State Senate OKs foreclosure bill
A bill aimed at putting the brakes on home foreclosures in California was approved Monday by the state Senate, ending a months-long partisan stalemate.
Under the legislation, a lender would have to try at least three times to contact a borrower in person or by telephone 30 days before sending a notice of default. When contact is made, the lender would assess the borrower’s financial situation and discuss options to avoid default.
The bill, introduced by Senate President Pro Tem Don Perata (D-Oakland), is similar to one he previously introduced. That measure would have required face-to-face meetings, but it fell one vote short of the two-thirds needed for urgent approval in January when all but one Republican lawmaker voted no.
Perata amended the measure to allow phone conferences, and the mortgage banking industry dropped its opposition.
The bill would give borrowers at least 30 days after the consultation with the lender to take steps to keep their home. The legislation would apply only to mortgages taken out between Jan. 1, 2003, and Dec. 31, 2007, the period during which most of the problem loans were made, Perata said.
“In our experience the biggest issue was making sure that before somebody is evicted or foreclosed upon that they have an opportunity for a personal conversation with whomever the holder of the note is,” Perata said.
The legislation would also tighten rules on lenders to maintain homes left vacant after foreclosure.
Monday’s vote was 28-10, with several Republican lawmakers voting no because of worry that the bill could hurt an already reeling industry.
“I’m still concerned that it’s a bit overreaching, that it still has potential to interrupt liquidity in the market,” Sen. George Runner (R-Lancaster) said.
But Dustin Hobbs, spokesman for the California Mortgage Bankers Assn., expressed support for the bill, saying it “provides something that everyone supports, an increased communication between lender and borrower.”
The bill now goes to the Assembly for consideration.