Keeping the Door Open for California Families
California is now the first state in the nation to enact a sweeping set of foreclosure laws designed to protect responsible homeowners with the passage and signing of the Homeowner Bill of Rights. For hundreds of thousands – perhaps millions – of Californians, the fear of losing their home due to foreclosure has been an everyday reality.
But, with a stroke of Governor Jerry Brown’s pen last week, their fear turned to cautious hope.
Thanks to the advocacy of Attorney General Kamala Harris, Speaker John Perez, Senate leader Darrell Steinberg, State Senators Fran Pavley, Mark Leno and Mark DeSaulnier and Assembly members Mike Eng and Mike Feuer, California is now the first state in the nation to enact a sweeping set of foreclosure laws designed to protect responsible homeowners with the passage and signing of the Homeowner Bill of Rights.
The Data Doesn’t Lie
This landmark law is an example of the type of data-driven governing that makes our state more effective and efficient, and ultimately more fair. For years, it had been correctly assumed that there were major problems in the foreclosure process. Earlier this year, my office ran an audit of about 400 foreclosures in the county that determined nearly 85% of foreclosure filings included some sort of legal violation. Beyond that, roughly two-thirds of filings saw at least four errors.
Other concerning data included that 45% of foreclosures saw the property sold to an entity to which it should not have been sold, that two or more entities had the deed of trust to a property in roughly 6% of cases, and that in 8% of cases, homeowners never received notification of a default. These are more than statistics – these are hardworking California families who may have fallen on hard times during a rough economic period but who deserve the chance to get themselves out of it – in a fair and expeditious manner. And that’s what the Homeowner Bill of Rights will accomplish.
What It Means for California Families
The law incorporates a variety of the measures involved in the “national mortgage settlement” with some of the country’s biggest banks that was orchestrated by Attorney General Kamala Harris. The banks also agreed to a debt reduction settlement of up to $18 billion for California.
And unlike some legislation that leaves results to be desired, this bill will have tangible and direct effects on everyday Californians when it takes effect on January 1. One of the most important aspects of the bill includes preventing lenders from pursuing foreclosure while the homeowner is in negotiations for a lower mortgage. Previously, homes could be foreclosed on even while borrowers were making a good-faith effort to work with the bank. Homeowners will now have the due process they deserve.
Other changes set to take place involve banning the infamous “robo-signings” that led to a myriad of “improper or faulty processing of foreclosure documents” and the ability for citizens – or state agencies – to sue if lenders are found to be knowingly in violation of the law. This means returning a modicum of power to average citizens, leveling the playing field between lenders and borrowers and providing a sense of dignity in what is undoubtedly a tenuous circumstance for families.
There are some 700,000 Californians going through the foreclosure process that may now be able to save their home because of this law. Additionally, there are hundreds of thousands on the verge of foreclosure, as they are struggling to pay their mortgage or to even modify it. This law is not a guarantee to save everyone’s home – but it is a lifeline for families that previously did not exist.
Foreclosures mean so much more than just losing one’s home. Without the equity a home provides, people can find their net worth nearly decimated. This greatly reduces their ability to start a business or send their kids to college. People rely on this equity to take part in The American Dream and when it’s gone, it’s extremely difficult to get back.
Benefits for Local Communities
Throughout the mortgage crisis, we’ve seen the disastrous effects foreclosures have had not only on individual families but also on their communities. When a home is foreclosed on, it lowers the property value of the surrounding homes and the neighborhood as a whole. This means that homes sell for less and property taxes go down, greatly reducing revenue for vital services.
We all have an interest in keeping families in their homes and keeping communities vibrant. Not only does this mean more revenue in terms of property taxes for improved services, but also a more secure, productive citizenry. California has led the nation in so many ways, so many times before. This week, we lead again – helping to keep the door open for so many California families.