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.
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.
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.
In order to stem the wave of foreclosure, on July 11, 2012, California enacted into law a "Homeowner Bill of Rights" for the purpose of aiding embattled homeowners and bring fairness, accountability and transparency to the state's foreclosure process.
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.
The dual tracking ban set forth in the statute would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default or recording a notice of sale or conducting a trustee's sale while a complete loan modification application is pending on a first lien mortgage or deed of trust secured by residential real property not exceeding 4 dwelling units that is owner-occupied.
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.
There are also provisions which establish procedures to be followed in connection with the modification application. In addition, there are definite steps that must be taken by the servicer, should the servicer deny a modification application. Finally, the new law sets out very specific procedure to be followed in the event a borrower wishes to appeal the denial of a modification.
If all else fails, a California homeowner will be able to seek legal redress for violation of the Homeowner's Bill of Rights. Enforcement provisions permit a borrower, who is forced to litigate with his/her lender, to seek an injunction staying foreclosure.
As to the damage component, the Homeowner Bill of Rights authorizes 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. Borrowers may also receive attorneys' fees in connection with litigation under the act.
Other changes include changes to the notice provisions of Trustee's Sales. Formerly, a Trustee's Sale could be continued for as much as a year without written notice being provided to the borrower of the continued date. Under the new law, once foreclosure begins, if a Trustee's Sale date is postponed, the new law requires that written notice be given to the borrower after the postponement in order to advise the borrower of any new sale date and time.
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 )
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.
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.
In order to stem the wave of foreclosure, on July 11, 2012, California enacted into law a "Homeowner Bill of Rights" for the purpose of aiding embattled homeowners and bring fairness, accountability and transparency to the state's foreclosure process.
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.
The dual tracking ban set forth in the statute would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default or recording a notice of sale or conducting a trustee's sale while a complete loan modification application is pending on a first lien mortgage or deed of trust secured by residential real property not exceeding 4 dwelling units that is owner-occupied.
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.
There are also provisions which establish procedures to be followed in connection with the modification application. In addition, there are definite steps that must be taken by the servicer, should the servicer deny a modification application. Finally, the new law sets out very specific procedure to be followed in the event a borrower wishes to appeal the denial of a modification.
If all else fails, a California homeowner will be able to seek legal redress for violation of the Homeowner's Bill of Rights. Enforcement provisions permit a borrower, who is forced to litigate with his/her lender, to seek an injunction staying foreclosure.
As to the damage component, the Homeowner Bill of Rights authorizes 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. Borrowers may also receive attorneys' fees in connection with litigation under the act.
Other changes include changes to the notice provisions of Trustee's Sales. Formerly, a Trustee's Sale could be continued for as much as a year without written notice being provided to the borrower of the continued date. Under the new law, once foreclosure begins, if a Trustee's Sale date is postponed, the new law requires that written notice be given to the borrower after the postponement in order to advise the borrower of any new sale date and time.
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 )
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