California Homeowners Bill of Rights – New Law for 2013.

The new California Homeowner Bill of Rights becomes law today. If you’re not familiar with this measure, it was a bill carried on behalf of California Attorney General Kamala Harris last year that sought to codify some of the measures set forth in the national mortgage settlement deal struck in early 2012. 

Initially opposed by the California Association of Realtors as well as the California Bankers Association and the California Mortgage Bankers Association, the bill was pushed through the legislature by a closed joint committee  of both houses so when the bill eventually reached the floor, it was voted on immediately and passed to the Governor. Total time in committee, floor and signature was measured in hours rather than days, months or years, as is typical for most bills. 

Due to the secretive nature of the committee structure, there was little opportunity for interest groups to provide input and there was great concern that what emerged would be a very flawed effort reflecting an over reaction to purported lender wrongdoing. However, CAR did have an opportunity to work with the committee to effect some modifications to the final version that removed our opposition to the bill. CAR was not supportive of the bill in its final version but adopted a neutral position, although banking groups remained steadfast in their opposition due to to concerns about meritless litigation that the bill opens up for aggreaved homeowners. 

Here’s what the bill does:

  • Stops dual tracking. Once the process has started for either a loan modification or short sale by the lender, the foreclosure process must be stopped. This is in response to cases where the property proceeds along multiple courses at the same time only to have the foreclosure process conclude days ahead of a short sale approval by another arm of the bank. As pointed out, this frequently resulted in the bank taking the property back and ultimately receiving thousands less in the foreclosure sale than they would have in a short sale. Of course we know the banks are covered either way and really don’t care but ultimately this should result in more short sales and fewer foreclosures, which is better for the recovering market.
  • Under the dual tracking provisions, banks must give an applicant a response to their loan modification before they can start the foreclosure process. If a homeowner has not applied for a loan modification, the bank must inform them of their right to do so before starting the foreclosure process.
  • No more robo signing.
  • Banks must provide a single point of contact to borrowers trying for a loan modification or short sale. Homeowners and Realtors are often frustrated by multiple points of contact and the handoff fr5om one agent to  another within a bank frequently resulting in the loss of paperwork sending the process back to square one while the foreclosure process continues apace in another department.
  • Allows the borrower to sue loan servicers if the borrower thinks they have violated any foreclosure laws. This is one of the most worrisome components of the bill in that it may open the door to frivolous lawsuits resulting in increased costs and unnecessary delays in an already costly and time consuming process. 

With nearly 1 million foreclosures recorded in the state since 2007, California remains one of the hardest hit areas of the country. However, foreclosures are down in most areas by 30% or more in the past year and with prices starting to climb across the state, the hope is that fewer and fewer people will be pushed into foreclosure anyway. Some 30% of state homeowners remain underwater in their loans but the combination of improving employment statistics and home price increases has decreased that by more than 5% in the past year.

The Homeowners Bill of Rights may well provide some relief for harried homeowners and produce further delays to the process, but it will do little to change the underlying ability of a homeowner to ultimately afford their home and will, in most cases, only delay the inevitable. If Sacramento and DC don’t screw it up, an improving economy will do more to aid homeowners than the HBR will ever accomplish – and ultimately that’s the best news for everybody. 


CAR OPPOSES AG's Homeowner Bill of Rights.

California Homeowners Bill of Rights:

A Lesson in Political Expediency & Unintended Consequences.

California Attorney General Kamala Harris announced in a much heralded press release today that her ‘California Homeowners Bill of Rights’ has ‘taken a key step toward passage’. Here’s the key step – she bypassed every preliminary opportunity for the bill to be discussed, debated or voted on in either the Assembly or the Senate. What she did, or had her minions in the Legislature do for her, was have the bill introduced to a ‘two-house conference committee’ that voted this morning to pass the bill. That means tomorrow or, more probably Monday, the full Senate and Assembly will vote on the bills – SB 900 & AB 278 with no discussion.

You’ve heard me discuss the measures previously as the Nevada Suite of bills, so named for the deleterious results Nevada experienced after passing similar legislation last year. Did I mention the ‘special committee’ was made up of 4 Democrats and 2 Republicans? Now guess what the vote was? That’s called a ‘procedural matter’ in Sacramento. Roughly translated it means ‘bend over’.

Here’s C.A.R.’s take on the issue:

C.A.R. is OPPOSING conference report, AB 278, containing anti-foreclosure legislation sponsored by the state Attorney General. C.A.R. opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not, C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes this conference report because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, and making it difficult for even well qualified borrowers to obtain financing. Financing is already very difficult to get. This conference report will only make a difficult situation worse.

Initially the Attorney General had sponsored a package of bills; the so-called the “Homeowners Bill of Rights.” For procedural reasons, the majority of these bills have been under consideration by a Conference Committee made up of six legislators. REALTORS® had the opportunity to educate these legislators about C.A.R.’s concerns as part of Legislative Day and since then C.A.R. lobbyists have been working directly with the conferees and legislative staff to make them aware of the unintended consequences of some of these proposals. The Conference Committee has now issued its final report and it must be passed by both Houses of the legislature. These votes may occur as early as Monday, July 2nd.

Background

The Attorney General has sponsored a package of bills to place into California law an expanded version of the national settlement between major banks and state attorneys general. The contents of some of these bills have been under consideration by a Conference Committee comprised of six members who have just approved a conference report on a party-line vote. Some provisions will have the unintended effect of drying up mortgage loans for anyone but the most well-qualified borrowers, and increasing the costs of all mortgages.

One provision allows any borrower, no matter what the circumstances, to file a lawsuit. This will encourage opportunistic lawyers to pursue frivolous lawsuits, bringing unnecessary and unjustifiable delays to an already difficult and time consuming process. The language is so vaguely written that the borrower doesn’t even have to show that they have been harmed to file suit and be awarded damages.

One-sided  attorneys fees may still be awarded only to plaintiffs based on the very broad definition of a “prevailing party” in the report. And, of course, if lenders don’t have the remedy of foreclosure to ensure they can recover their security in appropriate situations, they will be less likely to lend, credit will be less available and the housing market recovery will limp along even more slowly.

C.A.R. is OPPOSED to the conference report because:

 

  • The housing market recovery is still fragile. About half of all sales are of distressed properties. By restricting a lender’s ability to foreclose and exposing them to unnecessary liability, this report will dry up inventory, and it will further discourage lending other than to the most highly qualified borrowers. Additionally, these bills will artificially slow down the foreclosure process, keeping properties off the market that are legitimately in foreclosure. Finally, by removing the threat of foreclosure, the bill erodes the incentive for short sales as well.
  • The bill invites bad-faith defaults and lawsuits. By broadly defining under what circumstances a lawsuit can be filed, even those legitimately in foreclosure can “game” the system. Additionally, the bill creates an incentive for plaintiffs’ attorneys to file frivolous lawsuits even if no harm has been done to the borrower. The courts are already overwhelmed. This bill, by inviting frivolous lawsuits puts an additional strain on the already underfunded courts
  • Lending is already tight. Even the most well-qualified borrowers are finding it difficult to obtain financing. By stopping legitimate foreclosures, banks will be forced to further tighten lending standards at the expense of homebuyers.

 

We’re not intimating that everything contained in the bills is bad and we have been supportive of some of the issues. We also have a competing dual-tracking bill in play that we feel is more balanced and less vague. But this is a take-it-or-leave-it kind of bill – you have to eat the whole enchilada and there are no amendments allowed at this point. All the bad will be with us as law along with the few good things it might accomplish. Sound familiar?

This is also what is referred to as a ‘gut & amend’ bill. For 1 1/2 years some bills have been floating around the Legislature knowing full well they weren’t going anywhere. They were being held for just such a vehicle as this to rise from the ashes and require a last minute vote – often with only minutes of notice.

So this bill will pass UNLESS you can convince your Democratic Legislator to vote against it. Otherwise it’s a simple exercise in vote counting (53 – 27) to ascertain that our housing market will take another hit – a victim of increased frivolous lawsuits, further restrictions on foreclosures and tightened lending standards.

So now you know the proverbial ‘other side of the story’ and it’s not pretty. I encourage you to read the bill at  AB 278 and then read the AG’s release below. While the release summarizes a much glossed over purview of the bills, the devil is in the details. So go to work on your Democratic Legislators and let them know how Realtors® feel, and every homeowner and landlord who doesn’t feel like paying the price this bill will cost.

 

 

NEWS RELEASE

June 27, 2012

FOR IMMEDIATE RELEASE
(415) 703-5837

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California Homeowner Bill of Rights Takes Key Step to Passage

SACRAMENTO — Attorney General Kamala D. Harris today announced the passage of two central elements of the California Homeowner Bill of Rights through a special two-house conference committee. The 4 to 1 vote sends the bills to an expected vote next week in both the Assembly and Senate.

The two bills approved by the conference committee are the Foreclosure Reduction Act, which restricts the process of “dual-tracked” foreclosures and the Due Process Rights Act, which guarantees a reliable contact for struggling homeowners to discuss their loan with and which for the first time imposes civil penalties on the practice of fraudulently signing foreclosure documents without verifying their accuracy, a practice commonly known as “robo-signing.” The proposed legislation also includes meaningful enforcement for borrowers whose rights are violated.

The full Homeowner Bill of Rights includes additional provisions to reduce blight, ensure appropriate law enforcement response to mortgage fraud and crime, and protect tenants.  The bills containing these protections are also advancing through the Legislature.

“I am gratified by this vote, which represents one more step toward our goal of achieving a Homeowner Bill of Rights for California,” said Attorney General Harris. “The mortgage and foreclosure crisis in our state demands urgent efforts to help Californians keep their homes. The legislature will now have the opportunity to cast a vote on behalf of California’s struggling homeowners.”

The California Homeowner Bill of Rights was introduced February 29, 2012 at a press conference featuring Assembly Speaker John A. Perez and Senate President pro Tem Darrell Steinberg and bill authors from the Assembly and Senate. The goal of the Homeowner Bill of Rights is to take many of the mortgage reforms extracted from banks in a national mortgage settlement and write them into California law so they could apply to all mortgage-holders in the state.

“The mortgage and foreclosure abuse in California ends here,” said Noreen Evans (D-Santa Rosa), co-chair of the Joint Conference Committee. “This committee has passed historic legislation that codifies the
protections eligible homeowners deserve, while helping to stabilize the foreclosure crisis that has thwarted California’s economic recovery. The Legislature has studied, listened and engaged Californians and
industry to find a solution that is fair and effective to mitigate this crisis. I look forward to the full support of the Legislature and Governor in implementing this package.”

“This bill is the result of a long and difficult process in which we received input from all interested parties; including homeowners and the banks and found that foreclosures benefit no one,” said Assemblymember Mike Eng (D-Alhambra). “We ended such dubious practices as having a bank foreclose while a homeowner is in the process of modifying a loan and cut through confusion by making sure that there is a ‘single point of contact’ with mortgage servicers.  With half a million California homes at risk of foreclosure, this action was urgently needed.”

The California Homeowner Bill of Rights extends Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. Attorney General Harris created a Mortgage Fraud Strike Force in March, 2011 to investigate and prosecute misconduct related to mortgages and foreclosures. In February 2012 Attorney General Harris extracted a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers.

More details about the California Homeowner Bill of Rights are found on the attached fact sheet.  To learn more about how the bills impact California homeowners, review the slideshow at: www.oag.ca.gov.

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You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://oag.ca.gov/news/press-releases/california-homeowner-bill-rights-takes-key-step-passage

 


Spirit Cleansing – how to move that house that just won't sell.

Move over Feng Shue, look out Wabi Sabi,  there’s a new process home buyers and sellers are turning to in an effort to make sure a property is livable – spirit cleansing. I kid you not.

We’ve always known that some homes appear to be haunted – heck I own a 120 year old home myself that some folks will swear has a spectral resident. There are entire industries that have sprung up around that phenomenon including exorcisms, TV shows and movies.

bad vibesBut there’s a new form of home that’s appeared on the market – the house of bad vibes. Apparently what we in the business casually refer to as a ‘distressed’ property may actually be distressed in more ways than financially. It may have all sorts of negative vibes, residues or ‘energy imprints’ associated with it as a result of arguments, emotions, money problems and loss.

And of course where there’s an opportunity, there are opportunists. While it’s not unusual for some religious or ethnic groups to have their homes blessed occasionally, this new group is at the beck and call of home buyers and sellers to help rid a house of the funk either before it is put up for sale or before it closes escrow.

Practitioners of the art utilize a wide variety of customs and items in their cleansing treatment. Ringing bells, according to some, breaks up the negative energy. Iron, especially iron swords, are effective at keeping evil spirits away if placed before windows and doors. Kosher salt, candles, fresh flowers, scented oils, spices and incense can also play a role in the ceremony and in maintaining the ongoing positive aura of the home.

abaloinePractitioners of native arts insist that the same power can be derived from smudging ceremonies involving sage, cedar and sweetgrass applied to the person and the home. If you prefer this method, make sure to use a clay or stone bowl rather than an abalone shell. As we all know, abalone shells should only be used in water ceremonies, not burining rituals,  at the risk of offending Grandmother Ocean.

Consultants, astral healers or in some cases, witches, advise on a number of procedures including a thorough top-to-bottom house cleaning and airing-out as a precursor to the spiritual cleansing or invocation. Herbal mixtures, or just a sea salt and water concoction, can be used to sprinkle the house or actually wash down the place if the vibes are really bad. This is accompanied by a blessing, incantation or charm session, lighted candles in every room and the application of more herbs and fresh flowers to keep the negative energy at bay.

But as always, there’s a caution. Advocates warn that by doing this you are entering into a relationship with an unseen power of the plants and spirits which must be treated with respect and honor. Worse yet, you may actually remove a beneficial spirit that will result in even greater harm to you after the ceremony. You are advised to know what effects the spirits are having on your environment before you take any action.

As always, as with any phase of our business, it’s best to hire a professional.


Long overdue – Stonewood scam goes to trial

At long last the trial has begun for the perpetrators of the so-called Stonewood Scam in Southwest Riverside County. Long time readers are acquainted with the basics of this story from my years-long chronicle of events. Our local association tried to bring this to the attention of law enforcement beginning in late 2004 but were unsuccessful in catching anybody’s ear until the scam had nearly run its course and started to collapse under its own weight.

The real estate part of it consisted of representatives from Stonewood Financial buying homes at significant premiums over asking price. As this was at a time our housing market was appreciating 20% – 30% a year, the fact that someone would pay a 25% or 30% premium on a home purchase was not enough to warrant investigation by the authorities. Homes listed at $500,000 were routinely selling for $600,000 or more. Targeting specific neighborhoods, after the first two or three sales were obtained with fraudulent appraisals, it became a self-feeding scheme since subsequent appraisals were now based on actual sales, albeit fraudulent. Turns out many of the buyers were either made of straw, or people talked into buying multiple properties they couldn’t begin to afford. Naturally other buyers into those neighborhoods also became victims since selling prices became predicated on fraudulently inflated values. In addition to the 200+ documented cases, many more innocent victims lost their homes when prices tumbled by more than 2/3 in some cases.

How did they do it? Well, partially through affinity fraud – many of the buyers were either members of the same ethnicity as the perpetrators or were nurses at the same facility where one of the perpetrators worked. They were also promised that the properties could be rented, that any shortage between the rental income and the mortgage payment would be paid for them, and that the $100,000+ overage collected by Stonewood or a related entity, would be paid to an investment account with the promise of even greater dividends to come.

Naturally there was no investment account to produce income, after a month or two the promised rental offset payments dried up and houses started going into foreclosure by tens, then by hundreds. When we became aware that something smelled bad here, we documented about 60 homes and about $40 million dollars in potential scams. By the time authorities finally acted on it the result was over 200 homes with the perpetrators indicated for over $120 million dollars. Our local District Attorney did not see fit to take action until the SEC, FBI and US Attorneys Office had finally acted, then he stood up on the podium all puffed up taking the credit. I like to hope in some small way it was part of the reason he was soundly defeated in his recent re-election campaign by a relative unknown.

Anyway, in addition to our local real estate fraud task force, reporters Chris Bagley from the Californian and Leslie Berkman from the Press Enterprise payed significant roles in shining the spotlight on these nefarious activities and our own attorney John Giardinelli and an attorney for some of the plaintiffs Richard Ackerman were pivotal in keeping the focus on.

It took too damn long and cost too many people – not to mention the damage done to entire neighborhoods and our cities – but as they say – sometimes the wheels of justice grind slowly. Let’s hope in this case they also grind exceedingly fine.

You can read the whole story and related elements here.

Press Enterprise – Fraud Trail Begins

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The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly, the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR,  or any local or state government or other mental institution.

A Raspberry to Michael T. Pines & Others

raspberry

The Californian today bestowed a raspberry entitled:

The “Uncommon Law’ award.

A raspberry to attorney Michael T. Pines, who has been advising his clients to break into their foreclosed homes.

Pines claims the actions are justified because lenders committed loan fraud and violated the Truth in Lending Act of 1968. A bankruptcy judge called his ideas frivolous and ordered him to pay $16,.430 in legal fees to the defendants in one case for wasting their time. Other local real estate lawyers are skeptical about his interpretation of the law.

While not every homeowner facing foreclosure is a victim, many are. They really don’t need one more expert giving them questionable advice that may further complicate their lives. They’ve gotten enough of that already.

To the Californian I say – AMEN. Folks, if it sounds too good to be true – you know the rest. And the same goes for those agents and attorneys advising their clients about short sale gimmicks through a series of trusts as well as those advising their clients they enable you to live in their homes indefinitely without paying. Our profession doesn’t need you, the market doesn’t need you and neither do people who have already been victimized once too often.


California Joins Multi-State Coalition to Protect Homeowners Facing Foreclosure

SAN FRANCISCO – Attorney General Edmund G. Brown Jr. announced today that California has joined a coalition of 49 attorneys general and dozens of state banking regulators in a multi-state effort to demand that lenders find solutions to serious and potentially widespread problems in the foreclosure process across the country.

“While California continues its own vigorous efforts to ensure that homeowners facing foreclosure are treated fairly and lawfully,” Brown said, “we are now working together with other attorneys general and regulators to seek solutions that reach across state lines to protect all borrowers at risk of losing their homes in this foreclosure crisis.”

On Friday, Brown called on all lenders in California to halt foreclosing on California homes until they can demonstrate that they are complying with state law. Earlier, Brown sent letters to Ally Financial and J.P. Morgan Chase directing them either to prove they are in compliance with state law or else halt foreclosures. His office also has been in discussions with other lenders, including Wells Fargo, One West and Bank of America. Brown’s office will continue its independent efforts to protect homeowners facing foreclosure.

Bank of America announced on Friday that it was temporarily halting foreclosures nationwide.

The multi-state group will review how lenders verify foreclosure documents nationally. The group was formed after several lenders and loan services admitted that officials, dubbed “robo-signers,” had vouched for the accuracy and completeness of foreclosure documents without reviewing them. Such sham verifications may constitute a deceptive and unfair practice or otherwise violate state laws.

Regulators in the states involved, including California, have already started examining whether mortgage servicers have submitted improper affidavits or other foreclosure documents.

Although each state has its own foreclosure laws, all attorneys general and financial regulators have a common goal of making certain that every lender and servicer conduct a good faith review of foreclosure documents, only foreclose on homeowners after confirming all requirements have been met, and obey all state laws.

California law prohibits lenders from recording notices of default on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless – with certain exceptions — the lender contacts or tries diligently to contact the borrower to determine eligibility for loan modification. A notice of default must include a declaration of compliance with California law.

California homeowners who experience problems with foreclosures, or other consumer issues, can file a complaint online with the Attorney General’s office at: www.ag.ca.gov/consumers/general.php.

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More housing delays from Brown – thanks Jerry

Pandering for a few more votes, Jerry Brown is calling for a halt to foreclosures in California. Super. Let’s let more people stay in their homes indefinitely without making payments and stall off the inevitable for a few more months. That’s what our market needs. Thanks Clueless. What a tool.

Brown Calls on Banks to Halt Foreclosures In California

SAN FRANCISCO – Following his office’s negotiations with the state’s top loan servicers and today’s announcement by Bank of America that it is temporarily halting foreclosures nationwide, Attorney General Edmund G. Brown Jr. today called on the state’s other lenders to halt foreclosing on California homes until the banks can demonstrate that they are complying with state law.

“All lenders should halt foreclosures until they clear up this mess and ensure that the process is fair and complies with California law,” Brown said. “Bank of America has taken an important step, and the other major lenders should follow its lead.”

California law prohibits lenders from recording notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, subject to limited exceptions, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with California law.

In the past few weeks, Brown’s office has been in discussions with Bank of America, Ally Financial, JP Morgan Chase, Wells Fargo and OneWest to ascertain whether they are complying with California law. Brown’s office has called on those banks to show they are complying with state law before continuing with foreclosures.

JP Morgan Chase, the nation’s third largest loan servicer, Ally Financial and One West have admitted that employees approved and signed foreclosure documents without first fully reviewing the borrowers’ loan files. As a result, those borrowers lost their homes based on affidavits the bank never confirmed were accurate.

Ally Financial and JP Morgan have suspended foreclosures in 23 other states that, unlike California, require a court order for foreclosures.

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