By Jeff Collins / The Orange County Register
California Attorney General Kamala Harris recently unveiled a legislative package aimed at ending mistreatment of homeowners and tenants caught in the cross hairs of the foreclosure crisis. The plan includes measures to guarantee of a single point of contact for questions to their lenders about their mortgage, the restriction of “dual-track” foreclosures, and an increase in penalties for “robo-signing.”
Special Assistant Attorney General Brian Nelson answered questions about Harris’ proposed “Homeowners Bill of Rights.”
Us: What prompted this proposal?
Brian: This effort was inspired by Attorney General Harris’ travels up and down the state listening to the stories of homeowners. From Boyle Heights to Stockton, from San Bernardino to Sacramento, homeowners spoke of wanting to pay to stay in their homes, to find a solution that worked for their family, their lender, and their community. The homeowners spoke of a process that seems stacked against them.
The California Homeowner Bill of Rights will build upon the reforms won from the nation’s five largest banks as part of a multi-state mortgage agreement that included a commitment of up to $18 billion to homeowners in our state.
The legislation will make those interim reforms permanent and available to all California homeowners.
Us: What’s the “dual track?”
Brian: The stories of “dual-track” foreclosures are frustrating, and common among struggling homeowners. Too many homeowners report being in talks to modify their mortgages and save their homes — only to hear that their home has been foreclosed and they must leave.
The dual-track process often begins when a homeowner contacts their lender to discuss a loan modification. Frequently they are told that the bank will not discuss this kind of solution until the homeowner is behind on payments.
Once homeowners enter default, the foreclosure process can begin, but — whether the homeowner realizes it or not — he or she is now on the “dual track,” seeking a loan modification to save their home while at the same time heading toward foreclosure.
The California Homeowner Bill of Rights contains guarantees for homeowners that a transparent loan modification process be completed before foreclosure commences.
Us: What other abuses are there?
Brian: Other concerns for our state are incidents of “robo-signing.” In California, when a lender begins the foreclosure process, they must certify that they have informed the homeowner of his or her rights. Our Mortgage Fraud Strike Force has received reports that these certifications have been “robo-signed” by someone with no personal knowledge of the situation.
Another problem is the Mortgage Electronic Registration System, or MERS. This is an electronic database that was established to keep track of the millions of separate ownership interests in mortgaged-backed securities. The use of MERS ended the practice of recording assignments of mortgages at the county recorder’s offices. As a result, it can be difficult for homeowners to find out who actually owns their mortgage, and who the homeowner can contact to discuss it.
Both of these problems are addressed in the Homeowner Bill of Rights.
Us: How are tenants being abused in the foreclosure crisis?
Brian: Tenants frequently find themselves being turned out of foreclosed homes without regard to their lease. This, unfortunately, can contribute to the downward spiral of blight, as the property can be left abandoned and uncared-for when the tenant is evicted.
The Homeowner Bill of Rights would solve that by ensuring that lease terms for all tenants are honored after foreclosure, and that state law matches federal law by giving tenants 90 days after foreclosure before eviction can start, instead of just the 60 days our law currently provides.
Us: Are all these new laws necessary? Aren’t there already protections on the books?
Brian: The protections for homeowners in the law today contain far too many loopholes.
For example, there are blight laws on the books. Yet blight in spreading out from foreclosed homes, depressing properties values throughout the community. Government and homeowners need new tools, and our legislation would assist cities and counties in taking receivership over blighted properties to help restore and maintain them. It would also allow new homeowners additional time to address blight conditions in homes they buy, which will help speed the clean up in our neighborhoods.
Similarly, while some forms of “robo-signing” are illegal, current law does not impose strong penalties to deter this misconduct. We raise the penalties to $10,000 per act to discourage it.
Finally, under current law, the jurisdiction of a grand jury is limited to a single county, which limits the ability of a prosecutor to bring complex financial cases, which often extend across multiple counties. We propose a new multi-jurisdictional grand jury to help prosecute these crimes.
Us: Why are you seeking a $25 notice of default fee?
Brian: What’s the key argument for the $25 notice of default filing fee in the current anti-tax climate?
We need a fee to support and expand our comprehensive investigations of fraud that relate to the mortgage and foreclosure crisis, and to have the resources to prevent a future crisis from happening. This gives law enforcement the tools they need to investigate wrongdoing against homeowners.
Us: When will the Homeowner Bill of Rights be introduced in the state Legislature, and when will it land on the Governor’s desk?
Brian: The California Homeowner Bill of Rights has been introduced in the legislature and will be taken up at hearings soon. There is an Aug. 31 legislative deadline to pass bills, but the urgency of this crisis compels us to act as soon as we possibly can.
Back to March 2012 Archive
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