Homeowner Protections Against Foreclosures Advance to Governor's Desk

August 20, 2018

SACRAMENTO -- Homeowners facing foreclosure may once again be able to rely on the protection of the Homeowner Bill of Rights to stay in their homes after Senator Jim Beall’s SB 818 was approved by a 33-0 vote in the Senate today. The bill will now be sent to the Governor for his consideration.

Beall’s bill restores several key provisions of the Homeowner Bill of Rights that lapsed on Jan. 1. SB 818 renews previous state requirements on mortgage lenders and loan servicers to act in a timely, transparent, and fair process with homeowners before proceeding with foreclosure. SB 818 would go into effect on Jan. 1, 2019 if it is signed by Governor Brown.

“Keeping California’s Homeowner Bill of Rights alive is important because it fills a gap in federal regulations,’’ Beall said. “SB 818 provides a clear and easy-to-understand path for borrowers to work with their loan servicers in order to modify their mortgage. SB 818 poses no new burden on lenders because they’ve worked under these rules for the past five years.

“This bill is a vital component in the Legislature’s housing strategy. By empowering homeowners under the threat of foreclose to stay in their houses, California maximizes the benefits of its existing housing stock and protects neighborhood home values as well as the stability of our communities. We know California’s economy is a history of ups and downs and SB 818 will help many homeowners weather the next recession.’’

The need for the Homeowner Bill of Rights is just as imperative as it was in 2012 when Governor Brown first signed it into law. Federal regulators and the Republican-dominated Congress are eliminating policies that have protected borrowers from the types of predatory mortgage loans that set the stage for the 2008 foreclosure crisis. Last year, financially distressed homeowners filed over 28,000 applications with Keep Your Home California, a free mortgage-assistance program.

Among the rights Senate Bill 818 would restore are crucial protections against dual tracking – when servicers simultaneously enter loan modification negotiations with borrowers while continuing foreclosure. The bill also continues other HBOR protections, including:

• The right to appeal the denial of a loan modification application.

• Requirements that loan servicers provide homeowners with written notices to confirm receipt of their loan modifications applications and whether any necessary application items are missing.

• Requirements that servicers send written denial notices with sufficient information and sufficient time to appeal a questionable denial.

Reinstating the Homeowner Bill of Rights will once again provide borrowers with the leverage they need to negotiate loan modifications their loans with lenders, experts said. 

“The restoration of the full Homeowner Bill of Rights is critically important to helping seniors and other vulnerable homeowners have the chance to hang onto their home," said Maeve Elise Brown, Esq., the Executive Director of Housing and Economic Rights Advocates.

Ronald Coleman, the Policy Advocate for the California Low-Income Consumer Coalition, said SB 818 will bring lenders to the negotiating table with borrowers.

“During the last foreclosure crisis, CLICC’s attorneys had large volumes of clients that never had a real opportunity to save their homes,’’ Coleman said. “While they were seeking a loan modification, the foreclosure process kept going. Servicers were losing documents left and right, families suffered through a maze of a process, and they weren’t given accurate, reliable or necessary information to give them a real opportunity to save their homes.

“These important protections gave families a fair chance to stay in their homes, and should be reestablished to avoid not only the human devastation that would be caused by a future foreclosure crisis, but also the negative impacts to our state and local economies.”