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Mortgage Bankers Association takes on the Californian Senate

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By : John Smith    99 or more times read
The California State Legislature will debate a bill this week that aims to further assist Californian households keep the foreclosure dragon from their doors while they attempt mediation. This legislation introduced by Democratic Representatives Senator Mark Leno and Senate pro-tem President Pro Tem Darrell Steinberg is targeting banks that foreclose while they agree to mediate, but faces an uncertain future as commercial opponents do their worst to block it.

The Democratic partners are proposing that mortgage firms be required to post new types of notices to borrowers, advising them on the options that they have, and finally (and if this applies) explain why they did not qualify for loan modification in plain American english. They are also proposing that if lenders break their rules, then their borrowers might sue them for compensation, perhaps asking in addition that the property confiscation be reversed, and their homes returned to them.

According to Senator Mark Leno, this will plug a gap in HAMP that does not provide for aggrieved borrowers to seek relief. “We’ve heard so many horror stories,” he told me “In some cases, borrowers have been approved for a loan modification, they’re making loan modified payments and their home is foreclosed upon. That should not happen.”

The Senator and his pro-tem President are facing determined opposition against their efforts. The California Mortgage Bankers Association is complaining that the bill duplicates existing State law, and the HAMP program too, adding complications to an already convoluted bureaucratic process, and encouraging litigation by delinquent borrowers.

On the far side of the debate individual Californians like Gina Gates-Portales are adding different kindling to the fire. The businesswomen lost her home in Evergreen to a lender who foreclosed just as she was completing the modification document pack it had asked her to prepare. “All along, I’m thinking, someone’s going to realize this is a big mistake.” she says. “These servicers are not doing their jobs ethically, and their excuse that oh, we’re just overwhelmed is not an excuse [at all].” The feisty lady tried (and failed) to have her repossession reversed, and ended up renting in a condo.

Current Californian legislation requires that mortgage firms must make multiple attempts to discuss options with their clients at least 30 days before they file a first notice of default. The new bill proposed by California Democrats adds layers of detail to this, further strengthening householder’s chances of getting a fair chance to debate matters with their bank. This would tip the scales back the other way in a situation where the beneficiaries of a mortgage originally thought they signed as Americans with the same judicial rights.
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