
One year after SB 1137 became effective, lawmakers are taking another opportunity to provide some specific guidelines for lenders on handling loan modifications. It is obvious from reading the thousands of stories about lender run arounds, mistakes, misrepresentations and outright lies, that more stringent rules are necessary for them to do this job. Despite the fact that SB 1137 required that lenders meet in person with homeowners before foreclosing, file a declaration with the NOD documents stating that they had complied with that law, they continued to lie, cheat and steal, and say they tried to meet and confer while proceeding on their merry way to foreclose. The level of incompetence was shocking, or maybe not, for those in the know. In addition to lenders circumventing SB 1137, let's not forget the 90 day moratorium on foreclosures that they immediately danced out of by claiming that they were exempt because they had "effective" loan modification programs in place.
Well, AB 1588 gives us hope. The problem with previous solutions is that they didn't have any accountability for lenders to anyone but the homeowner. No big brother was monitoring their compliance, so they continued to steam roll homeowners with their double talk, lies and incompetence. With AB 1588, there are other parties involved, and the title says it all "Monitored Mortgage Workout". The specific details are:
Lenders are required to notify ALL borrowers that they are eligible for the program and provide forms and envelopes for the borrow to exercise that right.
The California Housing Finance Agency would administer the program and once the borrower elects to participate, NO FURTHER action can be taken on the foreclosure until the COMPLETION of all sessions.
Mediators must have at least 4 years of real estate litigation practice, including experience as a mediator and received formal training or experience in federal loan modification guidelines. The $750 fee shall be paid by the trustee initially, and if the loan is modified, the borrower will reimburse $325.
If the trustee fails to participate in a meaningful mediation, the borrower will be authorized to pursue litigation to enforce the mediators recommended modification.
The borrower would be required to open a trust account and deposit 60% of the mortgage payment monthly during the mediation process.
All things considered, it is a step in the right direction, and strongly supported by consumer groups. Successful foreclosure workout programs in other states and cities are in place. In New Jersey, for example, in more than 50 percent of the completed monitored loan workout cases, families were able to remain in their homes. Connecticut’s mediation program has helped over 2,000 borrowers stay in their homes – a 60 percent success rate – since it began in July 2008 as a voluntary program. Mandatory workout programs have recently begun in other states such as Nevada and Maine. Make your voice heard if you support this bill for a better 2010 for struggling homeowners.







