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California Legislature Sends Homeowner Bill of Rights to Governor

Monday, July 2, 2012

Both houses of the California Legislature today approved the Foreclosure Reduction Act, a bill designed to reduce unnecessary foreclosures in the state. The bill is the centerpiece legislation of Attorney General Kamala Harris' Homeowner Bill of Rights.

"This is monumental," said CRL California Director Paul Leonard. "For the past three years, the legislature has said 'no' to making the foreclosure process fairer for consumers. Today, they finally said 'yes.'"

AB 278 and SB 900 contain provisions that will end "dual track" in mortgage servicing, requiring that servicers provide loan modification applicants with a yes or no decision—and an explanation—before the foreclosure process can begin. The legislation will also prohibit robo-signing by requiring all recorded foreclosure documents to be reviewed and verified.

Importantly, in the event that servicers do not comply with the law, borrowers who have been materially harmed will be able to have their day in court.

The legislation, similar to bills which had failed the prior two years, passed with bipartisan support in the Assembly and with the help of new supporters in the Senate, including Sen. Ron Calderon (D-Montebello). Asm. Ken Jeffries (R-Riverside) and Asm. Nathan Fletcher (I-San Diego) joined Assembly Democrats in voting for the legislation. Sen. Noreen Evans (D-Santa Rosa) and Asm. Mike Eng (D-Monterey Park) spearheaded a bi-cameral effort to include banks, credit unions, labor organizations, and consumer groups in carefully crafting fair and responsible legislation to improve the foreclosure process.

With passage of the Foreclosure Reduction Act, California becomes the first state to put into law some of the key servicing reforms of the National Mortgage Settlement between 49 Attorneys General and the nation's five biggest banks. The Foreclosure Reduction Act will join five other bills as part of the Homeowner Bill of Rights and will go into effect Jan. 1, 2013. We urge Gov. Brown to sign the Foreclosure Reduction Act and the complete Homeowner Bill of Rights as quickly as possible.

For more information: Kathleen Day at (202) 349-1871 or; or Ginna Green at (510) 379-5513 or