Stop Foreclosure / Delay
What is the California Homeowner Bill of Rights?
The California Homeowner Bill of Rights is a legal statute designed to ensure homeowners are given access to fair lending and borrowing practices. The goal is to help homeowners avoid falling into foreclosure. When California went through a foreclosure crisis, lender didn’t provide homeowners with loss mitigation options that would have allowed them to hold on to their homes. Now, lenders are legally required to offer these options to homeowners.
Who is protected by the Homeowner Bill of Rights?
The Homeowner Bill of Rights covers those with a first lien mortgage on certain properties. They must be residential, owner-occupied, and no bigger than four units. If the lender has less than 175 foreclosure sales per annual reporting period, they are exempt from some procedural requirements.
What key reforms are part of the California Homeowner Bill of Rights?
Key reforms established by the California Homeowner Bill of Rights include:
- Ensuring homeowners have a single point of contact
- Prohibiting dual-tracking
- Setting penalties for robo-signing
- Allowing homeowners to sue for violations
- Enforcing tenant rights
Below, each of these are explained.
Single Point of Contact
Prior to the Homeowners Bill of Rights, when a homeowner needed to speak with their lender, they would end up talking to a different person every time, making it more complicated to solve mortgage issues. Now, lenders have to give a single point of contact to each borrower that is eligible for loan modifications or alternative solutions. This point of contact is assigned to the borrower’s account until all loss mitigation options have been exhausted and the account is current.
Individuals assigned as the single point of contact must be someone who has:
- An understanding of foreclosure prevention alternatives
- Access to the relevant decision-makers at their company
- Knowledge of the homeowner’s situation
- The duty to manage the flow of documents between borrower and lender
In the past, lenders could engage in a practice known as dual-tracking. The lender would foreclose on homeowners even when their application for a loan modification was pending. Now, this practice is banned by the Homeowner Bill of Rights. Loan services are required to grant or deny a first lien loan modification application before they can foreclose on a property.
Robo-signing is a term that refers to when lender or servicer representatives sign foreclosure documents without verifying their accuracy or even reading them. The Homeowner Bill of Rights fines lenders for robo-signing, with the penalty reaching as much as $7,500 per loan.
Right to Sue
Homeowners have the option to sue lenders and services who violate the Homeowner Bill of Rights. Potential relief options include but are not limited to:
- Halting the foreclosure sale
- Economic damages if the foreclosure sale already took place
- Being rewarded statutory damages
When someone purchases a foreclosed home that has tenants living in it, they must give them 90 days before they begin eviction proceedings. If there was a fixed-term lease in place, then the new owner must honor this, unless exceptions related to fraudulent leases apply.
Should I consult with a lawyer?
As a California homeowner, the Homeowner Bill of Rights protects you. However, navigating the legal field isn’t easy, and you may not be able to realize the full benefits on your own. Work with an experienced real estate attorney to protect your home.