(English) July 2nd, 2012
The state with the biggest home foreclosure problem is finally on the verge of adopting new rules to ease the crisis. The overdue changes fix lending abuses that threaten to kick thousands out of their homes.
Since 2008, when the housing bubble began deflating, some half million homeowners have landed in foreclosure and another 1 million have lost their homes. For many, it was the result of bad decisions, such as taking out huge loans to buy overpriced real estate. But others were left hanging, good candidates to stay in their homes if a lender would rework the mortgage.
Two major changes – pushed by Attorney General Kamala Harris – would make this task easier by eliminating the infuriating tactics used by lenders. These reforms also give aggrieved homeowners another option: a chance to sue under certain conditions.
One change eliminates “dual tracking,” whereby one arm of a financial outfit negotiates a loan with a homeowner while another part of the institution launches foreclosure proceedings. The second change gives a frustrated homeowner a single contact person to eliminate the paper-chase runaround that often goes with refinance applications.
These reforms sound sensible, even obvious. But banks and other lenders have opposed giving up any advantage as they pick through the refi pile. Not every candidate for a new loan deserves one, bankers contend, an observation that’s undoubtedly true.
Past efforts to regulate lending practices went nowhere because of heavy pressure from the financial lobby. But this wall of opposition began crumbling with a national settlement over unfair lending practices used by five major banks. This breakthrough deal – which included a settlement of $25 billion – changed loan procedures for the better but came with only a five-year life for the big banks involved.
Now it’s the Legislature’s turn to make such reforms permanent as part of a larger package known as the Homeowners Bill of Rights. Because of the political heat, the measures were handed to a joint conference committee, which approved the major changes last week. The committee recommendations must be voted up or down, with no room for amendments that could gut the measures.
A decision by both the Assembly and Senate could come on Monday. One telltale sign of a positive outcome is the support of a group of business-friendly Democrats on the conference panel. The vote also comes less than a week after Stockton, a city where a once red-hot housing market collapsed, declared bankruptcy.
If the Legislature follows through and Gov. Jerry Brown signs the bills, it would be turning point. California, which suffered the biggest housing hit, would have the most thorough foreclosure-prevention package in the country. It would be a sign that this state has learned from its mistakes and is willing to help homeowners over banks in easing the housing crisis.
Source: San Francisco Chronicle
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