Learn more about California’s new Homeowner Bill of Rights

To update the June 1 article about foreclosure options, homeowners will want to find out about important rule changes that will take effect Jan. 1, 2013. The new legislation signed into law on July 11 is referred to as a “Homeowner Bill of Rights,” and makes California the first state in the nation to expand upon provisions of the National Mortgage Settlement.

Rather than try to explain the details and specific benefits, which essentially address areas of conflict and unfairness, this article will provide four major resources for homeowners to get the information that focuses on their particular circumstances.

1. See Governor Brown’s announcement: http://gov.ca.gov/news.php?id=17627

When Governor Jerry Brown signed the California Homeowner Bill of Rights, he said he was responding to the "abusive tactics" of loan servicers, in order to protect struggling homeowners who are trying, in good faith, to renegotiate their mortgages.

"Californians should not have to suffer the abusive tactics of those who would push foreclosure behind the back of an unsuspecting homeowner," said Governor Brown. "These new rules make the foreclosure process more transparent so that loan servicers cannot promise one thing while doing the exact opposite."

2. See the Office of Attorney General’s website, which provides a slideshow of how six families would benefit from new rules: http://oag.ca.gov/homeowner-stories

"The California Homeowner Bill of Rights will give struggling homeowners a fighting shot to keep their home," said Attorney General Kamala D. Harris. "This legislation will make the mortgage and foreclosure process more fair and transparent, which will benefit homeowners, their community and the housing market as a whole."

3. Link to guest host Maria Hinojosa’s talk with Kamala Harris, California's attorney general, on “Tell Me More,” from NPR News, for a listen to or transcript of the conversation: http://www.npr.org/2012/07/12/156668324/homeowner-bill-of-rights-for-flawed-system

Harris says, “First of all, these are simple, practical solutions to a very flawed system and so it's an amazing thing … to get these bills passed (But) you've got to create rules and you have to have consequence and accountability if people break those rules, so we can encourage them to pay attention to them. And so we have a strong enforcement component in the California Homeowner Bill of Rights, which will allow the homeowner to sue if the banks and the servicing institutions do not comply with the rules as have been outlined.”

For the full text of the bills, visit http://leginfo.ca.gov/bilinfo.html

Here is a brief summary of four of the major components designed to bring fairness and transparency to the foreclosure process:

The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.

1. Prohibits "dual track" foreclosures: A servicer will no longer be able to continue with foreclosure while also reviewing a homeowner's application for a loan modification;

2. Creates a single point of contact for homeowners while negotiating a loan modification, which prevents inefficiency in the process;

3. Expands upon notice requirements to a borrower before taking action on a loan modification application or pursuing foreclosure; and

4. Allows for injunctions against foreclosure until violations are corrected; also permits civil penalties (including money damages) against servicers that file multiple inaccurate mortgage documents or otherwise violate the law.

Because the realities of home foreclosures have been so negative for all of us, considering its negative impact on our families, communities and economy, we are all hoping these changes will make a huge difference in the way we can work together to solve problems that will not go away without persistent and intelligent action.

Kaushik Ranchod practices bankruptcy law and immigration law in Sacramento and San Francisco. To learn more visit our websites http://www.california-bankruptcyattorney.com/ or www.ranchodlaw.com, or email him your financial legal questions at info@california-bankruptcyattorney.com for next week's column.