California’s Homeowner Bill of Rights and Foreclosure Fraud

Foreclosure fraud in California has increased due to the number of homeowners who were talked into buying more property than they could afford. Predatory lending practices became commonplace as brokers used any means possible to qualify marginal borrowers. Mortgages with affordable initial rates that quickly adjusted to much higher rates put many in an untenable financial position. Extreme types of adjustable rate mortgages reset periodically throughout the life of the mortgage, continuously going higher. Mortgages with inconspicuous balloon payments that required borrowers to produce enormous sums of money were included in many contracts.

The increasing number of unaffordable mortgages led to an endemic number of foreclosures and with them followed foreclosure fraud. Foreclosure fraud utilized faulty documents and/or procedures, which resulted in homeowners wrongfully losing their homes. State and local government agencies are now investigating allegations of improper foreclosures by banks and other lending institutions. Meanwhile, homeowners have also filed foreclosure lawsuits, alleging banks used an unethical foreclosure process to force them out of their homes.

Between 2008 and 2011, more than one million homes in California were foreclosed. In many cases, lenders did not provide homeowners with a significant opportunity to obtain loss mitigation options to avoid foreclosure and also engaged in extensive mortgage servicing misconduct

A law, California’s Homeowner Bill of Rights, that reformed some aspects California’s foreclosure process went into effect on January 1, 2013. It was formulated in order to better protect homeowners in foreclosure. The Homeowner Bill of Rights makes the nonjudicial foreclosure process in California more fair and transparent. The law’s protections for homeowners and now the Homeowner Bill of Rights can aid homeowners facing foreclosure in California.

The Service members’ Civil Relief Act and Foreclosure Fraud

A federal law that provides foreclosure benefits to those on active military is called the Service members’ Civil Relief Act (SCRA). If you took out a mortgage before you went on active duty, you are entitled to a variety of protections against foreclosure.

Under the Service members’ Civil Relief Act (SCRA), all states are required to have judicial review of foreclosures and a judge is required to authorize foreclosures on homes of military members. Foreclosure authorization can only be given after a hearing at which military members are properly represented. The SCRA was enacted to protect active military members, some of them on duty overseas and with no ability to make mortgage payments. It has been reported that some service members have returned from active duty to discover that their home was in active foreclosure.

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