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What is the homeowners bill of rights?

More than one million homes in California have been foreclosed between the period of 2008 and 2011. There were many caseswhere lenders did not even provide the homeowners with enough time or opportunity to obtain loss mitigation options so as to be able to avoid foreclosure and save their homes. There were also many instances of mortgage servicing misconduct, which naturally added to the woes of the homeowners. The seriousness of these issues led to introducing the Homeowner Bill of Rights by Governor Jerry Brown in California, on July 11, 2012. This bill later came became effective on January 1, 2013. The law is a very important one as far as homeowners are concerned because it has effectively addressed many of the issues faced by homeowners over the last few years of economic downturn. The Homeowners Bill of Rights seeks to reformareas of the California foreclosure process to providebetter protection of homeowners during the process of foreclosure.An additional purpose of this law is to increase the amount of fairness and transparency in the foreclosure process.

The aim of the Homeowner Bill of Rights

The aim of this billis to provide protectionto homeowners who are facing foreclosure. Additionally, the law has reformed the entire system of foreclosure in many waysand ensured that homeowners are given a fair opportunity toseek and find loss mitigation options, which includeloan modifications or even alternatives to foreclosure that they may find more suitable.

Some key provisions of the Homeowner Bill of Rights include:

  • Before the Homeowner Bill of Rightscame into effect, through the ‘dual-tracking’ process, a lender could foreclose on a homeowner even during the pending loan modification application. But, thanks to the Homeowner Bill of Rights,once the homeowner submits a complete loan modification application, the foreclosure is now stalled while the loan servicer reviews the application. As a result, even in the case of the lender denying the loan modification proposal, the lender is not permitted under the new law to foreclose until the applicable appeals period has expired, which is generally 30 days from the date of a written refusal of the proposal.
  • The Homeowner Bill of Rightsmade it clear that a single point of contact must be provided to the homeowner, unlike in the past where homeowners often had to explain their condition to different people at different times, without getting straight answers to their queries. The law now makes it mandatory that the homeowner must be given one direct means of communicating with the contact.
  • Homeowners will have theright to sue for any violationsof the law. In the case of litigation, the homeowner they could get relief in the following forms:
  1. An injunction bringing to a halt the foreclosure.
  2. Monetary damages, if the foreclosure has already happened.
  3. The court can award penalty of up to $50,000, if it finds that there has been intentional violation on the part of the loan servicer or lender.
  • Verification of documents: Lenders who record and file multiple unverified documents can be subject to a fine up to $7,500 per loan. Lenders also come under the scrutiny by licensing agencies by theDepartment of Business Oversight and the Bureau of Real Estate.
  • The new law states thatthose who have purchased theforeclosed home must make sure that the existing tenant in that house are given at least 90 days of time to vacate the premises. In the case of a fixed-term lease that the tenant entered into with the previous owner, the new owner after foreclosure must honor the lease unless they can prove exceptions that indicate otherwise.
  • The law states that borrowers will now have the authority to seek redress of “material” violations as a part of the new foreclosure process.

Overall, the Homeowners Bill of Rights is an exciting new tool for attorneys to help struggling homeowners have more options in the battle to save their homes from foreclosure.


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