SB 1275: Homeowners Bill of Rights
No. of Jobs
N/A
Category
Value working families
Proposal
The legislature will enact the Homeowner’s Bill of Rights – for California homeowners seeking a change in their mortgage situations. Among the issues addressed in this bill will be:
- Borrowers must receive a notice of their rights prior to foreclosure.
- Loan servicers must process any application for loan modification before starting the foreclosure process. If borrowers are denied a loan modification, loan servicers must provide a detailed denial explanation letter.
- The bill would provide remedies to homeowners whose rights were violated under this act.
Background
Over the last three years, home values have plummeted and homeowners have struggled to pay inflated mortgages. Additionally, given the current recession, many homeowners simply cannot pay their mortgages. In California alone, there are over 87,000 active foreclosures and just last year, nearly 500,000 families lost their homes.
Many homeowners have encountered difficulty in working with their banks and other loan servicers. Borrowers who do request loan modifications frequently complain about loan servicers being non-responsive and having to fax documents multiple times. They express general frustration about the process.
Even with additional education for homeowners, it is crucial that when a homeowner is discussing the renegotiation of a loan with their lending institution, a separate arm of the institution is not instituting foreclosure of the family’s home at the same time – the goal is to preserve homeownership.
