Submitted by admin on Tue, 06/26/2012 - 02:25
In a recent update, the Democrats of California who mainly control the state's legislature, have come up with a new plan which will provide the homeowners to get more power against their lenders.
According to the draft of the new legislation, the following things in favor of the borrowers will be given importance:
- Ban dual track foreclosures: Stop banks from foreclosing on homes when the application for loan modifications is pending. Also, the lenders should be held liable for damages if they engage in reckless, wilful and intentional violations. This is known also known as dual-track foreclosures.
- Sue lenders: Allowing homeowners to sue mortgage providers who break state law. However, there should be significant violation of law.
- Single point of contact: Make it necessary for the lenders to provide a single point of contact to borrowers so that they can discuss refinancing or foreclosure options. However, exemptions should be given to smaller lenders.
- Fix problems: The banking industry wants the lenders to get a chance to fix problems with the borrowers on an individual basis.
- Increase penalties: The banks that foreclose properties without reviewing any documentation will be liable for penalties. The process is known as robo-signing.
Experts are considering this new legislation as the extension of the national settlement which had forced new restrictions on the five largest U.S. banks. As per the bill, the California based lenders who process more than 175 foreclosures per year will be liable to follow the new regulations.