California Homeowners Bill of Rights

Changes Are Coming to the California Homeowners Bill of Rights

In 2012 the California legislature enacted the California Homeowners Bill of Rights to prevent mortgage lenders and servicers from proceeding with preventable foreclosures and protect borrowers. The bill also ensured fair mortgage lending and servicing practices.

However, it is important to note that many sections of the HOBR are being replaced by new rules that will take effect on Jan. 1, 2018. While many of the changes are meant to ease the regulations on lenders and servicers, some of the changes will impose stricter guidelines.

Let’s take a look at some of the bigger changes coming in 2018:

Civil Code Section 2923.5 will replace section 2923.55 and will set pre-Notice of Default contact requirements for loan servicers of all sizes. The distinction between servicers conduction more or less than 175 annual foreclosures will no longer exist.

Section 2923.6, which prohibits servicers from engaging in dual tracking is being replaced by Section 2924.11. While the old code only prohibited dual tracking with regards to loan modification applications, Section 2924.11 applies dual tracking prohibition to all foreclosure prevention alternative applications.

Another, especially important, change involving Civil Code Section 2924.11 is that an appeal period following a written denial will no longer be required. Moving forward, the denial of a first lien loan modification application will need to include specific reasons for the denial and include a statement that the borrower may obtain additional documentation supporting the denial decision upon written request.

Luckily, Civil Code Section 2923.7 will remain the same. Servicers will still be required to provide a single point of contact (SPOC) to communicate, coordinate documents, notify a borrower of any missing documents and have access to current and accurate information on the current status of a borrower’s case.

Finally, Section 2924.10 will expire, meaning servicers will no longer be required to provide a written acknowledgment within 5 days of receipt of loan modification documents.

The California Homeowners Bill of Rights has been fundamental in protecting the rights of borrowers from predatory lenders and servicers and in many respects it will continue to do so. In some cases, such as with dual tracking, it will enact stricter guidelines. However, it will also ease some of the regulations they must follow.

To learn more about the changes, visit Housing Wire.

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