The California Homeowner Bill of Rights (HBOR) was signed into law in 2012 at the tail-end of the foreclosure crisis that forced many residents out of their homes, some unfairly and unlawfully.
It guarantees qualified homeowners facing foreclosure a meaningful opportunity to obtain a mortgage modification and keep their homes. [Calif. Civil Code §2923.4]
While some of its provisions expired in 2018, Senate Bill 818 reinstated and modified many of the Homeowner Bill of Rights’ original protections in 2019.
To better protect homeowners, the HBOR prevents:
- dual-tracking foreclosure, which is when a homeowner is simultaneously going through mortgage modification and foreclosure;
- robo-signing foreclosure documents, which heightens the risk of wrongful foreclosure; and
- more than one point of contact for distressed homeowners in the foreclosure process.
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These protections were reinstated for first lien mortgages secured by residential property. The main differences between the original HBOR and the 2019 version are new clauses:
- allowing servicers to be exempt from the provisions in SB 818 when an application for a mortgage modification is received less than five days before a scheduled foreclosure sale; [CC §2924.18(a)] and
- exempting servicers from the phone contact requirements of SB 818 when the homeowner has notified the servicer in writing to cease and desist all communications. [CC §2923.5(e)(2)(C)(ii)]
Mortgage servicers may not record a notice of default (NOD) until:
- at least 30 days have passed after initially contacting the homeowner; or
- if the servicer is unable to contact the homeowner, they have satisfied the due diligence requirements made to reach the homeowner, including mailing a notice and calling at different times of day. [CC §2923.5(a)(1)(A)]
Further, servicers may not record an NOD when a homeowner submits a complete application for a loan modification at least five business days before a scheduled foreclosure sale. Once the servicer provides the homeowner with a written decision on the modification, the servicer may proceed with the foreclosure. [CC §2923.5(a)(1)(B)]
When the homeowner is rejected for a loan modification, the servicer needs to wait at least 31 days after the homeowner is notified before recording an NOD or — if an NOD was already recorded — recording a notice of trustee’s sale (NOTS). [CC §2923.6(e)]
When the homeowner is approved for a loan modification, the servicer may not proceed with the foreclosure process as long as the homeowner complies with the terms of the modification.
Servicers may not charge homeowners any fees to apply or obtain a mortgage modification or other foreclosure prevention alternative. [CC §2924.11(e)]
The bill gives California homeowners the right to sue lenders and banks for violating the bill of rights. [CC §2924.19(b)]
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