Attorney General Kamala D. Harris Joins Legislative Leaders Unveils California Homeowner Bill of Rights

SACRAMENTO – Attorney General Kamala D. Harris today announced the California Homeowner Bill of Rights designed to protect homeowners from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state’s urgent mortgage and foreclosure crisis.
Joined by Senate President pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez, Attorney General Harris announced her sponsorship of six bills designed to guarantee: – Basic standards of fairness in the mortgage process, including an end to dual-track foreclosures – Transparency in the mortgage process, including a single point of contact for homeowners – Community tools to prevent blight after banks foreclose upon homes – Tenant protections after foreclosures – Enhanced law enforcement to defend homeowner rights – paid for by fees imposed on banks – A special grand jury to investigate financial and foreclosure crime.

“California communities and families are being devastated by the mortgage and foreclosure crisis. We must ensure the deceptive practices that caused it never happen again,” said Attorney General Harris. “The California Homeowner Bill of Rights will provide basic fairness and transparency for homeowners, and improve the mortgage process for everyone.”

The legislation builds on the California commitment announced by Attorney General Harris earlier this month, which is expected to result in $18 billion of benefits for California homeowners. That agreement included reforms for mortgages owned by the five banks that were signing parties. The California Homeowner Bill of Rights will strengthen those protections, make them permanent, and apply them to all mortgages in the state.

“When I secured the California commitment, I made clear it was only one of many steps I am taking to comprehensively address the mortgage and foreclosure crisis,” Attorney General Harris continued. “I want to thank Senate President pro Tem Steinberg, Assembly Speaker Pérez and all the other lawmakers who are supporting this urgent package of legislation for homeowners.”

“I want to congratulate the Attorney General on the victory she won on behalf of the people of California,” said Speaker John A. Pérez. “Our state has suffered greatly as the result of bad actors in the banking and financial industries, and this settlement holds them accountable as we continue the difficult work of recovering the housing market and stemming the tide of foreclosures, evictions and auctions.”

“Millions of Californians have already lost their homes to foreclosure and the mortgage crisis is far from over,” said Senate President pro Tem Darrell Steinberg. “This landmark settlement negotiated by Attorney General Harris helps thousands of Californians but thousands more need the same help. We need to put these protections into law so that more people can save their homes.”


If passed, the following bills would:
Authors: Assemblymen Mike Eng and Mike Feuer; Senators Mark Leno, Fran Pavley, and Senate President pro Tem Darrell Steinberg -Require creditors to provide documentation to a borrower that establishes the creditor’s right to foreclose on real property prior to recording a notice of default. -Require creditors to provide documentary evidence of ownership, the chain of title to real property, and the right to foreclose, at the time of the filing of a notice of default.  -Prohibit creditors from recording a notice of default when a timely-filed application for a loan modification or other loss mitigation measure is pending. -Prohibit creditors from recording a notice of sale when a timely-filed application for a loan modification or other loss mitigation measure is pending. -Prohibit creditors from recording a notice of sale while a borrower is in compliance with the terms of a trial loan modification or after another loss mitigation measure has been approved. -Require creditors to disclose why an application for a loan modification or other loss mitigation measure has been denied. -Require that notices of foreclosure sales be personally served, including notices of foreclosure sale postponement. -Provide homeowners with a private right of action in instances in which the requirements set forth in the legislation are not followed

Authors: Assemblywoman Holly Mitchell; Senators Mark DeSaulnier and Fran Pavley -Require creditors to provide a single point of contact to borrowers in the foreclosure process who will be responsible for providing accurate account and other information related to the foreclosure process and loss mitigation efforts. -Require creditors to provide a dedicated electronic mail address, facsimile number and mailing address for borrowers to submit information requested as part of a loan modification, short sale or other loss mitigation option. -Authorize borrowers to challenge the unlawful commencement of a foreclosure process in court. -Impose a $10,000 civil penalty on the recordation or filing of “robosigned” documents, defined as documents that contain information that was not verified for accuracy by the person or persons signing or swearing to the accuracy of the document or statement.  -Require that certain documents be recorded in a county recorder’s office.

Authors: Assemblywoman Wilmer Carter; Senator Fran Pavley -Prevent blight enforcement actions from being taken against new purchasers of blighted property for 60 days, provided that repairs are being made to the property. -Require banks that release liens on foreclosed property to inform local code enforcement agencies of the release so that demolition of blighted property can proceed. -Increase fines against owners of blighted property from $1,000 per day to $5,000 per day, and allow the imposition of the costs of a receivership over blighted property to be imposed directly against the owner of blighted property.

Authors: Assemblywoman Nancy Skinner; Senator Loni Hancock -Require purchasers of foreclosed homes to honor the terms of existing leases and give tenants at least 90 days notice before commencing eviction proceedings.

Author: Assemblyman Mike Davis -Impose a new $25 fee to be paid by servicers upon the recording of a notice of default. The fee would be deposited into a real estate fraud prosecution trust fund that would support the Attorney General’s efforts to deter, investigate and prosecute real estate fraud crimes, including the work of the Mortgage Fraud Strike Force. -Extend the statute of limitations from one year to four years from the date of discovery for violations of law commonly occurring in connection with foreclosure-related scams, including acting as a real-estate agent without a license and charging up-front fees for loan modification services.

Authors: Assemblyman Mike Davis; Senator Loni Hancock -Authorize the Attorney General to impanel a special grand jury for the purposes of investigating and indicting multi-jurisdictional financial crimes against the state.



New premium structure will help protect FHA’s MMI fund

WASHINGTON – As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante today announced a new premium structure for FHA-insured single family mortgage loans.  FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent.

These premium changes will impact new loans insured by FHA beginning in April and June of 2012.  Details will soon be published in a Mortgagee Letter to FHA-approved lenders.

“After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Galante.  “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent.  This change is effective for case numbers assigned on or after April 1, 2012.  FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012.

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or after April 1, 2012.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.  These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan.  Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.

Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.

What the Federal Settlement of Foreclosure Misconduct Means to You


After ten months of intensive negotiations between the nations five largest banks and a coalition of state attorneys general and federal housing agencies, a settlement resulting in approximately $25 billion dollars in monetary sanctions and relief has been reached.

The settlement hopes to help hundreds of thousands of distressed homeowners remain in their homes through enhanced loan modifications and provide payments to victims of unfair foreclosure practices.

In addition, the settlement mandates mortgage loan servicing reform covering all aspects of mortgage servicing, from consumer response to foreclosure documentation. To ensure that the banks meet the new standards, the settlement will be recorded and enforceable as a court judgment. Compliance will be overseen by an independent monitor who will report to the attorneys general and the court.


Timelines for implementation are 30 – 60 days from the settlement agreement. Within 6 to 9 months, qualifying homeowners will be identified and notified by mail. Other resources will also be made available, such as for individuals to see if they qualify. Incentives have been built into the settlement for banks to meet the terms of the settlement within one year.


Immediate implications to the settlement will be swift. Foreclosures will go on the rise once again. If you, or someone you know, has been living in your property for years without paying, that will soon change. With this settlement, the roadblocks have been removed and lenders, who once had trepidation or hesitancy, will now move forward, full speed ahead to foreclosure.

To prevent this, the settlement gives incentives to the banks to seek other alternatives to foreclosures. But the borrower must connect with the lender sooner rather than later. The lender needs to know that you are interested in a workout program (loan modification, short sale, deed-in-lieu, forbearance, etc). It is when they don’t hear from you that they will now fast track your foreclosure without delay.


There had previously been some talk about principle reduction. The bottom line to that is that banks aren’t going to do principle reductions when they can only make fifteen cents on the dollar, and they can get more in a short sale or foreclosure.

Nine smaller banks have pending settlements which we will hear from soon, but for now, the settlement only applies to Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, and Ally Financial. Industry insiders are hopeful that terms similar to this settlement may eventually either become legislation and mandated for all banks or will become “best practices” .


The foreclosure timeline will decrease – gone are the days of living in your defaulted property longer than the state allowed time. Lenders are now prepared to foreclose faster. Due to the terms of the settlement, many problems have now been removed from the system.

If you have been pondering what to do with your home, contact a HUD counselor or qualified short sale specialist to get started on a workout program as soon as possible, don’t delay.

How To Seek Relief Under the New $18 Billion Mortgage Settlement

(re-post from C.A.R. Realegal (R)

California to Receive $18 Billion in Mortgage Settlement

On February 9, Attorney General Kamala D. Harris announced that California secured up to $18 billion for its distressed homeowners as part of a $25 billion national multistate settlement with the country’s five largest loan servicers. More than $12 billion will be used to offer short sales or write down loans over the next three years for about 250,000 underwater homeowners in California, according to the attorney general. Relief will go to areas hardest hit by the foreclosure crisis within the first year of the settlement.

Although the actual settlement has not yet been released, the attorney general has stated that other financial benefits for California include $849 million for refinancing 28,000 borrowers who are underwater but current on their payments; $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011; $1.1 billion for unemployed homeowners, transitional assistance, and repairing blight; $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners; and $430 million to the state attorney general’s office for costs and fees. As part of a California guarantee, if the lenders fail to reduce principal balances by a minimum of $12 billion, they will be required to pay fines up to $800 million to the state.

The loans involved in this settlement are those owned or serviced by Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, and Ally Financial Inc. The settlement releases the five named lenders from certain federal and state claims pertaining to robo-signing and other foreclosure misconduct by the lenders. It does not affect any individual’s rights to bring legal action against a lender. It also does not apply to the majority of mortgage loans, which are those owned by Fannie Mae or Freddie Mac.

This mortgage settlement does not change any homeowner’s existing financial relationship with a settling lender. It does not relieve homeowners from any obligation. It does not require a settling lender to stop any foreclosure.

Homeowners seeking relief under the settlement agreement should contact their loan servicer or a HUD-approved housing counselor. More information including detailed FAQs is also available from the California Attorney General’s website, or visit the National Mortgage Settlement website.