Homeowner Bill of Rights Helps Avoid Foreclosure
(Picture credited to http://www.flickr.com/photos/respres/ / CC BY 2.0)
I have spent the last several years as a Vista California bankruptcy lawyer listening to homeowners’ horror stories and frustrations with mortgage lenders’ while attempting to get modifications and avoid foreclosure of their homes. So you can imagine my joy after hearing what the state of California has just done to protect its homeowners who want to avoid foreclosure.
The New Homeowner Bill of Rights
Yesterday, Governor Jerry Brown signed the California Homeowner Bill of Rights. It is designed to stop abusive tactics of mortgage loan servicers and protect homeowners who are trying to modify their mortgages and avoid foreclosure.
Often in the past loan servicers would appear to be trying to help a homeowner renegotiate his or her mortgage. But sometimes they were actually going behind the homeowners back and foreclosing on their home. Also homeowners often keep getting shifted around to different agents of the servicer every time they called. So no single loan servicer representative would ever know the status of the modification or the foreclosure process. This led to great frustration and in some cases even lose of the home. No more.
Going into effect January 1, 2012, the new law:
- Forbids foreclosure while a homeowner works with a lender on a modification or a short sale;
- Requires the mortgage company to provide a single point of contact to work with the homeowner on a modification;
- Increases the notice requirements that must be provided to the borrower before taking action on a loan modification application or pursuing foreclosure;
- Permits homeowners to seek injunctions against mortgage servicers until violations are corrected and permitting monetary penalties up to $50,000 against servicers who file multiple inaccurate mortgage documents or commit reckless or willful violations of law.
The Goal of the New Homeowner Bill of Rights: Chance to Modify Before Foreclosure
The goal of the new law is to insure that the homeowner’s mortgage modification application receives full and fair consideration before foreclosure can occur. It also provides a legal remedy for mortgage companies who violate the rules.
Single point of Contact
Having a single point of contact will make the mortgage companies more accountable. It will avoid the current practice of shuttling modification applications and phone calls to various departments and employees. This has been a nightmare for modification applicants in the past.
New Notice Requirements
Under the new notice requirements the mortgage company is required to notify the homeowner the due dates for the modification application. They also have to be told whether their foreclosure has been put on hold, and whether or not the application has been denied.
Kudos to Governor Jerry Brown and Attorney General Kamala Harris for providing these “first in the nation” protections to California homeowners seeking to avoid foreclosure of their homes. (For the full text of the new law (numbered SB 900 and AB 278) see : leginfo.ca.gov/bilinfo.html).
I help people in Vista, Oceanside, Carlsbad, Escondido, San Marcos, Fallbrook, and the entire North San Diego County save their homes and get debt relief through Chapter 7 or Chapter 13 bankruptcy. Contact me today for a free office consultation to find out how.