Realtors OPPOSE CA 'Homeowners Bill of Rights'.

Real Estate Agent with 1st Action Real Estate

California Homeowners Bill of Rights:

A Lesson in Political Expediency & Unintended Consequences.

California Attorney General Kamala Harris announced in a much heralded press release today that her 'California Homeowners Bill of Rights' has 'taken a key step toward passage'. Here's the key step - she bypassed every preliminary opportunity for the bill to be discussed, debated or voted on in either the Assembly or the Senate. What she did, or had her minions in the Legislature do for her, was have the bill introduced to a 'two-house conference committee' that voted this morning to pass the bill. That means tomorrow or, more probably Monday, the full Senate and Assembly will vote on the bills - SB 900 & AB 278 with no discussion.

You've heard me discuss the measures previously as the Nevada Suite of bills, so named for the deleterious results Nevada experienced after passing similar legislation last year. Did I mention the 'special committee' was made up of 4 Democrats and 2 Republicans? Now guess what the vote was? That's called a 'procedural matter' in Sacramento. Roughly translated it means 'bend over'.

Here's C.A.R.'s take on the issue:

C.A.R. is OPPOSING conference report, AB 278, containing anti-foreclosure legislation sponsored by the state Attorney General. C.A.R. opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not, C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes this conference report because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, and making it difficult for even well qualified borrowers to obtain financing. Financing is already very difficult to get. This conference report will only make a difficult situation worse.

Initially the Attorney General had sponsored a package of bills; the so-called the “Homeowners Bill of Rights.” For procedural reasons, the majority of these bills have been under consideration by a Conference Committee made up of six legislators. REALTORS® had the opportunity to educate these legislators about C.A.R.’s concerns as part of Legislative Day and since then C.A.R. lobbyists have been working directly with the conferees and legislative staff to make them aware of the unintended consequences of some of these proposals. The Conference Committee has now issued its final report and it must be passed by both Houses of the legislature. These votes may occur as early as Monday, July 2nd.


The Attorney General has sponsored a package of bills to place into California law an expanded version of the national settlement between major banks and state attorneys general. The contents of some of these bills have been under consideration by a Conference Committee comprised of six members who have just approved a conference report on a party-line vote. Some provisions will have the unintended effect of drying up mortgage loans for anyone but the most well-qualified borrowers, and increasing the costs of all mortgages.

One provision allows any borrower, no matter what the circumstances, to file a lawsuit. This will encourage opportunistic lawyers to pursue frivolous lawsuits, bringing unnecessary and unjustifiable delays to an already difficult and time consuming process. The language is so vaguely written that the borrower doesn’t even have to show that they have been harmed to file suit and be awarded damages.

One-sided  attorneys fees may still be awarded only to plaintiffs based on the very broad definition of a “prevailing party” in the report. And, of course, if lenders don’t have the remedy of foreclosure to ensure they can recover their security in appropriate situations, they will be less likely to lend, credit will be less available and the housing market recovery will limp along even more slowly.

C.A.R. is OPPOSED to the conference report because:


·         The housing market recovery is still fragile. About half of all sales are of distressed properties. By restricting a lender’s ability to foreclose and exposing them to unnecessary liability, this report will dry up inventory, and it will further discourage lending other than to the most highly qualified borrowers. Additionally, these bills will artificially slow down the foreclosure process, keeping properties off the market that are legitimately in foreclosure. Finally, by removing the threat of foreclosure, the bill erodes the incentive for short sales as well.

·         The bill invites bad-faith defaults and lawsuits. By broadly defining under what circumstances a lawsuit can be filed, even those legitimately in foreclosure can “game” the system. Additionally, the bill creates an incentive for plaintiffs’ attorneys to file frivolous lawsuits even if no harm has been done to the borrower. The courts are already overwhelmed. This bill, by inviting frivolous lawsuits puts an additional strain on the already underfunded courts

·         Lending is already tight. Even the most well-qualified borrowers are finding it difficult to obtain financing. By stopping legitimate foreclosures, banks will be forced to further tighten lending standards at the expense of homebuyers.


We're not intimating that everything contained in the bills is bad and we have been supportive of some of the issues. We also have a competing dual-tracking bill in play that we feel is more balanced and less vague. But this is a take-it-or-leave-it kind of bill - you have to eat the whole enchilada and there are no amendments allowed at this point. All the bad will be with us as law along with the few good things it might accomplish. Sound familiar?

This is also what is referred to as a 'gut & amend' bill. For 1 1/2 years some bills have been floating around the Legislature knowing full well they weren't going anywhere. They were being held for just such a vehicle as this to rise from the ashes and require a last minute vote - often with only minutes of notice.

So this bill will pass UNLESS you can convince your Democratic Legislator to vote against it. Otherwise it's a simple exercise in vote counting (53 - 27) to ascertain that our housing market will take another hit - a victim of increased frivolous lawsuits, further restrictions on foreclosures and tightened lending standards.

So now you know the proverbial 'other side of the story' and it's not pretty. I encourage you to read the bill at  AB 278 and then read the AG's release below. While the release summarizes a much glossed over purview of the bills, the devil is in the details. So go to work on your Democratic Legislators and let them know how Realtors® feel, and every homeowner and landlord who doesn't feel like paying the price this bill will cost.




June 27, 2012

(415) 703-5837


Print Version


California Homeowner Bill of Rights Takes Key Step to Passage

SACRAMENTO -- Attorney General Kamala D. Harris today announced the passage of two central elements of the California Homeowner Bill of Rights through a special two-house conference committee. The 4 to 1 vote sends the bills to an expected vote next week in both the Assembly and Senate.

The two bills approved by the conference committee are the Foreclosure Reduction Act, which restricts the process of “dual-tracked” foreclosures and the Due Process Rights Act, which guarantees a reliable contact for struggling homeowners to discuss their loan with and which for the first time imposes civil penalties on the practice of fraudulently signing foreclosure documents without verifying their accuracy, a practice commonly known as “robo-signing.” The proposed legislation also includes meaningful enforcement for borrowers whose rights are violated.

The full Homeowner Bill of Rights includes additional provisions to reduce blight, ensure appropriate law enforcement response to mortgage fraud and crime, and protect tenants.  The bills containing these protections are also advancing through the Legislature.

“I am gratified by this vote, which represents one more step toward our goal of achieving a Homeowner Bill of Rights for California,” said Attorney General Harris. “The mortgage and foreclosure crisis in our state demands urgent efforts to help Californians keep their homes. The legislature will now have the opportunity to cast a vote on behalf of California’s struggling homeowners.”

The California Homeowner Bill of Rights was introduced February 29, 2012 at a press conference featuring Assembly Speaker John A. Perez and Senate President pro Tem Darrell Steinberg and bill authors from the Assembly and Senate. The goal of the Homeowner Bill of Rights is to take many of the mortgage reforms extracted from banks in a national mortgage settlement and write them into California law so they could apply to all mortgage-holders in the state.

“The mortgage and foreclosure abuse in California ends here,” said Noreen Evans (D-Santa Rosa), co-chair of the Joint Conference Committee. “This committee has passed historic legislation that codifies the
protections eligible homeowners deserve, while helping to stabilize the foreclosure crisis that has thwarted California’s economic recovery. The Legislature has studied, listened and engaged Californians and
industry to find a solution that is fair and effective to mitigate this crisis. I look forward to the full support of the Legislature and Governor in implementing this package.”

“This bill is the result of a long and difficult process in which we received input from all interested parties; including homeowners and the banks and found that foreclosures benefit no one,” said Assemblymember Mike Eng (D-Alhambra). “We ended such dubious practices as having a bank foreclose while a homeowner is in the process of modifying a loan and cut through confusion by making sure that there is a ‘single point of contact’ with mortgage servicers.  With half a million California homes at risk of foreclosure, this action was urgently needed.”

The California Homeowner Bill of Rights extends Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. Attorney General Harris created a Mortgage Fraud Strike Force in March, 2011 to investigate and prosecute misconduct related to mortgages and foreclosures. In February 2012 Attorney General Harris extracted a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers.

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:


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Bryan Robertson
Intero Real Estate - Los Altos, CA
Broker, Author, Speaker

The intent of this bill is good but the execution is flawed.  Consumers need a weapon against banks because the banks have a "my way or the highway" mentality.  However, this legislation IS NOT the way to do it.  Any time the lawyers get involved like this, the money and power goes to them and nobody wins. 

Jun 27, 2012 09:50 AM #1
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Here is the worst part - being self employed I cannot even get un employment.  To date this has been the best year I have had in a long time.  I want to keep working.

Jun 27, 2012 10:01 AM #2
Gene Wunderlich
1st Action Real Estate - Murrieta, CA
Realtor & Legislative Liaison

Bryan - absolutely correct. Anybody working this market knows the issues we face but this isn't the fix. Our local market has also been very strong this spring. We currently have 1 month inventory and this will do nothing to improve that. It will also enable people to stay in their homes without paying for even longer - just delaying the inevitable. Why must we always err so heavily on the side of the 'victim'. 

Keep plugging Gene. It has been a good year so far. 

Jun 27, 2012 10:09 AM #3
Laurie Mindnich
Centennial, CO

As long as the banks are following real property law and foreclosing legally, they (and you) have nothing to fear.  Oh, that's right...the word "terrified" should come to mind.  The rules, if they are similar to those imposed in NY, will force the rule of law (as you and I are forced to abide by) and, short of being able to foreclose legally, may well provide homeowners with the beneficial payoffs now being used to "retire" fraudulent paperwork via a short sale or deed in lieu of.  $25k or $35k seems fair enough to retire the fraud- that, or the homeowner stays.

Sorry, but I'm all for following the law- and fraud against OUR judicial system should be stopped nationwide.  Hope the bill passes- no entity should be able to function outside of the law.  That it's the Chases and Wells Fargos and BofAs and Citis submitting fraud to our judges/judicial process makes it all the more essential to pass such laws.

Nonsense that it will impede future borrowers- it's blackmail, pure and simple.

Jun 27, 2012 10:49 AM #4
Ute Ferdig
Ferdig Real Estate Solutions - Auburn, CA
Because Getting It Right Matters!

Well, the pendulum has swung all the way, once again.  I am not in favor of frivolous lawsuits, but whether a case has merit or not is not always easy to decide when it comes to foreclosure defense as there are not enough reported cases yet that would help provide guidance on which way the case law will go.  California home owners are at a disadvantage compared to home home owners in judicial foreclosure states because they will never have their day in court to raise issues unless they do file a complaint in court.  I honestly don't think that home owners will suddenly line up on the court house steps to assert their right to file a lawsuit that may ultimately be considered without merit.  There has never been a law that a plaintiff can only file a lawsuit that has merit.  There is a law against vexatious litigants, but that requires a whole lot more than filing one lawsuit in an unsettled area of the law.  The opposition is making an issue out of a non-issue.  Knowing how the legal system works, tells me that increased # of lawsuits will result in increased # of settled cases.  The judge will make generous use of their ability to order these cases to mediation.  Since CA if already a mandatory mediation state, I think the lenders are no worse off than they would be without this new law.

Jun 27, 2012 11:34 AM #5
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Gene:  It sounds like this bill is going to cause much more trouble than it will cause good things to happen.

What is humorous to me, though, is that in your commentary in your post, you used the word "minions."  I know it is just a "personal thing" with me... but whenever I see someone talk about someone else and their "minions..." I think... "Oh Jeez... here we go again."

Here's hoping you and YOUR minions have a great weekend.

Jun 27, 2012 02:09 PM #6
Iris Stuart
none - Santa Rosa, CA

Gene, I really appreciate your efforts to make us aware of this bill in such great detail.  Having spent many years working in the trial courts, I'm not in favor of legislation which bypasses the established process which allows for thorough analysis, commentary, reflection, and amendment before passage and implementation.  But I must agree with each of Ute's comments in #5.  I also believe that because California is a mandatory mediation state, the lenders will not be any worse off than they are now.  And perhaps with time we'll see legal precedence established that will preserve the lenders rights while also protecting the homeowners from the scandalous behavior by financial institutions that we've heard so much about the past few years.  

Jun 27, 2012 04:21 PM #7
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

And California wonders why businesses are fleeing its borders and the government is practically bankrupt. 

Jun 27, 2012 11:53 PM #8
Gene Wunderlich
1st Action Real Estate - Murrieta, CA
Realtor & Legislative Liaison

With all due respect Laurie... There was a reason I addressed this to California Realtors. Quite frankly, the opinion of someone in a judicial foreclosure state at the far end of the country has no bearing or relevance to our current discussion in California. As to your characterization of our concern as 'blackmail', sorry, I'll trust the advice of our own lobbyists and counsel in this matter. It's bad enough that people can remain rent-free in their homes for 1 - 2 years in California - you can keep your judicial foreclosure and your 3 - 5 year waits in New York. 

As a notoriously litigious state with a bleeding heart legislature, AG and, of course, the 9th Circuit Court of Appeals, we already have a massive litigation backlog from people who are deemed to have cause. This legislation opens the door to additional frivolous litigation and additional gaming of the system (mediation notwithstanding) - and given that even plaintiff attorneys will be entitled to costs it doesn't take a rocket scientist to figure out what impact this broadening of definition of harm, will have on the system.

Lenders indeed have run roughshgod over the legal system in many areas and in many ways. THIS is not the solution. 

Karen Anne - I used the term minion judiciously as it precisely defines the slavish and obsequious relationship our Democratic Legislators in Sacramento have to their union overlords as well as to the whims of the AG. A simple perusal of Maplight or OpenSecrets will demonstrate the money trail and vote record. We literally have our Democratic legislative leaders excuse themselves from meeting with the Governor to retreat to their offices to consult with SEIU, Teachers Union and AFSCME reps before they can make a decision. I did not use the term lightly.

And sadly, since the dog died, I am bereft of minions. 


Jun 28, 2012 07:36 AM #9
Gene Wunderlich
1st Action Real Estate - Murrieta, CA
Realtor & Legislative Liaison

And no Rob, we're not wondering why. Well, maybe some of our legislators are a little unclear on the concept, but the rest of us taxpayers fully understand why and many are just waiting for the right opportunity to join the exodus. Sad. 

Jun 28, 2012 07:53 AM #10
Ute Ferdig
Ferdig Real Estate Solutions - Auburn, CA
Because Getting It Right Matters!

Gene, I wish I had your crystal ball.  Attorneys only get paid if they win, which would mean that the case had merit.  It's one thing to challenge how this bill got to where it is now without meaningful opportunity to be discussed, it's another to predict how it will open the floodgates to frivolous lawsuits.  Only time will tell and my prediction is, it will not have that effect.  We have already seen attorneys soliciting home owners to join mass joinder lawsuits, which is nothing more than grouping a bunch of hopefully similarly situated home owners together and file a lawsuit.  Lawyers have already figured out long before this bill how to get to home owners.  Once again, merit is not decided at the front gate, and this bill is just stating the obvious.  It just means that home owners don't have the burden of stating a prima facie case to get their day in court.  Just like the trustees that foreclosure on properties don't have to proof that the investor on whose behalf they act are in possession of the promissory note.  Sounds like equal playing field to me.

Jun 28, 2012 08:45 AM #11
Laurie Mindnich
Centennial, CO

Gene, with respect as well,the judicial process in NY has *everything* to do with your state, and all others- it's where the banks are getting caught RED HANDED, and they are doing nothing differently in NY in terms of judicial fraud, as they are elsewhere.  You're looking for a simple fix so people don't "live for free", and in harboring this resentment, are missing the forest for the trees- if the banks are acting illegally in NY, you can bet your AG is aware of the same fraud in your state, and is simply trying to curb it.  Hats off to Kamala, and I hope that she's able to eliminate the massive fraud, or at least force the hands of the banks to work more cooperatively with the "deadbeats"- who likely are anything but- in order to bring first, a legal process, and soon after, a legal surrender of property to the rightful owner- simple!

In NY the majority of foreclosure actions are uncontested, which pretty much dumps a bucket of water on the theories presented- it's bunk.

Jun 30, 2012 06:09 AM #12
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