California homeowners and the California housing market received good news on July 11, 2012 when Governor Jerry Brown signed into law the Homeowner Bill of Rights. Effective January 1, 2013, the new law extends homeowner protections previously scheduled to expire shortly.
These protections include a requirement that lenders try to discuss alternatives to foreclosure with at-risk homeowners. There is also an important change in that lenders are now required to provide notice of postponement of foreclosure sales. Prior to this, homeowners were often unaware of the status of their foreclosure, not knowing if a foreclosure sale had gone forward or been postponed.
Significantly, the Homeowner Bill of Rights also creates a new right to sue lenders for violation of foreclosure law. The new rules continue to require that applications to a lender for a loan modification are complete and correctly documented. Failure to follow these steps can render the protections moot for a homeowner.
The law is expected to reduce foreclosures, and to improve conditions in the California housing market. “These new rules make the foreclosure process more transparent so that loan servicers cannot promise one thing while doing the exact opposite,” said Governor Brown.