Jan. 24, 2012 | A bill authored by state Sen. Ellen Corbett allowing struggling mortgage borrowers additional time to explore alternatives for avoiding a notice of default passed the State Senate Monday.
Corbett's bill will extend the sunset period on a bill she co-authored with then state senator Don Perata in 2008. The clause is due to end in January 2013. The urgency measure was passed at the beginning of the current recession. Corbett said lawmakers then had hoped the housing crisis would subside by 2013.
"Sadly we have not come out of the foreclosure crisis as of yet," Corbett said while addressing the senate floor.
SB 708 would extend the sunset period to January 2018 and was passed with nearly unanimous bipartisan support. It heads for discussion in the assembly.
The legislation calls for lenders to assess and offer alternative ways for borrowers to avoid foreclosure proceedings and forbid them from filing notice of default letters on borrowers for 30 days after the initial contact.
While it is often in the best interest of banks to avoid foreclosure proceedings with borrowers, the avalanche of toxic loans that became the hallmark of the current housing crash and economic futility of the past few years has more families into foreclosure than ever before.
“The housing downturn and its fallout have wreaked havoc on thousands of Californians and their communities,” Corbett said. “Unfortunately, foreclosures remain a major problem throughout the state. This legislation continues important protections for homeowners and renters that have proved tremendously helpful in this trying time.”
The bill would also fine lenders $1,000-a-day for failing to perform maintenance on homes now unoccupied by foreclosure and at risk for becoming a haven for crime and neighborhood blight.