Homeowners throughout California continue to personally suffer the injurious consequences of irresponsible lending practices, explains an attorney in the state. Even today, several years after the real estate bubble began to burst, there continues to be a high number of foreclosures. Unfortunately, some of the foreclosures that have taken place and that continue to take place are wrongful or involve violations of borrower protection and foreclosure laws. The violations that many banks committed are so egregious that five major banks in the United States recently agreed to a $25 billion settlement with 49 states as a result of their illegal foreclosure shortcuts.
While the settlement aims to make things right for homeowners who have already lost their homes or who are involved in the foreclosure process, the settlement alone is not sufficient to stop foreclosure abuses now or in the future. As such, legislation is under consideration that will help to stop mortgage abuses. This legislation is dubbed the California Homeowner Bill of Rights and is actually six separate bills that supporters-including Attorney General Kamala D. Harris-believe will help to protect homeowners from unfair mortgage practices.
As the wrongful practices of banks and lending agencies have been exposed throughout the last year, so to have the stories of the victims: homeowners negotiating loan modifications unaware that banks were simultaneously taking the legal steps to foreclose on their property; or the frustration of speaking to multiple bank representatives and hearing different status updates on their loan modifications from each one. The aim of the Bill of Rights is to protect homeowners from such experiences.
Together, these bills aim to provide homeowners and the state with important protection from loss. Banks not only helped to create the mortgage crisis by issuing subprime loans and repackaging them as bonds for sale on the secondary market, but they also made the crisis worse by engaging in wrongful foreclosure practices. Countless mortgage lenders used robosigners to sign tens of thousands of foreclosures each month without reading documents, and some mortgage lenders, including Fannie Mae and Freddie Mac, refused to suspend foreclosures even when it became clear that improper paperwork was being submitted.
The abuses by the banks were personally felt by the many Californians who lost their homes, not to mention the injurious consequences for the state and national economy, explains an attorney. These Bills do not impose any overly burdensome obligations against lenders, who already should be complying with foreclosure laws and providing borrowers with sufficient information about pending foreclosures. The limited burden that is imposed by these new bills is far outweighed by the benefits of stopping wrongful foreclosure in California.