This is just a reminder that the California Homeowner Bill of Rights becomes effective January 1, 2013. Signed into law earlier this year, the Bill of Rights contains several significant mortgage and foreclosure reforms for residential property in California including:
- Required Documentation – Mortgage servicers will be required to fully document for consumers the servicers’ right to foreclose in an effort to prevent fraudulently signed mortgage documents.
- Prohibition Against “Dual Track” Foreclosures – Mortgage servicers will be required to render a decision on a loan modification application before continuing with the foreclosure process rather than pursuing both at the same time.
- Single Point of Contact – A lender or servicer will be required to designate a “single point of contact” for borrowers with loan modification applications pending.
- Modification Denial Explanation – Lenders will be required to provide clear explanations where loan modification applications are rejected or denied.
The Homeowner Bill of Rights provides borrowers and governmental agencies additional affirmative enforcement rights including:
- Injunctive Relief/Damages – Borrowers will be entitled to enforce “material” violations of the Bill of Rights through injunctive relief preventing foreclosure sales from going forward and/or damages claims following a sale.
- Civil Penalties – Lenders and mortgage servicers can be subject to civil penalties of up to $7,500 per loan for recording and filing multiple unverified documents.
The Bill of Rights also contains provisions protecting tenants in rental properties that are subject to foreclosure. Assembly Bill 2610 requires specific notice to be posted on rental properties informing the tenant that the buyer at any foreclosure sale must give the tenant 90-day eviction notice (as opposed to the previous 60-notice period). Moreover, a tenant with a fixed term lease is entitled to remain in the premises for the remainder of the fixed term unless the new owner intends to occupy the property as a primary residence or in other limited circumstances.
More information and the full text of California’s new Homeowner Bill of Rights can be found here: http://leginfo.legislature.ca.gov/ or call Darrin M. Menezes at 916-558-6050.