Sounds suspect doesn’t it? Why would the State’s Realtor Association oppose this bill of rights? Well, we received a press release to explain.
From DS News:
The Homeowner Bill of Rights was introduced in February and has been the subject of much debate from various state groups ever since. Advocates of the proposal say it helps protect the kinds of homeowners who were affected in the housing crisis, while opponents say it will slow down the state’s housing recovery.
And here is the release from CAR (California Association of Realtors):
C.A.R. opposes so-called “Homeowners Bill of Rights”
A legislative conference committee voted today to approve a bill draft that seeks to reform the mortgage foreclosure process. C.A.R. is opposing this conference report and will be issuing a Red Alert targeting specific legislators. The measure, sponsored by the state Attorney General, will stall the housing recovery by inviting bad-faith lawsuits and defaults, and make it difficult for even well qualified borrowers to obtain financing.
Initially, the Attorney General had sponsored a package of bills called the Homeowners Bill of Rights. For procedural reasons, the majority of these bills have been under consideration by a Conference Committee made up of six legislators. REALTORS® had the opportunity to educate these legislators about C.A.R.’s concerns as part of Legislative Day and since then, C.A.R. lobbyists have been working directly with the conferees and legislative staff to make them aware of the unintended consequences of some of these proposals. The Conference Committee has now issued its final report, and it must be passed by both Houses of the legislature. These votes may occur as early as Monday, July 2.
One provision allows any borrower, no matter what the circumstances, to file a lawsuit to stop a foreclosure. The language is written so vaguely that the borrower doesn’t even have to show that they have been personally harmed to file suit and be awarded damages. And even if a court allows a foreclosure to proceed, one-sided attorneys’ fees may still be awarded based on the very broad definition of a “prevailing party” in the report. And, of course, if lenders don’t have the remedy of foreclosure to recover their security in appropriate situations, they will be less likely to lend, credit will be less available, and the bill will delay the housing market recovery even more.
C.A.R. will continue to provide information on these bills as it becomes available.
What do you think? I’ve long since realized that most government intervention has slowed the process of recovery. Certainly there has been some good, though with most programs sponsored by any government entity, the guidelines are often narrow and only a select few will benefit. I like the idea of not allowing a bank to foreclose while undergoing a mortgage resolution (loan modification or short sale) but the truth is, some people wait so long to ask for help it’s been a year or more of missed payments and may never have a chance to get caught up and resume payments. More needs to be done to actually provide help that matters. Principle reductions when they make sense would help many. But when faced with a hardship, and looking a mortgage that is 50% or more underwater, what is the incentive if you get only nominal relief? How many years will it be until that home will ever recover the value needed in order to sell with equity?
We’ll see how it plays out, and will keep you posted.