California lawmakers pass historic foreclosure protections

State lawmakers approve what would be the nation’s strongest legislation to help financially troubled borrowers stay in their homes. Gov. Jerry Brown is expected to sign them this week or next.

By Marc Lifsher and Alejandro Lazo, Los Angeles Times

“SACRAMENTO — California lawmakers have passed legislation that would provide homeowners with some of the nation’s strongest protections from foreclosure and such aggressive bank practices as seizing a home while the owner is negotiating to lower mortgage payments.

“After years of distress in the housing and mortgage markets, during which lenders seized nearly a million California houses, legislators Monday sent a pair of Assembly and Senate bills to Gov. Jerry Brown designed to help financially troubled borrowers stay in their homes.

“The legislation would make California the first state to prohibit lenders from “dual tracking,” the practice of negotiating with clients to modify a mortgage so that payments become more affordable while simultaneously pursuing foreclosure. In such cases, homeowners can wind up being evicted even though they had been working with the bank to modify their loans.

“The measures would outlaw so-called robo-signing — the improper or faulty processing of foreclosure documents— and would allow state agencies and private citizens to sue financial institutions, under limited conditions, for economic compensation and for additional civil damages of up to $50,000 if lenders willfully, intentionally or recklessly violate the law. No lawsuit could go forward if the bank or servicer first fixes the problem with documentation or procedures, according to the bills.”

Read full article here.

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