Foreclosure protections approved by state legislature

If the bills are signed into law by Gov. Brown, California will become the first state to prohibit lenders from pursuing a foreclosure and a mortgage modification at the same time. This so-called duel-tracking has resulted in homeowners getting evicted despite being led to believe that the bank is trying to keep them in their home. The legislation also allows banks to be sued for economic damages and additional civil damages. From the LAT:

"This has been an incredibly long and tortuous process to get the kinds of basic protections that borrowers have long needed throughout this six-year crisis," said Paul Leonard, California director of the Center for Responsible Lending in Oakland. The banking and real estate industries oppose the foreclosure-prevention bills, calling them well-meaning but overly complicated and so legally ambiguous that they would spur frivolous lawsuits. It is critical that "we don't give borrowers and enterprising attorneys an opportunity to delay foreclosures at will," said Dustin Hobbs, a spokesman for the California Mortgage Bankers Assn. Bankers also warned that the new law would increase real estate transaction costs, slow the housing recovery, tighten credit and lower home values.

[CUT]

The bills are the most controversial part of a Homeowner Bill of Rights legislative package, sponsored by California Atty. Gen.Kamala D. Harris. The package is modeled on a multi-state, $25-billion settlement of a foreclosure lawsuit against five large banks but would extend protections to more homeowners and would lock the provisions into state statutes. The proposed state law, Harris said, is "fair and transparent" and noted that it only applies to people living in their homes.