Support for the bill designed to help homeowners who are facing potential government and bank foreclosures, including Wells Fargo home foreclosures, has diminished in the past few weeks. Senate Bill 1275 initially had the support of majority of legislators, but has lost steam following an alleged intense lobbying effort from the banking industry.
The bill was authored by California Senator Mark Leno who knew all about troubled homeowners since foreclosures in San Francisco, the city where he is based, have not shown any sign of abating since the housing market crisis started. Leno reportedly developed the bill in an effort to prevent banks from taking advantage of troubled homeowners.
California foreclosed homes remain some of the highest in the whole U.S. and the bill was supposed to help control the tide of foreclosures in the area. It was designed to require lender banks to provide a considered decision to homeowners seeking loan modification before any foreclosure step is taken.
The bill also aims to prevent the continuous rise in the number of foreclosure homes for sale caused by lenders foreclosing on properties while homeowners are still in the process of negotiating for a mortgage modification.
The legislation would have allowed borrowers facing Wells Fargo home foreclosures and other types of foreclosures to sue banks should they foreclose while a mortgage modification negotiation is ongoing. The federal government had already implemented similar regulations early on under its foreclosure mitigation initiative.
However, supporters of the bill stated that the federal government's rules did not clarify provisions that would have provided for legal action and they did not use any formal enforcement scheme to bring lenders to courts.
The banking industry reportedly campaigned against the bill, stating that it provides too much leeway to homeowners to sue banks for technical violations. They further argued that the legislation would result in delaying the process of foreclosure even under circumstances when borrowers are not qualified for a loan modification.
Supporters of the bill have asserted that the legislation is needed to hold banks accountable for a crisis that they played a major role in. They further added that the high number of bank and government foreclosures, including Wells Fargo home foreclosures, was largely due to banks and lenders' actions.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.