Promises Of Reform, Money Take Struggling Homeowners Down Winding Path

Promises Of Reform, Money Take Struggling Homeowners Down Winding Path

By Elizabeth Hsing-Huei Chou, EGP Staff Writer

When California State Attorney General Kamala Harris announced in February that $26 billion in settlement money had been secured for struggling homeowners, she also addressed a fear that promises for reform in the mortgage industry would result in disappointment, just like many other past promises.

“… A deal ain’t done just based on a promise. It’s based on a promise, acceptance and then performance,” she said.

Harris said she was tough on the banks when negotiating California’s portion of the settlement money, ultimately getting $12 billion in guarantees from the financial institution to reduce principal on mortgages and offer other kinds of relief for homeowners.

According to Harris, California cities are among the hardest hit by foreclosures, with 500,000 homeowners currently on their way to losing their homes, many the result of the banks mishandling of their cases through the practice of robo-signing, or forging signatures, on foreclosures. When she toured Stockton and East Los Angeles she heard “stories that represent the worst of human experience.”

But the hope felt by California homeowners when the settlement deal with the nation’s top five banks was announced could soon turn to despair as the state struggles to deal with its ongoing budget troubles.

Earlier this year Harris recommended that $410 million in settlement money be given to the state and that it be used to help homeowners access the benefits and funds due to them, but Gov. Jerry Brown’s latest budget proposal calls for using all of the money to help bridge the state’s budget gap.

“While the state is undeniably facing a difficult budget gap, these funds should be used to help Californians stay in their homes. I plan to work with the Governor and Legislature toward a balanced budget that honors our obligations to California’s homeowners,” Harris said in her response to Brown’s May revise budget proposal.

Adding to homeowners concerns are attempts to weaken the Homeowner Bill of Rights, a package of bills aimed at protecting the rights of homeowners facing foreclosure. With critical votes on two of the bills and the state budget deadline approaching, it remains to be seen if lawmakers will live up to the promises they’ve made.

Well aware there would be challenges to any reform effort, local housing rights advocates have campaigned in recent weeks to keep the provisions of two bills in the Homeowner Bill of Rights intact, applying pressure on local politicians holding key roles in the decision-making process.

Last Friday, local housing rights advocates who form Occupy Fight Foreclosures, rallied outside the Montebello office of Sen. Ron Calderon, and urged him to not back down on key language in the two bills, which will soon face critical votes. Four other bills in the package have already passed, but according to housing advocates, the remaining two have the most impact.

One of the bills, SB 900, seeks to end dual-tracking, a process in which homeowners are put through the foreclosure process, even as they work to modify their loans to a manageable amount, but there is disagreement on how the bill should be enforced.

The original proposal was to give homeowners the ability to sue banks taking illegal shortcuts or actions while processing their foreclosures, but the banking industry is fighting back, saying that allowing homeowners to sue could tie up the foreclosure process in court and slow the recovery of the housing market.

The California Bankers Association called this part of the bill “a de facto moratorium on foreclosures.” In response, State Sen. Noreen Evans, who chairs the conference committee negotiating the bill, said the provision should not apply to “simple foreclosures,” and banks should not worry about lawsuits as long as foreclosures are processed according to the law.

Occupy Fight Foreclosures spokesman Carlos Marroquin said they are calling on Calderon not to take the side of the banking industry on this issue, noting that Calderon, considered a swing vote on the conference committee, has a history of saying one thing, but ultimately “siding with corporations.”

He added that Hispanics who make up a large percentage of Calderon’s district are disproportionately affected by foreclosures, so the senator “needs to stand with the homeowners.”

In a written response Friday, Calderon expressed his sympathy for homeowners who have been “foreclosed upon unnecessarily and without due process,” but added the Legislature must not do anything to “stall the recovery of the housing market.”

His chief of staff, Rocky Rushing, said Calderon is not blind to the struggles of homeowners facing foreclosure, but “it’s not a small matter” to craft the bill’s language. “It’s not just about passing the most liberal progressive bill that gives borrowers unlimited authorities… we want to ensure homeowners receive just, due process, at the same time protecting our fragile economy.”

Rushing said they are trying to strike a balance between the banks and the homeowners who are victims of misconduct during the foreclosure process.

The second bill, AB 278, would require that there be a single point of contact for homeowners trying to modify their loans, and is meant to address the complaints of homeowners who say they are frequently shuffled from one bank representative to another.

Rushing said they are negotiating the language on the bill, making it so that they could still allow there to be more than one person handling a homeowner’s foreclosure or loan modification case, as long as there is a central database.

The Conference Committee on the Foreclosure Crisis is set to vote on the two bills some time in the next few weeks, and the fate of the $410 million settlement money the state received could be decided as well along with the rest of the state budget currently being negotiated.

While introducing the Homeowner Bill of Rights back in February, Senate President Pro Tem Darrell Steinberg, one of the authors of the bill package and a member of the conference committee, hinted at the winding road ahead.

“The practice of expediency by too many in the mortgage lending industry are at the root of the pain for millions of California families and it has to end… these are questions of basic fairness to stop hurting innocent consumers,” Steinberg said of the Homeowner Bill of Rights, explaining that it builds on the mortgage settlement, which will last for three years, putting into place long-lasting reforms in the mortgage industry.

“We need to be aggressive, we have to be fair, and we have to negotiate… in the legislature there is never a straight line to get to ‘goal.’ We know that.”

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June 14, 2012  Copyright © 2012 Eastern Group Publications, Inc.


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