Five years ago on January 1, 2013 the California Homeowner Bill of Rights championed by former Attorney General Kamala Harris and signed into law by Governor Jerry Brown went into effect. It was instituted during a time when an unprecedented number of homeowners were facing foreclosure; between 2008 and 2011, one million Californians, including many in Silicon Valley and beyond, lost their homes to foreclosures.
The Homeowner Bill of Rights provided these people with defenses against lender exploitation as well as restructuring various facets of the foreclosure procedure.
The protections offered by the Homeowner Bill of Rights generally apply to first lien mortgage loans for properties that meet the following criteria:
- Four units or less
The Bill contains four primary areas of reform:
1. Elimination of Dual Tracking
Previously, a lender was allowed to foreclose even if the homeowner had submitted a loan modification application. Known as dual tracking, the Bill abolished this procedure, ensuring that loan modification applications are approved or denied prior to initiating or continuing a foreclosure proceeding.
2. Single Point of Contact
The Homeowners Bill of Rights requires lenders to provide a single point of contact and one or more means of communication to homeowners who are eligible for loan modification or foreclosure alternatives. This has removed the issue of the homeowner having to repeat his or her situation multiple times to multiple people, streamlining the process and minimizing frustration. The point of contact remains assigned to the homeowner’s account until all foreclosure mitigation options are exhausted or the past due amount is paid in full and the account is current.
The point of contact may be an individual or a team that possesses:
- Detailed knowledge of the homeowner’s loan status
- Information regarding foreclosure prevention alternatives
- Direct access to decision-makers
- Accountability to manage the documentation passing between the homeowner and mortgage servicer
3. Penalties for Robo-Signing
According to a definition by Nolo.com, when a representative of the lender or servicer signs foreclosure documents without reading and comprehending them or having any personal knowledge about the accuracy of the information they contain, that is considered Robo-signing. The Homeowner Bill of Rights imposes a fine of up to $7,500 per loan on lenders and servicers that record or file multiple, unsubstantiated documents, effectively limiting the instances of Robo-signing during foreclosure events.
4. Right to Sue for Violations
Homeowners were given the right to sue their lender or loan servicer for violation of the Bill of Rights, affording them the possibility of assistance in the form of:
- Injunctive relief, such as a halt to the foreclosure sale (if the foreclosure sale hasn’t happened yet), or
- Actual economic damages if the foreclosure sale has already occurred
The Homeowner Bill of Rights was instrumental in helping many California homeowners during the state’s foreclosure crisis. On January 1, 2018, key provisions of this Bill expired, creating a gap in this necessary safeguard, especially after the devastating wildfires that swept the state during the latter part of 2017. To ensure this protection continues California Senator Jim Beall introduced Senate Bill 818, which will renew the vital mortgage and foreclosure protections that lapsed at the start of the New Year.
“The need for the Homeowner’s Bill of Rights is especially critical because so many families hit by wildfires in Northern and Southern California will be coping with financial setbacks as they seek to rebuild their homes,’’ states Senator Beall, who serves on the Transportation and Housing Committee as its chairperson.
“Senate Bill 818 will restore the rights, the safeguards, which have helped thousands of people keep their homes. “We do not want people to lose these rights, which had existed for the past five years.”
Bill 818 is aimed at restoring protections against dual tracking, the right to appeal the denial of a loan modification application, the requirement of lenders and servicers to provide written notification of the receipt of loan modification applications as well as providing timely and detailed written notices regarding denials to allow homeowners to appeal.
Experts claim the need to keep the Homeowner’s Bill of Rights protection provisions intact is just as necessary in 2018 as it was in 2012 and many key people are backing Senator Beall’s proposal (LINK: http://sd15.senate.ca.gov/news/2018-01-03-beall-acts-restore-homeowners-bill-rights ) to reinstate the Bill in it’s entirety.