The California Homeowner Bill of Rights became law on January 1, 2013 to ensure fair lending and borrowing practices for California homeowners.
The laws are designed to guarantee basic fairness and transparency for homeowners in the foreclosure process. Key provisions include:
- Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.
- Guaranteed single point of contact: Homeowners are guaranteed a single point of contact as they navigate the system and try to keep their homes – a person or team at the bank who knows the facts of their case, has their paperwork and can get them a decision about their application for a loan modification.
- Verification of documents: Lenders that record and file multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders who are in violation are also subject to enforcement by licensing agencies, including the Department of Business Oversight, the Bureau of Real Estate.
- Enforceability: Borrowers will have authority to seek redress of “material” violations of the new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale. (AB 278, SB 900)
- Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply. (AB 2610)
-
Tools
to prosecute mortgage fraud: The
statute of limitations to prosecute
mortgage-related crimes is extended
from one to three years, allowing
the Attorney General’s office to
investigate and prosecute complex
mortgage fraud crimes. In addition,
the Attorney General’s office can
use a statewide grand jury to
investigate and indict the
perpetrators of financial crimes
involving victims in multiple
counties.
(AB 1950, SB 1474) -
Tools
to curb blight: Local
governments and receivers have
additional tools to fight blight
caused by multiple vacant homes in
their neighborhoods, from more time
to allow homeowners to remedy code
violations to a means to compel the
owners of foreclosed property to pay
for upkeep.
(AB 2314)The California Homeowner Bill of Rights marked the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The Mortgage Fraud Strike Force was created in May 2011 to investigate and prosecute misconduct at all stages of the mortgage process. In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks for up to $18 billion for California borrowers.
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