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California's new Homeowners Bill of Rights designed to provide protection from foreclosure

Foreclosures Spike As Banks Accelerate Loan Default Notices

Kevork Djansezian/Getty Images

California gets a new Homeowners Bill of Rights. Above, a foreclosed house in Glendale.

Advocates for homeowners in financial distress are hailing the arrival of the California Homeowners Bill of Rights.

“Wall Street Banks have been wrongfully taking our homes for years,” said Vivian Richardson of the Alliance of Californians for Community Empowerment (ACCE) in a statement. “Homeowners will finally have the backing of the law to fight the banks on a more level playing field.”

The new law — championed by California Attorney General Kamala Harris — is supposed to make it easier for people to modify a loan and stave off foreclosure. One of its chief provisions prohibits “dual tracking.” That’s when a bank forecloses on a homeowner as it also negotiates a modification of their loan.  

Other provisions of the new law:

  • It guarantees a single point of contact at the bank for struggling homeowners, so people are not tossed around to different departments.
  • It creates civil penalties for fraudulently signing mortgage documents — a practice that came to be known during the foreclosure crisis as “robo-signing."
  • Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease of one year or less, the new owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply.

You can learn more about the new law here.

Foreclosures are down from previous years, but the numbers are still high. Banks foreclosed on more than 200,000 California homeowners in 2012, according to RealtyTrac.  Riverside and San Bernardino Counties continued to see the highest rates.

KPCC business reporter Matt DeBord wrote about foreclosures in November.

According to the Alliance of Californians for Community Empowerment, about 5.3 million homeowners are behind on their payments.

“Every Californian fighting to stay in their home should make a New Years’s Resolution to learn and use the new tools provided by the Homeowner Bill of Rights to prevent unfair foreclosures,” said the Alliance's Richardson.

In December, Attorney General Harris said in a statement that the bill is an important step forward.

“For too long, struggling homeowners in California have been denied fairness and transparency when dealing with their lending institutions,” Harris said. “These laws give homeowners new rights as they work through the foreclosure process and will give Californians a fair opportunity to stay in their homes.”

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