The whole nation was looking forward to Governor Jerry Brown to sign the Homeowner Bill of Rights intended to help people of California in keeping their home safe. The main aim of the law is to help people in preventing the negative effects of foreclosures and to stabilize the housing market of California. Some of the main points included in the law are prohibiting dual tracking on part of the lenders, providing safeguard to the borrowers during foreclosure process and provide borrowers with the power to sue lenders for any form of violation of the law. The bill is also known as Assembly Bill 278 and Senate Bill 900.
Law Applicability: This law is applicable to the first trust deeds which come under owner-occupied properties presently in use by the owner. “Owner-occupied” is the property currently used as principle residence of the owner and the same is secured with a loan for household purposes. Eligibility of the borrower depends on his eligibility for any foreclosure prevention alternative program and the person should not have surrendered the property or file bankruptcy and should not be in contact with advising people for extending the foreclosure or avoid any of the contractual obligations. Loan modification and short sale are considered as “foreclosure prevention alternative”.
Some important parts of this law are discussed in brief and you can refer government official law site for further details.
Dual Tracking Prohibited During Short Sale Process: If a foreclosure prevention alternative has been applied for the property, the lender is not allowed to record default notice, conduct trustee’s sale or even file a notice of sale. This requirement will expire as per January 1, 2018.
Pending Trustee’s Sale Cancellation: In case a short sale is approved by all involved parties along with proof for financing, the mortgage servicer has to cancel any pending trustee’s sale. If the borrower executes any type of permanent foreclosure prevention alternative, the lender must record rescission of default notice and cancel any pending trustee’s sale.
Single Point of Contact: If the borrower requests for any type of foreclosure prevention alternative, the mortgage service must provide direct means of communication assigned against the borrower’s account with a single point of contact.
Dual Tracking not allowed during Loan Modification: If the borrower has a pending first lien loan modification application or is in compliance with repayment plan, permanent loan modification or forbearance then the mortgage service or lender cannot record default notice, sale notice or conduct trustee’s sale for any kind of non-judicial foreclosure process. The borrower will get up to 30 days for appealing against denial of loan application and mortgage service cannot go ahead with the foreclosure until 31 days of providing the borrower with a written notice for denial of loan modification.
No Application Fees or Late Fees: If the borrower has first lien loan application under process or making modification payments or a denial is being appealed or an exercise of foreclosure prevention alternative is under progress, then the mortgage service cannot charge any application fees or late fees during the process.
There are other safeguards built to keep the borrowers safe and these are listed below:
•Lender has to review the foreclosure documents
•Extension of initial contact requirements
•Notifying Borrower before and after the NOD
•Standard of Care for Lenders towards the Borrowers
•Legal remedies for all the Borrowers
These are some of the safeguards that will help in keeping the house owners safe against such financial situations where they have to choose among foreclosure or other foreclosure alternative programs. Well I hope the Borrowers will be deeply benefitted by the law and they can have some relief during hardships.
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