California Attorney General Kamala Harris has called herstate the "epicenter" of the foreclosure and mortgagecrisis having, in the year 2011, seven of the nations 10 hardest-hit cities by foreclosure were in California.
Californias prolonged real estate slump has resulted in more than one million California homes were lost to foreclosure in the past three years alone. To bring this point home, I am talking not about homes simply inforeclosure or threatened by foreclosure, but lost through foreclosure.
Moreover, while parts of the California real estate marketare recovering, statewide there are an additional 700,000 properties currently in various stages of the foreclosure process.
As a result of such horrific statistics, on July 11, 2012, in order to stem the wave of foreclosure, California enactedinto law a "Homeowner Bill of Rights" for the purpose of aiding embattled homeowners.
One of the key provisions of the new law is the ban on "dual tracking," a practice whereby the lender on onehand proposes to give the borrower to a modification andat the same time, is foreclosing. As one might expect, this practice has the effect of lulling homeowners into a false sense of security.
The Bill of Rights dual tracking ban would prohibit a mortgage servicer, mortgagee, trustee, beneficiary, orauthorized agent from recording a notice of default, notice of sale or conducting a foreclosure sale while a completeloan modification application is pending on a mortgage or deed of trust secured by residential real property not exceeding 4 dwelling units that is owner-occupied.
In addition, mortgage servicers will be required todesignate a "single point of contact" for borrowers who are potentially eligible for a loan modification. The newlaw requires the single point of contact be responsible tocoordinate the flow of documentation between borrower and mortgage servicer and be knowledgeable about the borrowers status and foreclosure prevention alternatives.
The new law also establishes procedures to be followed in connection with a modification application on a loansecured by a first lien. There are also procedures that must be followed in connection with the denial of an application, and most importantly it provides for a borrowers right to appeal a denial.
The enforcement provisions of the Bill of Rights authorizea borrower, who is forced to litigate with his/her lender, toseek an injunction and damages for violations of certain of the provisions described above. Under its provisions, for the first time in the state of California, a homeowner will be able to secure injunctive relief without having to cure arrears or post expensive bonds.
In addition to injunctive relief, Californias Homeowner Bill of Rights authorize the greater of treble actualdamages or $50,000 in statutory damages if a violation of certain provisions of the law is found to be intentional, reckless or resulting from willful misconduct. Prevailing borrowers may also receive attorneys fees.
There are also changes to the notice provisions of aTrustees Sale. These changes include the requirement that written notice be given to the borrower after the postponement of a Trustees Sale.
Californias Homeowners Bill of Rights legislation iseffective January 1, 2013, and can be found in the recent amendments and additions to the California Civil Code Sections relating to mortgages. ( See: Civil Code 2920.5, 2923.4, 2923.5, 2924, 2923.6, 2923.7, 2923.55, 2924.9, 2924.10, 2924.11, 2924.12, 2924.15, 2924.17, 2924.18, 2924.19 and 2924.20 )