Legislation Will Level the Playing Field for Borrowers Across California, and Ensure That All Borrowers Get Full and Fair Consideration for Loan Modifications
Six weeks of negotiations between banks, the bipartisan legislative conference committee, the Attorney General and consumer groups have produced a Homeowner Bill of Rights that deserves to pass both floors of the Legislature and be signed by Gov. Jerry Brown as soon as possible.
The Homeowner Bill of Rights will prevent unnecessary foreclosures without putting undue burden on banks by implementing the following key provisions modeled on the National Mortgage Settlement:
- Prohibit dual tracking by ensuring that borrowers who submit a completed loan modification application will get a "yes or no" decision from their servicer, with an explanation, before the servicer begins the foreclosure process.
- Limit robo-signing by requiring servicers to review evidence to substantiate borrowers' default and the servicer's right to foreclose. In addition, all recorded foreclosure documents must be properly reviewed and verified for accuracy.
- Provide strong but fair accountability by implementing strong incentives for servicers to comply with standards already in place for HAMP, the GSEs and the National Mortgage Settlement. Servicers will be responsible for following the law, and borrowers who have been materially harmed when servicers do not follow the law will have some recourse.
The Homeowner Bill of Rights will level the playing field for California homeowners whose loans are not being serviced by the nation's five largest banks. Those banks, as part of the National Mortgage Settlement, have already agreed to similar provisions and to pay billions of dollars in penalties.
The bill is scheduled to be heard on the Assembly and Senate floors on Mon., July 2.
The Legislature should quickly pass, and Gov. Jerry Brown should quickly sign, this critical legislation.