California’s Attorney General Kamala Harris is pushing lawmakers to pass what she calls the Homeowners Bill of Rights. The legislation would protect homeowners facing foreclosure, but bankers have some objections.
Harris' plan would ban banks from filing a foreclosure notice when a homeowner is already trying for a loan modification.
The nation’s five biggest banks agreed to that ban in February as part of a national settlement, but the ban expires in three years, and Harris says California needs to keep it in place.
"Homeowners who can actually afford to stay in their home, who are paying the modified loan payment, are being foreclosed upon," she said. "That’s not fair."
Monica Kenney said last year Wells Fargo offered to let her pay a smaller mortgage temporarily to hold onto her 500-square-foot, single-bedroom home in San Francisco.
"I made a payment on it in good faith," said Kenney. "The following day, my home was sold at auction."
Kenney lost her job a couple years ago. She said she’s emptied out her retirement accounts to pay the mortgage.
"I’ve given every penny that I’ve made in practicality to keep this home," Kenney said, adding that "I’m still fighting, I’m not just going to walk away."
Beth Mills, with the California Bankers Association, said some people just can’t afford their mortgages, even with a loan modification. She said preventing lenders from filing foreclosure notices won’t change the final outcome.
"Actually, what it does is just create additional procedural hoops and hurdles for lenders and mortgage servicers to jump through to start the foreclosure process," said Mills.
She also claimed that additional regulations will make it harder for lenders to recoup properties. Some may stop offering loans in California.