The new laws for California that was signed by Governor Jerry Brown on January 1, 2013 will aid all homeowners that are in the process of a loan modification. In short, it clearly states that your mortgage servicer/lender cannot commence foreclosure proceedings while you are in the process of obtaining a loan modification. The new laws for California are known as the California Foreclosure Reduction Act which is a part of the California Homeowners Bill of Rights and further state the following:
- The home must be owner occupied and only 1-4 unit properties
- The bill applies to lst liens only – no second mortgages
- Homeowners must receive a “concise point of contact” to ask about the loan modification process and negotiate the terms. Note: You may have a team of people, however, that individual (”concise point of contact”) must have total access to your information and have the authority to stop the foreclosure proceedings.
- When your loan modification paperwork is submitted, your lender must provide written acknowledgment within 5 business days of receiving that package.
- Your lender must show a paper trail of documented contacts they made with you prior to filing foreclosure paperwork.
- If your loan modification is denied, your lender must give you a reason why. In addition, you have 30 days to appeal their decision and foreclosure proceedings cannot continue until the appeal process has ended or 31 days, whichever is greater.
The passing of Senate Bill 900 and Assembly Bill 278 culminates a long process started 3 years ago by Attorney General Kamala Harris presenting the California Homeowners Bill of Rights.
What Happens if Your Lender Does Not Abide by the New Laws for California?
If your lender violates any of these material violations, you can take your lender to court for disregarding the new law. You may also seek $50,000 or triple actual damages and reasonable attorney/court cost fees.
Why was this law established?
The new laws for California was set up to establish accountability by the lender and to avoid the robo-signing catastrophe that was found over the past 5 years. It was designed to uncover the abusive tactics in the loan modification and foreclosure process that has been played upon the “backs of an unsuspecting homeowner” as quoted by Governor Brown.
There has been many complaints from homeowners alleging the unscrupulous strategies that the lenders employed such as, loss of paperwork numerous times, lack of communication between the homeowner and lender’s agent, no direct contact or accountability with lender’s agent, loss of time and slow process of paperwork, lack of qualified, trained and competent employees to make decisions in underwriting loan packages, etc.
Who does the new law NOT help?
- This law does not help the following homeowners:
- Homeowners that are in the process of a bankruptcy
Homeowners with second mortgages
Owners with rental properties
Homeowners who started with a loan modification prior to January 1, 2013.