California’s Foreclosure Reduction Act Closer to Final Approval


Support for the California Foreclosure Reduction Act, which requires all lenders to abide by a number of consumer protection provisions of the national mortgage settlement, appears to be unanimous.

A Conference Committee made up of key California Assembly and Senate members has formally approved the bill.

The full Assembly and Senate are expected to vote on the bill as early as July 2.

It is expected to help curb unfair lending practices and reduce foreclosures through a number of provisions.

Dual tracking, which has lead to foreclosure for many homeowners while they were negotiating a loan modification, requires that lenders provide an explanation for the foreclosure decision before the foreclosure process can be started to all borrowers who submit a complete loan modification application.

It also prohibits the servicer from recording a notice of sale on the property until the borrower is provided with a decision on the loan modification application.

In addition the act requires that lenders provide proper documentation to prove that the borrower has defaulted on the mortgage and that it has the right to foreclose, a single point of contact for the borrower, and allows borrowers to bring legal action against loan servicers for material violations of the law after a notice of default has been recorded.


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