The California Legislature has a approved a law recognized by many as the nation’s most comprehensive effort to strengthen homeowner rights since the housing meltdown,
The legislation, which passed despite opposition from the banking industry, was sent to Gov. Jerry Brown’s desk. The law would make California the first state in the nation to enact key terms of an $18 billion national mortgage settlement reached with five major banks, extending them to additional lenders.
The law, which would take effect in January, would ban lenders from engaging in “dual tracking” by starting or continuing foreclosure proceedings during loan modification negotiations.
It would prohibit the use of robo-signed documents to speed up the foreclosure process and require large institutions to provide borrowers with a single department or group of employees to deal with their lending issues.
The law also gives homeowners the ability to take action in court against banks that fail to follow the legal processes.
“We gave those families some promise that they can be in a system that allows them a fair opportunity to be the responsible homeowners that they want to be, so that they can keep that home and the shelter where they raised their children, that place where they expect to retire and to live with dignity,” said Attorney General Kamala Harris, who pushed for the bill as part of a package of foreclosure relief legislation.
It is unclear how many of the estimated 700,000 Californians currently going through the foreclosure process would benefit from the law’s protections. Harris, who was involved in negotiating the national settlement, said she believes “informed” homeowners would be able to take advantage of the law come January and hopes that banks would proactively implement the bill’s provisions sooner.