June 1, 2010
Thousands of troubled California homeowners could benefit if California lawmakers this week approve proposed foreclosure relief legislation.
California SB 1275, the bill sponsored by California State Senators Mark Leno (D-San Francisco) and Darrell Steinberg (D-Sacramento), is designed to level the loan modification playing field and hold servicers accountable for their errors, the sponsors say.
The bill is up for consideration in the Senate Banking, Finance and Insurance (SBFI) Committee sometime this week -- most likely Wednesday.
The bill has two major provisions. First, it would prohibit servicers from starting the foreclosure process until a homeowner has received an up or down decision on their modification, if they requested one. It would also provide limited remedies to those homeowners whose homes were lost due to serious servicer errors.
"A foreclosure that starts because a servicer's left hand doesn't know what the right hand is doing is the most preventable foreclosure of all," said Paul Leonard, director of the California office of the Center for Responsible Lending. "And when those foreclosures end with homeless borrowers, simple fairness dictates that servicers right those wrongs."
SB 1275 could be heard as early as Tues., June 1. If it passes, it will need to be approved by the full Senate by Fri., June 4. The legislation faces opposition primarily from select lawmakers who oppose allowing wronged California homeowners from pursuing claims against lenders and servicers.
"It's unacceptable that when servicers lose faxes and lose payments, some Californians lose their homes," said Caryn Becker, policy counsel with the CRL California office. "At nearly 1 million foreclosures and counting, we need to prevent every unnecessary foreclosure we can."
