Mortgage Relief May Be on the Way Soon for Californians as State Senate Passes Legislation With Two-Thirds Vote

Despite the amendments taken by Perata, the broad coalition in support of the bill as reflected in the floor analysis, and the lack of any known opposition, 10 Republican Senators voted against the bill.

It will require a two-thirds vote in the Assembly to pass—and that will require at least 6 Republican votes. One thing that augurs well for passage to the Assembly floor is that the new Chair of the Assembly Banking Committee, Pedro Nava, has signed on as a co-author of the bill.

After Senate passage, Perata asked for immediate transmittal to the Assembly. Help may be just around the corner for some Californians in a world of hurt. And not a moment too soon with the collapse of the California economy and daily worsening of our budget deficit, said this morning by the Governor to be an estimated $20 billion.

The following is a description of the bill from Senator Perata’s office.

SB 1137 -- Perata Mortgage Relief Bill

• This is an amended version of SB 926, which failed on the Senate floor in late January. The bill was an urgency measure and fell one vote short of passing.

• As a result of negotiations, all opposition has been eliminated, including from the California Bankers Association and the California Mortgage Brokers Association, which are now neutral on the bill.

• Supporters of the measure include ACORN, Consumers Union, Center for Responsible Lending, California Reinvestment Society, California Labor Federation AFL-CIO and the Western Center on Law and Poverty.

• This is still an urgency bill because this is still an urgent problem. There is a wave of resets hitting people now and another coming in late summer.

• The March 2008 California Foreclosure Report detailed record highs in notice of defaults and notice of trustee sale while foreclosure sales have taken a slight dip. This indicates a growth in the number of houses headed to foreclosure, but because there is such a high inventory, the homes are not selling as quickly in foreclosure.

• The five worst hit counties are: Merced, San Joaquin, Stanislaus, Sacramento and Yuba. In Merced, 1 in 737 residents lost their home in a foreclosure sale in the month of March. In Sacramento, that number is 1 in 1,003.

• The bill changes include: no longer requiring a face-to-face meeting and instead allowing a meeting on the phone; removing the notice to borrowers of pending mortgage payment changes; and limiting the scope of the contact requirement so it only applies to loans made between January 1, 2003 and December 31, 2007, when most of the loans that are causing the problems we face today were made.

• Tenants will get notice (in six different languages) once a notice of sale has been posted on a property.

• The bill increases the current notice required to be given to residential tenants of foreclosed properties to 60 days prior to eviction.

• Locals can impose a $1,000-per-day fine on financial institutions that don't maintain vacant properties if problems are not fixed within 14 days. “Failure to maintain” includes failure to adequately care for the property including but not limited to, permitting excessive foliage growth that diminishes the value of surrounding properties, allowing trespassers or squatters, or permitting mosquito larva to grow in standing water.