It’s not often that we can say lawmakers actually did something to help homeowners, but here we are — California legislators passed a comprehensive bill that helps homeowners out when they’re facing off against their lenders, and Gov. Jerry Brown is expected to sign the bill into law.
It would allow lawsuits in the event the banks are caught robo-signing, or the mass approval of foreclosures without following proper procedures. (Banks have paid out $25 billion and reached agreements with 49 states because of past robo-signing grievances.) The bill also prevents banks from moving forward with foreclosures against borrowers while they’re trying to negotiate.
If negotiations are rejected, the bank will have to provide a reason in writing. Should the situation come to the point where foreclosure is inevitable, the banks need to verify all documents or face fines of up to $7,500.
Of course, the lenders have raised all sorts of reasons as to why anything that would help mortgage holders is a bad idea. A coalition of banks, some real estate professionals and mortgage companies are complaining that the new regulations places an “unnecessary burden” on them, and that these changes won’t prevent, only delay foreclosures. They even claim that all of these protections threaten to stall a housing and real estate recovery.
We applaud the state of California for finally doing something to make banks and lenders accountable for their actions. However, we question how effective these measures ultimately will be.
For all the fines and additional paperwork they need to be mindful of, never forget that banks are “where the money is,” as the saying goes. They can afford to be sloppy and they can afford the legal expertise to fight anyone they really want to foreclose on.
Ensuring the banks respect your rights and regulations they must abide by is more important than ever. If you feel your home may be in danger of foreclosure, contact the Real Estate Law Center, P.C.