In the last three years the state of California, as well as the rest of our nation, has suffered from a prolonged real estate slump. In that time, more than one million were lost, in California alone to foreclosure.
All told, in the last three years with California suffering from a prolonged real estate slump, more than one million California homes were lost to foreclosure. Not just in foreclosure pipeline, but lost.
Moreover, while parts of the California real estate market are recovering, statewide there are an additional 700,000 properties currently in various stages of the foreclosure process.
In order to stem the wave of foreclosure, on July 11, 2012, California enacted into law a "Homeowner Bill of Rights" for the purpose of aiding embattled homeowners and bring fairness, accountability and transparency to the state's foreclosure process.
Some of its key provisions include the ban on "dual tracking," a practice whereby the lender on one hand gives the illusion of working with the borrower to secure a modification and at the same time, is foreclosing. Needless to say, many homeowners are lulled into a false sense of security by such practice, thinking they will get a modification, when in reality the bank wants to do nothing more than foreclose and take the home.
The Bill of Rights' dual tracking ban would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default, notice of sale or conducting a foreclosure sale while a complete loan modification application is pending on a mortgage or deed of trust secured by residential real property not exceeding 4 dwelling units that is owner-occupied.
In addition, mortgage servicers will be required to designate a "single point of contact" for borrowers who are potentially eligible for a loan modification. The new law requires the single point of contact be responsible to coordinate the flow of documentation between borrower and mortgage servicer and be knowledgeable about the borrower's status and foreclosure prevention alternatives.
The new law also establishes procedures to be followed in connection with a modification application on a loan secured by a first lien. There are also procedures that must be followed in connection with the denial of an application, and most importantly it provides for a borrower's right to appeal a denial.
If all else fails, a California homeowner will be able to seek legal redress for violation of the Homeowner's Bill of Rights. Enforcement provisions permit a borrower, who is forced to litigate with his/her lender, to seek an injunction staying foreclosure.
In addition to injunctive relief, California's Homeowner Bill of Rights authorize the greater of treble actual damages or $50,000 in statutory damages if a violation of certain provisions of the law is found to be intentional, reckless or resulting from willful misconduct. Prevailing borrowers may also receive attorneys' fees.
There are other changes, as well. For example, formerly, a Trustee's Sale could be continued month - to - month for up to a year, without written notice to the borrower of the continued date. Under the new law, however, once foreclosure begins if a Trustee's Sale date is postponed, the law requires written notice be given to the borrower.
California's Homeowners Bill of Rights legislation is effective January 1, 2013, and can be found in the recent amendments and additions to the California Civil Code Sections relating to mortgages. ( See: Civil Code 2920.5, 2923.4, 2923.5, 2924, 2923.6, 2923.7, 2923.55, 2924.9, 2924.10, 2924.11, 2924.12, 2924.15, 2924.17, 2924.18, 2924.19 and 2924.20 )
All told, in the last three years with California suffering from a prolonged real estate slump, more than one million California homes were lost to foreclosure. Not just in foreclosure pipeline, but lost.
Moreover, while parts of the California real estate market are recovering, statewide there are an additional 700,000 properties currently in various stages of the foreclosure process.
In order to stem the wave of foreclosure, on July 11, 2012, California enacted into law a "Homeowner Bill of Rights" for the purpose of aiding embattled homeowners and bring fairness, accountability and transparency to the state's foreclosure process.
Some of its key provisions include the ban on "dual tracking," a practice whereby the lender on one hand gives the illusion of working with the borrower to secure a modification and at the same time, is foreclosing. Needless to say, many homeowners are lulled into a false sense of security by such practice, thinking they will get a modification, when in reality the bank wants to do nothing more than foreclose and take the home.
The Bill of Rights' dual tracking ban would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default, notice of sale or conducting a foreclosure sale while a complete loan modification application is pending on a mortgage or deed of trust secured by residential real property not exceeding 4 dwelling units that is owner-occupied.
In addition, mortgage servicers will be required to designate a "single point of contact" for borrowers who are potentially eligible for a loan modification. The new law requires the single point of contact be responsible to coordinate the flow of documentation between borrower and mortgage servicer and be knowledgeable about the borrower's status and foreclosure prevention alternatives.
The new law also establishes procedures to be followed in connection with a modification application on a loan secured by a first lien. There are also procedures that must be followed in connection with the denial of an application, and most importantly it provides for a borrower's right to appeal a denial.
If all else fails, a California homeowner will be able to seek legal redress for violation of the Homeowner's Bill of Rights. Enforcement provisions permit a borrower, who is forced to litigate with his/her lender, to seek an injunction staying foreclosure.
In addition to injunctive relief, California's Homeowner Bill of Rights authorize the greater of treble actual damages or $50,000 in statutory damages if a violation of certain provisions of the law is found to be intentional, reckless or resulting from willful misconduct. Prevailing borrowers may also receive attorneys' fees.
There are other changes, as well. For example, formerly, a Trustee's Sale could be continued month - to - month for up to a year, without written notice to the borrower of the continued date. Under the new law, however, once foreclosure begins if a Trustee's Sale date is postponed, the law requires written notice be given to the borrower.
California's Homeowners Bill of Rights legislation is effective January 1, 2013, and can be found in the recent amendments and additions to the California Civil Code Sections relating to mortgages. ( See: Civil Code 2920.5, 2923.4, 2923.5, 2924, 2923.6, 2923.7, 2923.55, 2924.9, 2924.10, 2924.11, 2924.12, 2924.15, 2924.17, 2924.18, 2924.19 and 2924.20 )
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Want to find out more about the Homeowner's Bill of Rights, then visit Mitchell Sussman's site on how to navigate foreclosure.
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