Monday, April 28, 2008
SACRAMENTO, CA – By a vote of 28 to 10, the California Senate voted today to pass SB 1137, a bill that ensures that homeowners facing difficulty paying their mortgage will have a fair chance to work out a plan with lenders to avoid foreclosure. The bill, which was passed as an urgency measure, now goes to the California Assembly for consideration. If passed by the Assembly and signed into law by the governor, the measure will go into effect immediately.
“SB 1137 is a balanced and rational response to California’s mortgage foreclosure crisis,” said Norma Garcia, Senior Attorney with Consumers Union. “It will ensure that Californians facing foreclosure will be in a better position to keep their homes and protect communities hardest hit by the subprime mortgage meltdown.”
Last December, the Center for Responsible Lending estimated that nearly 500,000 California families would lose their homes to foreclosure. Despite recent pledges by lenders to work with borrowers to help them avoid default, recent evidence suggests that these efforts have been limited. According to the California Reinvestment Coalition, 91 percent of mortgage counseling agencies surveyed indicated that lenders have not been making contact with borrowers at risk of foreclosure. Seventy-two percent of those mortgage counselors surveyed said that foreclosures are a very common outcome for their clients.
SB 1137, introduced by Senator Don Perata, requires lenders to meet with borrowers prior to filing a notice of default to go over the options available to avoid foreclosure. The bill gives the borrower at least 30 days after the meeting to take steps to keep their home. Lenders who aren’t able to set up a meeting with borrowers can begin the foreclosure process 30 days after they have demonstrated a good faith effort to work with the homeowner.
SB 1137 also aims to help communities hard hit by the recent wave of foreclosures. The bill requires lenders to maintain foreclosed properties to prevent nuisance and blight and subjects those who fail to do so to fines. Tenants, who increasingly have been hurt by the foreclosure crisis, also are protected. Under the bill, lenders must notify a resident of a property facing foreclosure about the property’s status. Tenants must be given at least 60 days to vacate the property in the event of a foreclosure.
In addition to Consumers Union, SB 1137 is supported by the Center for Responsible Lending, ACORN, California Reinvestment Commission, and the California Labor Federation.
Norma Garcia – 415-431-6747