Making Home Lending More Transparent
Today, I am proud to join SEIU, ACCE, CRL and CRC in proposing legislation to make the home lending process significantly more transparent. We are honored to have Assemblymember Bob Wieckowski carry our legislation asking lenders to file documents every time a loan is sold so any property owner will know who actually owns the loan they are paying every month.
Foreclosures continue to remain at all time highs in CA, while home owners continue to struggle to get their loan modified. One problem for home owners is the lender who loaned them the money has now sold their mortgage to an investor. Historically, the lender would have had to file a promissory note with the Recorder's office as a formal document, but today, lenders are allowed to sell notes through a system called MERS. MERS was create about ten years ago so the financial industry could become more efficient and package loans in large numbers to be sold on Wall Street. At the same time, if home owners defaulted, investors would be able to foreclose quickly without having to file any paperwork with Recorders across the country. While efficiency increased, home owners today have no idea who actually owns the mortgage they pay every month. Most lenders are just collecting the check on behalf of an investor somewhere else. This lack of transparency has become a major issue during the foreclosure process because home owners seeking modifications and relief were told lenders or servicers could do nothing without the approval of the investor.
In case, you are wondering why this is important, you need look no further than this story about a couple who is facing foreclosure despite have made every single payment on their mortgage.