A state Senate bill pressuring lenders to deal more effectively with struggling mortgage borrowers cleared a key legislative hurdle Wednesday despite opposition by the lending industry.
The bill, co-authored by Sens. Mark Leno, D-San Francisco, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, would make lenders do more to modify loans before filing a notice of default, the first step in the foreclosure process. The changes would force lenders to deal earlier with problems and potential solutions, reducing the likelihood of foreclosure, Leno said.
The bill also would let borrowers void foreclosures or obtain monetary damages if lenders fail to deal with them properly.
"The kind of mistakes that are made should not be on the backs of the borrowers," said Lisa Sitkin, attorney for Oakland-based Housing and Economic Rights Advocates, the bill's sponsor. Leno and others testified that widespread lender disorganization in the face of a severe U.S. mortgage crisis is causing people to unfairly lose their homes. All talked about lost paperwork, delays and repeat demands for the same information.
The bill, pushed by labor unions, loan counselors and consumer groups, is considered one of Democrats' key foreclosure prevention bills this year. A hearing on the measure came the same day a report showed that 12.3 percent of Sacramento-area mortgages were more than 90 days delinquent, somewhere in the foreclosure process or tied to a bank-owned home for sale as February ended. First American CoreLogic said 11.7 percent of borrowers statewide and 8.7 percent nationally are in the same condition.
The bill, Senate Bill 1275, passed the Senate Banking, Finance and Insurance Committee, but faces more scrutiny before a full Senate floor vote.
To read the complete article, visit www.sacbee.com.