Banks Appear Close to Killing Foreclosure-Prevention Bill

Los Angeles Times
August 26, 2010
Lifsher, Marc

Lobbyists from banks, securities firms, home builders, and business groups have been working overtime to defeat SB1275 in the California Assembly; and they may be close to success. The measure by Sen. Mark Leno (D-San Francisco) fell 14 votes short of the 41 needed to pass the Assembly. Leno said many of the lawmakers abstained from voting because of fear instilled in them by the lobbyists, who argued that the measure would make the foreclosure process overly complicated. The legislation would require mortgage servicers to give borrowers a decision regarding their request for loan modification before beginning the foreclosure process. Leno, bill co-author Senate President Pro Tem Darrel Steinberg (D-Sacramento), and consumer advocates say the law is needed to protect borrowers whose properties are sold out from under them before their loan workouts are processed. Paul Leonard, director of the Center for Responsible Lending in Oakland, called the reform "fairly modest," although banks continue to express disdain for the proposal because they say it would allow homeowners to sue for monetary damages and seek injunctions to delay or void a foreclosure.
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