A bill pressuring mortgage lenders to deal more effectively with struggling homeowners cleared a hurdle in a California senate committee this week despite opposition by the lending industry.
The measure would require lenders to handle problems and offer potential solutions before filing a default notice - the first step in the foreclosure process. It would enable borrowers to void foreclosures or receive monetary damages if lenders fail to deal with them properly.
Supported by labor unions, loan counselors and consumer groups, the bill is considered one of California Democrats' key foreclosure prevention bills this year. According to First American CoreLogic, at the end of February, 11.7% of borrowers in California and 8.7% nationally have mortgage loans that are more than 90 days delinquent or somewhere in the foreclosure process.
The bill, Senate Bill 1275, passed the Senate Banking, Finance and Insurance Committee, and next proceeds to a full Senate floor vote. The bill is co-authored by Sens. Mark Leno, D-San Francisco, and Senate President Pro Tem Darrell Steinberg, D-Sacramento.