California governor expected to sign foreclosure reforms
Gov. Jerry Brown said he fully supports the new requirements for mortgage servicers under the Homeowner Bill of Rights passed by the California State Legislature Monday.
"The Homeowner Bill of Rights will prevent banks from throwing Californians out of their homes while they are trying, in good faith, to renegotiate their mortgages," Brown said in a statement. "This bill establishes important consumer protections that are long overdue and I commend Attorney General Kamala Harris for her determined pursuit of these changes."
His office did not say when the governor is expected to sign the legislation.
Democrat lawmakers took just four months to push a series of bills through both chambers since introducing them earlier this year. Many of the requirements were built around similar requirements under the national $25 billion foreclosure settlement California Attorney General Kamala Harris and 48 other states signed onto in March. Oklahoma did not sign the settlement.
The bills passed Monday end the practice of dual-track foreclosures, by which mortgage servicers continue the foreclosure process on borrowers while simultaneously considering them for a modification.
They also require servicers to provide documentation to the borrower establishing the right to foreclosure before filing a default notice, and the bills levy civil penalties for filing fraudulent affidavits and other paperwork with counties.
Other bills give Harris new powers to pursue financial crimes across several jurisdictions.
The bills faced significant opposition from the mortgage industry.
"The California foreclosure laws are misguided and damaging," said Anthony Sanders, an economist at George Mason University, in a blog post Tuesday. "Essentially, would you lend money to someone in California if you knew that it is more difficult to enforce a foreclosure if the borrower defaults?"
Roughly 263,500 properties in California received a foreclosure filing in the first six months of 2012, the highest total in the nation, according to RealtyTrac. Filings dropped 13% from last year.
It takes an average 274 days to foreclose on a property in California after the notice of default is filed, one of the shortest timelines in the country, according to ForeclosureRadar.
"Californians will finally have a fighting chance to keep their homes, as this measure brings fairness to the loan modification and foreclosure process," said California Senate President pro Tem Darrell Steinberg.