(TheNicheReport) -- California is set to become the first state in the Union to actually rely on comprehensive legislation to curb the foreclosure avalanche that has plagued the nation over the last few years. Considering that California is one of the jurisdictions in which the foreclosure process is non-judicial, the passing of Assembly Bill 278 and Senate Bill 900 is very significant for homeowners in the Golden State.
The passing of the bills culminates a long process that began with the Homeowner Bill of Rights presented by Attorney General Kamala Harris three years ago. Among the important provisions contained in the new legislation, borrowers will now have the option of taking banks to court if they feel that they have not complied with certain new requirements prior to initiating the foreclosure process. These new requirements call on lenders and mortgage servicing companies to carefully review loan modification applications and provide borrowers with a detailed explanation in case of a denial -before a foreclosure can be considered.
An End to Robo-Signing
The new Foreclosure Reduction Act takes a cue from the recent foreclosure settlement agreement between several state attorney generals and five major lenders in the sense that it prevents the questionable practice of robo-signing. Once the legislation is enacted and goes into effect on January 1, 2013, any foreclosure document produced in California will have to undergo significant review and verification before it is signed. This measure aims to prevent unscrupulous law firms from becoming foreclosure mills, and lenders or servicing agents from cutting corners.
With the bipartisan approval of the Foreclosure Reduction Act, California is also the first state to adapt the recommendations contained in the National Mortgage Settlement Agreement in its body of legislation. The Foreclosure Reduction Act is just one piece of the Homeowner Bill of Rights in California. Other provisions contained therein will make the Golden State one of the most progressive jurisdictions in the sense of providing mortgage borrowers and homeowners with essential protections against predatory lenders.
Foreclosure Purchasing Frenzy
While the Foreclosure Reduction Act and the Homeowner Bill of Rights await enactment, real estate investors in California are stepping up the pace of their acquisitions with regard to distressed properties. The Urban Strategies Council of Oakland recently reported that 42 percent of homes foreclosed since 2007 have been snapped up. Most of these properties, however, are located in low-income neighborhoods -something that housing activists are closely following for fear of future displacement.