California lawmakers OK Foreclosure Reduction Act
July 2, 2012
Homeowners From Unfair Mortgage Foreclosure Practices
SACRAMENTO, CA – The California Assembly and Senate approved the Foreclosure Reduction Act today, enacting a number of reforms aimed at protecting homeowners from foreclosure abuses. The bill requires all lenders to abide by certain provisions of the national mortgage settlement negotiated by 49 state attorneys general earlier this year.
“Too many Californians have lost their homes to foreclosure while they desperately tried to qualify for a loan modification,” said Norma Garcia, manager of Consumers Union’s financial services program. “This bill will help ensure struggling homeowners are treated fairly so that more Californians can avoid foreclosure and keep their homes. Ultimately, these reforms will help stabilize the state’s housing market and curb the damage that foreclosures have on California families and communities. California’s bill should serve as a model for other states looking to protect homeowners from foreclosure abuses.”
The bill approved today adopts a number of critical reforms that Consumers Union has been urging state lawmakers to support. It would prohibit foreclosures from happening while a borrower is seeking a loan modification; require lenders to provide borrowers with a single point of contact for loan modifications; require lenders to produce proper documentation before initiating a foreclosure; and enable homeowners to bring legal action after a notice of default has been filed against lenders who violated the law.
California has been particularly hard hit by the foreclosure crisis. Over 900,000 foreclosures occurred in California between 2007 and 2011. Last year, 38 of the top 100 ZIP codes hit hardest by foreclosures were in California. California’s foreclosure crisis has hurt property values throughout the state and resulted in less revenue for schools, public safety, and other vital public services.
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