California Legislature and Attorney General Present a Package of Bills to Help Foreclosed Homeowners

The California Legislature and Attorney General recently presented a number of homeowner-friendly bills that include a private right of action for borrowers who can show that lenders did not follow rules regarding foreclosure.  The package has been entitled the Homeowner Bill of Rights and would give the Attorney General new funding for her mortgage fraud investigations.  The bills, which are in the very early drafting stages, would include the following:  1) allow homeowners to seek damages and attorney's fees if they can prove that a lender proceeded with a foreclosure even though a loan modification was underway; 2) impose a $10,000 civil penalty on lenders who filed fraudulent documents; 3) increase fines against owners of blighted properties related to foreclosures; 4) force lenders to pay $25 for every notice of default they record, which would fund the Attorney General's real estate fraud investigations; and 5) authorize the Attorney General to empanel a multijurisdictional grand jury to pursue "financial crimes against the State."

It is likely that the bills will face stiff opposition from the mortgage and lending associations.  We will monitor the status of these bills and update our clients accordingly.

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