Governor Edmund G. Brown Jr. today signed the California Homeowner Bill
of Rights to halt the “abusive tactics” of loan servicers and protect
struggling homeowners who are trying, in good faith, to renegotiate
their mortgages.
“Californians should not have to suffer the abusive tactics of those who
would push foreclosure behind the back of an unsuspecting homeowner,”
said Governor Brown. “These new rules make the foreclosure process more
transparent so that loan servicers cannot promise one thing while doing
the exact opposite.”
“The California Homeowner Bill of Rights will give struggling homeowners
a fighting shot to keep their home,” said Attorney General Kamala D.
Harris. "This 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."
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.
By prohibiting dual-track foreclosure, this legislation provides
borrowers with certainty that their loan application will receive full
review and consideration before any foreclosure occurs. These
requirements also provide the borrower with a legal remedy to challenge
the actions of servicers that engage in dual-track foreclosure or other
material violations of law.
The Homeowner Bill of Rights also requires a single point of contact for
borrowers seeking loan modification. This requirement will make loan
servicers more accountable and prevent them from repeatedly transferring
applications and phone calls to various departments and employees.
Under the new law, servicers must notify borrowers when a modification
application is due, if foreclosure has been postponed and if a
modification has been denied. Each of these new rules increases
transparency and helps to ensure that borrowers are properly informed of
the actions taken by a servicer before foreclosure activities begin.
Borrowers have a right to file private lawsuits under this new law to
block 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. These provisions
protect the rights of consumers, while allowing servicers to correct
unintentional violations.
The California Homeowner Bill of Rights, AB 278 and SB 900, was
sponsored by California Attorney General Kamala D. Harris. AB 278 was
authored by Assembly Members Eng, Feuer, Mitchell and John A. PĂ©rez. SB
900 was authored by Senators Leno, Evans, Corbett, DeSaulnier, Pavley
and Steinberg.