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California Fights Bank Foreclosures
1. California Attorney General Kamala Harris has called her
state the "epicenter" of the foreclosure and mortgage
crisis having, in the year 2011, seven of the nation's 10
hardest-hit cities by foreclosure were in California.
2. California's prolonged real estate slump has resulted in
more than one million California homes were lost to
foreclosure in the past three years alone. To bring this
point home, I am talking not about homes simply in
foreclosure or threatened by foreclosure, but lost through
foreclosure.
3. Moreover, while parts of the California real estate market
are recovering, statewide there are an additional 700,000
properties currently in various stages of the foreclosure
process.
4. As a result of such horrific statistics, on July 11, 2012, in
order to stem the wave of foreclosure, California enacted
into law a "Homeowner Bill of Rights" for the purpose of
aiding embattled homeowners.
5. One of the key provisions of the new law is the ban on
"dual tracking," a practice whereby the lender on one
hand proposes to give the borrower to a modification and
at the same time, is foreclosing. As one might expect, this
practice has the effect of lulling homeowners into a false
sense of security.
6. The Bill of Rights' dual tracking ban would prohibit a
mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent from recording a notice of default, notice
of sale or conducting a foreclosure sale while a complete
loan modification application is pending on a mortgage or
deed of trust secured by residential real property not
exceeding 4 dwelling units that is owner-occupied.
7. In addition, mortgage servicers will be required to
designate a "single point of contact" for borrowers who
are potentially eligible for a loan modification. The new
law requires the single point of contact be responsible to
coordinate the flow of documentation between borrower
and mortgage servicer and be knowledgeable about the
borrower's status and foreclosure prevention
alternatives.
8. The new law also establishes procedures to be followed in
connection with a modification application on a loan
secured by a first lien. There are also procedures that must
be followed in connection with the denial of an
application, and most importantly it provides for a
borrower's right to appeal a denial.
9. The enforcement provisions of the Bill of Rights authorize
a borrower, who is forced to litigate with his/her lender, to
seek an injunction and damages for violations of certain of
the provisions described above. Under its provisions, for
the first time in the state of California, a homeowner will
be able to secure injunctive relief without having to cure
arrears or post expensive bonds.
10. In addition to injunctive relief, California's Homeowner
Bill of Rights authorize the greater of treble actual
damages or $50,000 in statutory damages if a violation of
certain provisions of the law is found to be intentional,
reckless or resulting from willful misconduct. Prevailing
borrowers may also receive attorneys' fees.
11. There are also changes to the notice provisions of a
Trustee's Sale. These changes include the requirement
that written notice be given to the borrower after the
postponement of a Trustee's Sale.
12. California's Homeowners Bill of Rights legislation is
effective January 1, 2013, and can be found in the recent
amendments and additions to the California Civil Code
Sections relating to mortgages. ( See: Civil Code 2920.5,
2923.4, 2923.5, 2924, 2923.6, 2923.7, 2923.55, 2924.9,
2924.10, 2924.11, 2924.12, 2924.15, 2924.17, 2924.18,
2924.19 and 2924.20 )
