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California politico wants mortgage servicers to pay $20k per foreclosure

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A California state representative has filed a bill that would require mortgage servicers to pay $20,000 to local communities for each foreclosure proceeding it files. California State Assembly member Bob Blumenfield (D-San Fernando Valley) introduced the bill in February. According to the proposed legislation, the fee will be distributed for public education, local police and fire departments, redevelopment programs, small businesses and programs to mitigate the effects of foreclosure. The bill is scheduled to be heard in committee March 22. According to the bill's fact sheet, the initiative would generate $10 billion over the next two years. It forbids mortgage servicers from passing the charge on to borrowers. In January alone, there were nearly 16,000 properties in California repossessed through foreclosure, according to RealtyTrac. Between 2009 and 2012, it is estimated that nearly 2 million homes will be lost to foreclosure in the state, according to the bill's fact sheet, accounting for nearly 30% of actions in the country. California property tax losses will be near $3.8 billion, and communities will pay an estimated $17.4 billion to deal with the cost of foreclosure, according to Blumenfield. "Yet while communities suffer, those who cause foreclosure play no part in alleviating its effects," Blumenfield said in the fact sheet. "Mortgage servicers have been slow to modify home loans and need to pay their fair share to restore our communities." Servicers are likely to push back against the bill. Nationally, Republicans and trade groups have said the proposed settlement from the 50 state attorneys general would be too costly for servicers. San Francisco-based Wells Fargo (WFC) would not comment on pending legislation, and the California Bankers Association did not immediately reply to requests for comment. Write to Jon Prior. Follow him on Twitter: @JonAPrior

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