Citizen Law: ‘There Ought to be A Law’ program generates foreclosure disclosure law for renters, adds to California’s landmark Homeowner Bill of Rights

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“The Internet is full of horror stories of tenants moving into properties and quickly finding out that their home is up for auction.”

A year ago, San Jose resident Samantha James paid her security deposit, furnished a duplex and rented it for several months, only to discover the property was in foreclosure.

But she didn’t just get angry, she also got even.

She contributed legislative fodder for Senator Joe Simitian’s (D-Palo Alto) “There Oughta Be a Law” competition which seeks from California citizens suggestions for new laws or for old ones to be abolished.

“What I found was astonishing,” James penned in a Mercury News opinion piece.

Tenant ‘horror stories’

“The Internet is full of horror stories of tenants moving into properties and quickly finding out that their home is up for auction. Tenants are also required to pay rent while the landlord may or may not be paying the mortgage, and most end up in Small Claims Court fighting to get their deposits back,” James added.

After her ordeal, James told Senator Simitian there ought to be a law that forces property owners to disclose to renters that their property faces foreclosure. The tenant can then decide to take the risk and rent – or not – as an informed renter. James’ effort paid off.

The legislation her suggestion spawned, Simitian’s SB 1119, is among a host of measures that comprise California’s Homeowner Bill of Rights, awaiting Gov. Jerry Brown’s signature.

The landmark bill of rights effectively codifies and enhances the National Mortgage Settlement as ongoing state law.

“The entire Homeowner Bill of Rights legislative package will ensure fair lending and borrowing practices for California homeowners,” said Attorney General Kamala D. Harris, who championed the legislation.

“California has been the epicenter of the foreclosure crisis and this package of legislation will help affected homeowners, tenants and neighborhoods,” said Harris.

Homeowner Bill of Rights provisions awaiting signature

• SB 1119 requires landlords to disclose notices of default to potential renters or face a voided contract and be forced to refund the renter up to twice the actual damages along with prepaid rents, security deposits or other costs. Tenants who decide to rent retain related rights under other law related to foreclosure properties.

• AB 2610, by Assembly Member Nancy Skinner (D-Berkeley), will require foreclosed home buyers to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease, the new owner must honor the lease unless the owner will become the occupant or demonstrates other acceptable reasons to evict.

• SB1474, by Senator Loni Hancock (D-Berkeley), gives the attorney general the authority to use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.

• AB 1950, by Assembly Member Mike Davis, (D-Los Angeles) extends the statute of limitations for prosecuting mortgage related crimes from one year to three years, giving the Department of Justice the ability to investigate and prosecute complex mortgage fraud crimes.

Homeowner Bill of Rights provisions signed

• Recently signed into law is AB 2314, by Assembly Member Wilmer Carter (D-Rialto). It provides additional tools to local governments to fight blight caused by multiple vacant homes in neighborhoods.

In June, Gov. Brown signed major provisions of the Homeowner Bill of Rights and is expected to sign the final pieces.

The Homeowner Bill of Rights prohibits a series of inherently unfair bank practices that have needlessly forced thousands of Californians into foreclosure.

• The law restricts dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home.

• It also guarantees struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers, and imposes civil penalties on fraudulently signed mortgage documents.

• In addition, homeowners may require loan servicers to document their right to foreclose.

All aspects of the California Homeowner Bill of Rights will take effect on January 1, 2013 once signed into law.

See more “California Homeowner Bill of Rights” information.

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