There is a bit of a dust-up going on over passage of a Homeowner Bills of Rights in California. The Center for Responsible Lending (CRL) and the Mortgage Bankers Association (MBA) have weighed in on opposite sides of the package consisting of six bills sponsored by Attorney General Kamala Harris. Harris, when she introduced the legislation, said that they had a goal of providing homeowners with a system where the rules are clear, where everyone gets a fair shot and everyone has equal standing.
In simple terms, the bills which are modeled to a certain extent on the $25 billion settlement agreement would ban robo-signing, give tenants 90 days rather than 60 to leave a property after foreclosure and end "dual tracking" where a servicer is negotiating a modification while still speeding toward foreclosure. The legislation also proposes a $25 fee to be paid by servicers when they record a notice of default. The fee would go into a real estate fraud trust fund that would support the AG's investigation and prosecution of real estate fraud crimes.
The AG's legislation has apparently undergone considerable revision since originally submitted. The thrust appears relatively unchanged but changes in bill numbering have made it difficult to backtrack.
According to a press release from CRL on Thursday, "Lobbyists fighting [the Bill of Rights] in Sacramento have now enlisted mortgage bankers from around the country to help them defeat it."
Regardless of who may have enlisted whom, the Mortgage Action Alliance (MAA) MBA's advocacy arm, has definitely entered the fray. The group sent out a letter to its members that urged its members to take action NOW (emphasis theirs) to support the state MBA in efforts to defeat the legislation. The MAA contends that the legislation under consideration is highly flawed, and will not accomplish the objectives of meeting homeowner needs and reviving the state's economy. "Consumer costs will increase and force California families to pay more for fewer choices. If enacted, the legislation also has great potential to seriously damage lenders, servicers, and the fragile state economy."
MAA urged its members both inside and outside of California to utilize the MAA's automated contact system to send MAA's message to California assembly members and Senators.
Today Paul Leonard, California Director of CRL said that Californians need AG Harris' Bill of Rights to fix mortgage lending abuses and speed economic recovery. His statement referenced the foreclosure crisis in the state and said the settlement would reduce foreclosures in three key ways:
- Ensure that homeowners get fair consideration for loan modifications and other alternatives before the foreclosure can proceed;
- Prohibit robo-signing and provide recourse when servicers violate that ban; and
- Provide homeowners with additional transparency, information, and protections in the foreclosure process.
Leonard said that the Assembly's Conference Committee has conducted nearly 20 hours of hearings with industry, homeowners, and consumer advocates and he urged the legislators to protect Californians "with common-sense rules that banks have already agreed to."
