California Set to Vote on Foreclosure Mediation Bill
A bill that establishes a foreclosure mediation program in California passed committee and will reach the California State Assembly floor this week. Assembly Bill 1639 was introduced by a trio of Democratic members of the assemby — Pedro Nava (Santa Barbra), Ted Lieu (Torrance) and speaker emeritus Karen Bass (Los Angeles). If passed, the bill would establish the Facilitated Mortgage Workout (FMW) program. Through it, lenders are required to meet with borrowers to develop a modification plan before foreclosure. The loan must have originated before Jan. 1, 2009, and the home must be occupied by the borrower as a principal residence. The principal balance on the mortgage cannot exceed $729,750. The bill passed the Assembly Appropriations Committee last week. “This legislation sends a strong message to the banking and mortgage industry — that business as usual is not working. We will force the industry to do more to help struggling California families facing foreclosure,” Nava said. “This legislation will require face to face meetings between homeowners and their lenders—so that a mutually acceptable plan can be implemented that keeps families in their home.” The bill also requires lenders to include information regarding the program with the notice of default. The borrower must return a form to the administrator of the program requesting a mediation within 30 calendar days of receiving the notice of default and must send other information with 15 days of the request. Borrowers must deposit with the administrator of the program 50% of the current mortgage payment each month while he or she participates in the FMW program. Lenders must meet with the borrower within 14 days of contact with the borrower. The program expires Jan. 1, 2014. According to RealtyTrac, an online foreclosure marketplace, one in 192 homes received a foreclosure filing in April 2010. It’s the fourth highest foreclosure rate in the country. “This crisis has devastated thousands of California families and communities. We have to take a new approach to help families remain in their homes,” Nava said. Write to Jon Prior.