California Passes Homeowners Bill of Rights

Am I dreaming? Wow! I really like this new Homeowners Bill of Rights, and I’m thrilled to see California passing AB 278 and SB 900. These are just two new bills that take effect on January 1, 2013 and require the banks to clean up their act. There are a couple of others pending that I haven’t read up on but may include in a later post.

There three things I REALLY like about these bills: 1) the enforcement provision. We all know what happened under HAMP — it had no teeth. I’m pleased to see the legislation including a provision that gives homeowners some traction to get an injunction to stop a sale;  (2) borrowers may be entitled to recover attorneys fees; and 3) filing multiple unrecorded documents may subject the banks to $7,500.00 per loan. Filing statutory complaints against these entities is also allowed in addition to any legal action you might take.

Section 2924.11 of AB 278 says:

“(i) A court may award a prevailing borrower reasonable attorney’s fees and costs in an action brought pursuant to this section. A borrower shall be deemed to have prevailed for purposes of this subdivision if the borrower obtained injunctive relief or was awarded damages pursuant to this section.”

Christine here: I would interpret this to mean that if you get the injunction, you are entitled to an attorney fee award.

Here are some more important points from the California AG’s office:

1. No more “dual tracking,” which means the foreclosure process is moving forward even though a loan modification application has been submitted. The servicer must render a decision on a loan modification before they file a notice of default, notice of sale, or conduct a trustee’s sale. The foreclosure process is stopped when a loan modification application is submitted, for the time it takes the servicer to review the application.

2. Servicers must designate a single point of contact for borrowers who are potentially eligible for a federal or proprietary loan modification application. The California AG’s office says a single point of contact is “an individual or team with knowledge of the borrower’s status and foreclosure prevention alternatives, access to decision makers, and the responsibility to coordinate the flow of documentation between borrower and mortgage servicer.”

3. An enforceability provision that allows borrowers to seek redress under the California Homeowner Bill of Rights. Injunctive relief will be available before the sale, and the borrower can seek damages after the sale.

4. If the banks record multiple unverified documents they will be subject to a civil penalty of up to $7,500.00 per loan in a lawsuit. Enforcement will also be allowed under licensing statutes, which means that you can also file complaints with regulators, such as the Department of Financial Institutions, the Department of Real Estate and the Department of Corporations.

I haven’t delved fully into all the information in these bills, but I will be digging further. In the meantime, visit the California AG’s office for more information. Here’s the text of AB 278 and SB 900.