Gov. Jerry Brown today signed two pieces of legislation collectively known as the California Homeowner Bill of Rights, which supporters contend will protect struggling homeowners and borrowers during the mortgage and foreclosure process.
The legislation, which will take effect Jan. 1, prohibits ``dual tracking,'' in which a lender forecloses on a borrower while reviewing a homeowner's application for a loan modification. The law also guarantees a single point of contact for homeowners negotiating a loan and expands notice requirements that must be provided to a borrower before taking action on a loan modification application or pursuing a foreclosure, according to the governor's office.
``These new rules make the foreclosure process more transparent so that loan servicers cannot promise one thing while doing the exact opposite,'' Brown said.
The laws also allow injunctions against foreclosure until violations are corrected and permit civil penalties against servicers that file multiple, inaccurate mortgage documents or commit reckless or willful violations of the law, according to backers of the legislation.
``The California Homeowner Bill of Rights will give struggling homeowners a fighting shot to keep their home,'' said Attorney General Kamala D. Harris. ``The legislation will make the mortgage and foreclosure process more fair and transparent, which will benefit homeowners, their community and the housing market as a whole.''
But Assemblywoman Diane Harkey, R-Dana Point, told the San Francisco Chronicle the legislation won't help homeowners, and the ``only people who will make money is attorneys.''
``California communities are starting to bounce back, and the longer you delay recovery from the housing market, the longer property tax revenues will continue to decline,'' Harkey said.
The bills were also opposed by large banks, the California Chamber of Commerce, title companies and Realtors.
According to state officials, the 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.
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- City News Service