California Foreclosure Reform Update
From Housing Wire
• April 18, 2012 • 12:34pm
Seven bills reforming some foreclosure rules passed committees in the California state legislature this week.
The bills were introduced in February. One set of bills extends protections to tenants, giving them 90 days before eviction after the foreclosure sale of the property. Another increases penalties to banks that fail to maintain blighted homes.
Servicers would be required to provide documentation to the borrower establishing its right to foreclose before the filing first step in the process, under other passed bills. Evidence of ownership and chain of title must also be shown to the borrower.
Two other bills charge servicers a $25 fee for every notice of default recording. The money will fund investigations for California AG Kamala Harris. Another piece of legislation passed by committee allows Harris to convene a grand jury to investigate financial crimes in different jurisdictions.
“All Californians have been impacted by the toll the mortgage and foreclosure process has taken on our neighborhoods,” Harris said. “Our California Homeowner Bill of Rights will provide relief for homeowners, tenants and communities. I thank the authors and supporters of these important bills.”
The Foreclosure Reduction Act
This bill was introduced by Assemblymen Mike Eng and Mike Feuer; Sens. Mark Leno, Fran Pavley and Senate President Pro Tem Darrell Steinberg.
Under this bill, servicers would be required to provide documentation to the borrower establishing its right to foreclose before the filing first step in the process — the default notice. Evidence of ownership and chain of title must also be shown to the borrower.
The bill prohibits servicers from dual-track foreclosures, or completing the process if the borrower is being considered for a modification. Notices of foreclosure sales must also be personally served.
Enhancement of AG Enforcement
The bill from Assemblyman Mike Davis imposes a $25 fee to a servicer when a default notice is recorded. The fees would fund investigations from the California AG and the national task force led by New York Attorney General Eric Schneiderman.
Servicers filed more than 67,000 default notices in the fourth quarter, according to RealtyTrac.
Attorney General Special Grand Jury
Another bill from Davis and Sen. Lori Hancock would authorize the AG to form a special grand jury to investigate and indict financial crimes against the state in different jurisdictions.
Due Process Reform Legislation
Assemblywoman Holly Mitchell and Sens. Mark DeSaulnier and Fran Pavley introduced the bill, which would increase fines to owners of dilapidated property to $5,000 per day from $1,000.
Enforcement actions would not be taken for the first 60 days against someone who acquired the distressed property. The investor or purchaser must show he or she is making repairs to the property.
The bill also requires banks to inform local code enforcement agencies when liens are released on foreclosures. This would clear the way for demolition to proceed.
The bill, written by Assemblywoman Nancy Skinner and Sen. Loni Hancock, would require buyers of foreclosed homes to honor the terms of existing leases for any tenants and give at least 90 days notice before eviction.