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Diane Gallagher

Homeowners bill of rights: How it can protect you

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Posted: Saturday, July 7, 2012 12:00 am

On Monday, the California State Legislature voted to pass the Homeowner Bill of Rights. This bill awaits Governor Jerry Brown’s signature.

According to Attorney General Kamala Harris, there are six bills attached to the Homeowners Bill of Rights. The first Bill; The Foreclosure Reduction

Act. The second Bill; The Homeowner Due Process Rights Act. The third Bill; The Blighted Prevention Act. The fourth Bill; Tenants Protection Act. The fifth Bill; The Enhanced Attorney General Enforcement Bill. And the final Bill; The Grand Jury for California Financial Crimes.

This law, The Homeowners Bill of Rights, will institute sensible reforms to bank’s foreclosure practices and create a fairer foreclosure process for

California’s homeowners. This bill will protect homebuyers in the most vulnerable communities in California, said Cristina Trujillo of the California Coalition for Rural Housing.

“Now, everyone has a fair chance at saving their homes and protecting themselves from unfair business practices,” she said.

This law will end the “dual track” process, where banks foreclose on homeowners while they are negotiating for a loan modification with their bank. Banks are now required to give homeowners a “yes” or “no” answer on a loan modification application before continuing with foreclosure, thereby giving homeowners a fair chance at preventing foreclosure. If a loan modification is accepted, the bank will rescind the notice of default or sale, allowing homeowners to pay their loans without the looming threat of foreclosure. If a loan modification is denied, homeowners will not be blindsided by a sale notice, because banks are now required to send a letter to the borrower describing the reason for denial and letting the borrower know of his or her right to appeal that denial to the servicer.

In addition to ending “dual track,” this legislation requires all banks to end “robosigning” and provide a single point of contact to borrowers.

Homeowners will no longer have to speak to a different person at the bank every time they call and resubmit the same mountain of paperwork to different people at the same institution.

If a bank cannot follow these simple procedural rules, California homeowner will be able to enforce their rights by taking the bank to court. This will encourage servicers to follow the law, and when they do not, it will allow victimized homeowners to get their homes back where possible, or get some financial relief.

“This legislation finally brings some accountability to the banks for harmful foreclosure practices,” said Kevin Stein, Associate Director of the California Reinvestment Coalition. “Homeowners will now be able to protect themselves from the commonplace violations that banks have exhibited in this foreclosure crisis.”

Many of the provisions in the legislation were embodied in the National

Mortgage Settlement that 49 Attorneys General signed with the five big banks earlier this year. The legislation extends the impact of the settlement so that all homeowners in California, regardless of which bank services of their loan, have the same protections and rights. This legislation should serve as a national model for other states looking to enforce the Settlement and protect their homeowners.

Have a Great Week! Diane is the President of the Lodi Association of Realtors and can be reached at