Bill of Rights Set to Protect During Foreclosure Process

Governor Jerry Brown signed a Homeowner Bill of Rights that aims to protect homeowners and borrowers during the mortgage and foreclosure process.

The bill of rights should stop several “inherently unfair bank practices that have needlessly forced thousands of Californians into foreclosure,” said officials with Attorney General Kamala D. Harris's office. The AG's office announced Wednesday's signing through a news release.

The law restricts dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions to modify a loan to save the home, officials said.

“It also guarantees struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers, and imposes civil penalties on fraudulently signed mortgage documents,” officials said. “In addition, homeowners may require loan servicers to document their right to foreclose.”

The laws will go into effect on Jan. 1. Borrowers will be able to turn to the courts to enforce their rights under this legislation.

The California Homeowner Bill of Rights was introduced Feb. 29 at a press conference featuring Assembly Speaker John A. Pérez and Senate President pro Tem Darrell Steinberg and bill authors from the Assembly and Senate.

The measure consists of a series of related bills, including two identical bills that were passed on July 2 by the state Senate and Assembly: AB 278 (Eng, Feuer, Pérez, Mitchell) and SB 900 (Leno, Evans, Corbett, DeSaulnier, Pavley, Steinberg).

However, not all lawmakers were on board with the measures.

Senate Republican Leader Bob Huff, R-Diamond Bar, said after the bills passed that the policy would do "irreparable harm to the California housing market and responsible homeowners."

“There’s no denying that home foreclosure is a significant and life-changing problem for many Californians and many California communities,” Huff said in a statement. “But rather than find realistic and reasonable solutions to help those in need, Democrats are wielding a sledgehammer on our fragile housing market."

The California Homeowner Bill of Rights also contains a variety of bills outside of the conference committee process. These will enhance law enforcement responses to mortgage and foreclosure-related crime, in part by empowering the Attorney General to call a grand jury in response to financial crimes spanning multiple jurisdictions, officials said.

Additional elements will help communities fight blight related to foreclosure, and provide enhanced protections for tenants in foreclosed homes, officials said.

More details about the California Homeowner Bill of Rights are found on the attached fact sheet. To learn more about how the bills impact California homeowners, review the slideshow at www.oag.ca.gov.