lending, banks and servicers often pursue a modification and foreclosure at the same time, commonly referred to as dual-tracking. But because it is difficult to stop the foreclosure process after it starts - even if a borrower qualifies for a loan modification - the homeowner can still lose the home.
SB 729 would also require proof of ownership, meaning servicers must establish ownership of the note and the right to foreclose when they record notices of default.
In addition, SB 729 requires the servicer to send to the borrower at the time it sends the notice of default a life-of-loan accounting statement, including an accounting of all payments with application and running balances and an itemization and description of all fees charged.
To ensure compliance, the bill provides a ""measure of recourse"" to families who lose their homes due to servicer misconduct.
""When people hit hard times but can still manage to make their mortgage payments with the help of a loan modification, they deserve that opportunity,"" said Steinberg. ""SB 729 requires lenders to give hard-working homeowners a fair evaluation on a modification before foreclosing on a home. Helping families stay in their homes is best for them and best for California's economy.""
