In February, 2012, California Attorney General, Kamala Harris, sponsored a series of Bills into the State Legislature designed to protect homeowners from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state’s urgent mortgage and foreclosure crisis. The legislation builds on the $18 billion of benefits which California homeowners will receive through the National Mortgage Settlement which Harris was instrumental in negotiating. That agreement included reforms for mortgages owned by the five banks that were signing parties.

The California Homeowner Bill of Rights will strengthen those protections, make them permanent, and apply them to all mortgages in the state. Called The Homeowner Bill of Rights“, her proposal consists of six Bills introduced in both the House and Senate designed to guarantee:

1) Basic standards of fairness in the mortgage process, including an end to dual-track foreclosures

2) Transparency in the mortgage process, including a single point of contact for homeowners

3) Community tools to prevent blight after banks foreclose upon homes

4) Tenant protections after foreclosures

5) Enhanced law enforcement to defend homeowner rights – paid for by fees imposed on banks

6) A special grand jury to investigate financial and foreclosure crime

however, since its introduction, a heavy fight has been raised by the Mortgage Bankers Assn and others who argue that such measures would make loans harder to get and would actually hurt the State’s recovery.

Perhaps the single most important peice of the package, and the most fought over, is the proposal to end the practice of “Dual Tracking”. This occurs when a lender proceeds with a foreclosure while they are in negotiations with borrowers for a Loan Modification. Many homeowners have been shocked to discover that their home has been foreclosed by their lender while they were in active negotiations. Two bills, AB 278, would:

  1. prohibit a lender from starting or proceeding with a Trustee Sale foreclosure while loan modification negoatiations were proceeding;
  2. provide an appeal process of persons who are denied a loan modification; and
  3. would authorize a borrower to obtain an injuntion to stop a violating lender from foreclosure and provide remedies, including attorney fees, if the borrower prevails.

When the Bills first came up for a vote in April, they were defeated. But they weren’t out. Instead, they, and other related measures, were referred to special two-House conference Committee for amendments that would make them more acceptable. This week, the Bills were approved in Committee and have now been sent up to the House and Senate for a vote.


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.” Other parts of the Homeowner Bill of Rights continue to move forward in the Legislature.

If these Bills and the Homeowner Bill of Rights are important to you, please contact your local Assembly and Senate Representatives and let them know that you want a Yes vote on these important measures.

If you or someone you know is upside-down on real estate and don’t know which way to go; or if you are being contacted by a creditor demanding payment after a short sale or after foreclosure, be sure to get legal help right away. Our BPE Law flat fee Consultation Program can offer knowledge of what to expect and form strategies to respond and hopefuly eliminate any liability. Of course, our Consultations are best if obtained before a short sale or foreclosure occurs. To schedule a Consultation, please contact our office at (916) 966-2260.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are upside-down on your loan, especially if you’re facing a lender lawsuit, get competent legal advice in your State immediately so that you can determine your best options.