In the fight against foreclosure, there could be hope for the underdog. The California Homeowner Bill of Rights went into effect on January 1, and real estate experts say this could be a win for homeowners everywhere.
The series of laws includes assistance for homeowners in foreclosure who want to sue lenders and recover damages if there were errors in the foreclosure process.
Valerie Torelli, Realtor/owner of Torelli Realty in Costa Mesa, Calif., says her state’s Bill of Rights for homeowners is long overdue.
“Before, borrowers were held in limbo for months and months, and loan modifications would be denied instantly, with the foreclosure process starting immediately,” says Torelli. “Homeowners are entitled to be treated with respect and get answers.”
While Torelli says she’s glad the new laws are in place, she says that banks must hire more knowledgeable and helpful people to assist homeowners in foreclosure to make a real difference.
Nicole Lawson, attorney with Lawson Law Group in Chicago, says California’s Bill of Rights is a milestone piece of legislation that she hopes will spread like wildfire to other states.
Homeowners who go to court with banks over foreclosure need all the help they can get, she says. “While this may not be the first legislation of its kind, it certainly seems the most aggressive, by offering financial remedies to those hurt by the Bill of Rights not being followed.”
Too many mortgage borrowers don’t understand what they’re signing at closing and put too much trust in mortgage lenders and brokers to do what’s right for them, says Norm Miller, professor and director of academic programs for the Burnham-Moores Center for Real Estate at the University of San Diego.
“Maybe the [legislation to protect homeowners] will help a little. Almost anyone can be misled if you are the trusting type. But since most people purchase homes rarely, few will ever become experts and stay on top of legislative changes,” Miller says.
Consequently, Lawson says it’s important that homeowners know their foreclosure rights – which vary from state to state – because “information is power.” Many people don’t know they have any rights, and they feel powerless against big banks, she says. “They think that if they didn’t pay their mortgage, the conversation is over, not understanding that they still have rights in the court of law.”
Depending on your jurisdiction, these homeowner rights could already include:
• The right to receive written notification from the lender of the intention to foreclose.
• The right to repay all past due monies as well as penalties and late fees agreed to in the mortgage contract, after which time the foreclosure will be stopped.
• The right to discuss payment options with the lender and to try to renegotiate loan terms in an effort to keep the property.
• The right to discuss with the lender the option of a private sale.
• The right to remain in the home during the foreclosure process, provided that the residence is maintained and all real estate taxes and homeowners’ insurance are paid.
• The right to regain ownership by purchasing it back following foreclosure.
Check with local real estate professionals or lawyers for specific laws in your state.