State Legislators Soundly Reject Bills to Combat Calif. Foreclosures

OAKLAND, Calif., April 28, 2011 /PRNewswire-USNewswire/ -- This week in Sacramento, the banking committees of both houses considered two bills designed to mitigate the effects of California's foreclosure crisis, and both failed in hearing rooms packed with supporters. Both bills, however, will be re-heard next week.

Even in light of tremendous involvement from constituents, consumer advocates, labor and grassroots organizations — and on the heels of robo-signing scandals that have caused thousands of wrongful foreclosures — legislators continue to oppose fair and simple legislation that would help Californians and the economy.

"Legislators listened to citizens who'd been wrongfully foreclosed and said, 'too bad.' What's really too bad is it appears big banks have more influence than their constituents and their communities," said Paul Leonard, California director of the Center for Responsible Lending.

SB 729, which would have prevented banks and servicers from pursuing "dual-track" servicing by requiring them to finish the loan modification process before beginning the foreclosure process, failed to pass the Senate Banking Committee by a 3-3 vote. A Senate bill similar in nature made it as far as the Assembly floor in 2010. Sen. Alex Padilla of Pacoima failed to vote.

AB 935 would have levied a foreclosure process fee on banks and servicers to help cover the costs associated with maintaining foreclosed properties, a burden which currently falls to cash-strapped local governments. It failed by 4-4 vote, with four members failing to vote.

The tallies:

SB 729 (Sens. Mark Leno and Darrell Steinberg) FAILED: Would require banks and servicers to complete the loan modification process before beginning the foreclosure process. Will be heard again next Wednesday, May 4.

AB 935 (Asm. Blumenfield) FAILED: Would have charged banks and servicers a fee to proceed with foreclosures, helping to ease the strain on local budgets burdened with caring for vacant foreclosed properties. Will be heard again next Monday, May 2.

The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.

SOURCE Center for Responsible Lending