On Aug. 4, California Attorney General Xavier Becerra sent a letter to 33 mortgage servicers reminding the companies of their obligations to California homeowners and tenants under the Homeowner Bill of Rights.
As a wave of coronavirus-related foreclosures and post-foreclosure evictions is expected to hit homeowners throughout the state, the letter warns mortgage servicers that they must adhere to legal protections for California homeowners and if they fail to do so, they may face enforcement actions by the California Department of Justice.
“As the dual economic and public health crises continue, many California homeowners may fall behind on their mortgage payments,” said Becerra. “During times like these we must rely on laws, such as the California Homeowner Bill of Rights, to provide a safeguard for families who are one payment away from losing their homes. We take the rights of homeowners very seriously and expect all mortgage servicers to comply with the law.”
Xavier Becerra
California’s Homeowner Bill of Rights provides homeowners with the right to fairness and transparency in the pre-foreclosure and foreclosure process and gives homeowners a meaningful opportunity to avoid losing their home. The law also gives rights to tenants living in homes that are undergoing foreclosure. For example, servicing companies must:
- At least 30 days before recording a notice of default, contact the borrower to assess their financial situation, explore foreclosure prevention options;
- Before recording a notice of default, inform the borrower in writing of their right to request a copy of their deed of trust or mortgage, payment history since they were last less than 60 days past due;
- Within five business days of recording a notice of default, notify the borrower in writing of any foreclosure prevention alternatives available and how the borrower may apply;
- Upon a borrower’s request for a foreclosure prevention alternative, promptly provide a direct means for communicating with a single point of contact responsible for walking the borrower through the application process and deadlines; coordinating receipt of application materials and notifying the borrower of missing documents; timely, accurately, and adequately informing the borrower of the application’s current status; ensuring that the borrower is considered for all foreclosure prevention alternatives; and stopping foreclosure proceedings when necessary;
- Provide written acknowledgment within five business days of receiving any document in connection with a borrower’s loan modification application and, in the initial acknowledgment of the borrower’s application, notify the borrower of all deficiencies, expiration dates for submitted documents and deadlines;
- Refrain from charging any fee for applying for a foreclosure prevention alternative;
- Refrain from charging any late fee while a complete loan modification application is pending, a denial is being appealed, the borrower is making timely modification payments, or a foreclosure prevention alternative is being evaluated or exercised;
- Refrain from proceeding with foreclosure while a loan modification application is pending,
Becerra reminds mortgage servicers that they must commit adequate resources to meet their legal obligations as the coronavirus and economic crisis continues. He asked each company to provide by Aug. 31 a name, phone number and email address of a company representative in order to facilitate communications.
During this crisis, Becerra remains committed to protecting the rights of renters and homeowners in California. In April, he issued updated guidance to California tenants, encouraging them to learn about their rights in light of the COVID-19 pandemic.
He also joined a coalition of 35 attorneys general in sending letters to U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson and Federal Housing Finance Agency Director Mark Calabria requesting action to better protect homeowners from the economic toll of the COVID-19 pandemic.
In May, Becerra joined a coalition of 26 attorneys general in sending a letter to HUD Secretary Ben Carson requesting further action to protect senior homeowners during the COVID-19 public health emergency. Prior to the pandemic, Becerra filed a motion to intervene in a lawsuit to protect California’s Affordable Housing Act, which provides people with the right to accessible and affordable housing.
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For more information on mortgages and foreclosures see COVID-19 Consumer Information and Resources website, oag.ca.gov/covid-19#cares
A copy of the letter can be found at oag.ca.gov/system/files/attachments/press-docs/HBOR%20Letter%20to%20Servicers.pdf