What meaningful California foreclosure reform should look like

The foreclosure reform conference committee is expected to come out with their report next week, likely after the budget votes are wrapped up. Here is what CALPIRGis hoping ends up in the policy. If the legislation contains these elements it will help struggling borrowers stay in their homes and help California’s economy right itself. 

1.    Strong Substantive Protections to Provide Borrowers with Fair Consideration of Alternatives to Foreclosure.

At their core, these two bills are designed to provide borrowers with a fair process to be considered for alternatives to foreclosure. In order to accomplish that goal, the conference report should include substantial restrictions on dual track, including requirements that:

–    Borrowers who apply for a loan modification get a “yes” or “no” determination before the foreclosure process commences; and
–    Borrowers who apply for a loan modification after the foreclosure process begins have their applications considered before the foreclosure process continues;
–    Prohibition of robo-signing;
–    Requirement that servicers provide borrowers with a streamlined point of contact.

2.    Effective Enforcement: A clear and meaningful “private right of action” to hold banks accountable, which should include the following provisions:
 
Targeted coverage: provide borrowers redress when major provisions of the law are violated.
Accountability Under the Law: Homeowners whose rights are violated should have the opportunity to remain in or get back their homes if the servicer is found to have acted improperly.
Financial Relief for Harm: Where it is not possible for homeowners to get their homes back, they must be able to get some financial relief to compensate for the harm caused and to give them a decent chance of transitioning to a stable housing situation.
No Exceptions: Maintaining provisions that provide for a private right of action is paramount, without exception. All banks and servicers should be covered by the law and bound to give due process and fair treatment to all California homeowners.