California Foreclosure Laws Need Homeowner Bill of Rights


My regular readers will likely remember past articles in which I stated that we would not win this battle over foreclosures by fighting individually in the courts.  I’ve stated on numerous occasions that we needed to bring political pressure to bear and fight this in our legislatures, both state and federal, because for our judges to be of more help, we need some new laws to be written and some older laws to change.


The fact is that over the last thirty years, as the financial sector was steadily growing in size it was increasing its ability to influence our legislative system.


While we were all in a debt-induced coma wandering around aimlessly at our respective shopping malls, the banking lobby was busy making sure that essentially every single state or federal law proposed, having to do with creditors and debtors, either blatantly favored, or at the very least tilted towards the creditor’s interests… certainly not the borrowers’.


Now, as we’re facing a crisis of unprecedented proportion, we’re learning the hard way that our rights as borrowers are almost non-existent.  In California and around the country, foreclosure defense lawyers saw that mortgage servicers could far too often pretty much foreclose at will using almost anything as documentation.


Mickey could sign it… Donald could notarize it, and it just didn’t matter very often.


I also came to realize that as far as messages go, saying that the courts would not be the answer we were looking for went over like a lead balloon.  And since telling people something that they hate hearing is no fun, I tried not to bring it up any more than was necessary.


The problem is, and I realized this yesterday… I WAS RIGHT… AM RIGHT. 


A few days ago I noticed that several California politicians were announcing a town hall type meeting on the foreclosure crisis that could be viewed online.  They were even soliciting questions from the general public.  (I submitted a few but wouldn’t you know it, mine weren’t chosen.)


Yesterday, I watched the video… it’s an hour long and you’ll find it below.


I also watched various individuals, from homeowners to housing counselors to consumer advocates, give testimony related to the proposed bills, and one thing came crashing through… I should have testified.


I would have made a significant difference.


What I learned watching both the testimony and the round table with the politicians was that the knowledge base of those making policy decisions related to the foreclosure crisis has much room for improvement and expansion.  Clearly, no one has filled them in properly in numerous areas.  And we are making a HUGE mistake by not marshaling our forces to get involved in the political process and make our voices heard.



State’s AG Backs California Homeowners Bill of Rights


In an effort to prevent now well-documented foreclosure abuses, California’s Attorney General has been pushing the state’s legislature to adopt a series of legislative proposals containing stricter consumer protections related to mortgage servicing and foreclosure.


The proposals are part of what’s come to be called the “Homeowner’s Bill of Rights.”


Politicians, no doubt recognizing that this was not a debate they wanted to be having publicly and desperate for political cover, decided to take many of the proposals out of the normal legislative process and place them instead into what’s being called, “a special conference committee.”


The special committee’s members, if it matters and I’m not at all sure that it does, include four Democrats and two Republicans.  State senators Noreen Evans and Ron Calderon… and Assembly members Mike Feuer and Mike Eng are the Democrats.  Senator Sam Blakeslee and Assembly member Donald Wagner are representing the GOP on the committee.


Party affiliation may not be important because just like all the past legislative proposals related to preventing abuses in the foreclosure process, the Homeowner Bill of Rights is vehemently opposed by the banking lobby.  And that means that the more important distinction will likely prove to be who is pro-banker and who is pro-consumer, or at least somewhat neutral.


So, how does the committee break down in that regard?  Here’s a quick look:


Noreen Evans appears to me to be pro-consumer, with stated policy priorities that include protecting the environment, fighting for women and children, and the reform of our legal system.  Currently, she chairs the Senate Judiciary Committee.


Also, her district covers Humboldt, Lake, Mendocino, Napa, Solano, and Sonoma counties.  However, and not that this in conclusive, she previously served in the State Assembly (2004-2010) and during that time she was a member of the Assembly’s Banking and Finance Committee.



Mike Feuer seems to be at least neutral, if not solidly pro-consumer.  He’s a graduate of Harvard College and Harvard Law School.  He chairs the State Assembly’s Judiciary Committee, but previously he co-chaired the Assembly’s Working Group on Jobs and Economic Recovery, and chaired the Budget Subcommittee on Transportation and Information Technology.


Also, while serving on the Los Angeles City Council, Feuer co-authored the Affordable Housing Trust Fund, funded meals for 75,000 indigent seniors, led efforts to create playgrounds accessible to disabled children, and bolstered the city’s Ethics Commission.



Ron Calderon is an ex-banker, and I think it’s more than safe to say that left to his own devices, he’ll vote with the banking lobby every single time.  Today, Calderon chairs the very influential Senate Insurance Committee, which I believe until recently was the “banking and insurance committee,” but during his two previous terms in the State Assembly, he served as chair of the Banking and Finance Committee.


Calderon says his policy priorities include a balanced state budget, strengthening state and local infrastructure, creating jobs, and protecting the rights of consumers.


The problem is that Calderon’s idea of protecting consumer rights is presumably what drove him to sponsor California’s SB 94, a bill signed into law by the governor in 2009, ostensibly designed to protect consumers from foreclosure scams, but that ended up doing nothing more than chasing legitimate attorneys away from helping homeowners get their loans modified.


Almost three years later, foreclosure related scammers remain ubiquitous in California, while now, in the hands of the State Bar, SB 94 threatens to make it literally impossible for a homeowner to hire a lawyer to help with a loan modification.  I understand why the Mortgage Bankers Association supported SB 94, but I for one don’t need or want that kind of “protection,” thank you anyway.



Mike Eng chairs the Assembly Committee on Banking & Finance, which oversees California’s financial institutions, real property finance, and corporate securities law.  The Committee develops and shapes public policy in such as areas as mortgage foreclosures, payday lending, regulation of state chartered banks and credit unions, consumer lending, and financial privacy.


That seems pretty conclusive, I understand, but watch him talk on the subject of the Homeowner Bill of Rights on the video below.  He makes clear that public support or the lack thereof is going to be a key driver of the committee’s decision.



Sam Blakeslee’s says he’s “known as one of the state legislature’s most bipartisan members,” and he chairs the Select Committee on Recovery, Reform and Realignment, which is described as a bipartisan Senate think tank.


But, Blakeslee is also president of his family’s business, the investment firm Blakeslee & Blakeslee, founded in 1971.  He is a Certified Financial Planner, a Registered Securities Principal, and a Registered Municipals Principal.  So, I don’t know what all that means, necessarily, but I’d say it’s worth keeping an eye on this guy for sure.  Maybe he’s the state’s most bi-partisan banker.



And finally, Don Wagner, the Vice-Chair of the Assembly Judiciary Committee, is from South Orange County (I live in North Orange County, by the way), and it looks to me like he’s a typical Orange Country conservative Republican… he ran for his seat in the State Assembly on a platform of fiscal responsibility… which on its face, doesn’t bode well as far as his support for the Homeowner’s Bill of Rights goes.


His website says that his “district has not raised taxes, but by floating bonds, it has paid off all of its debts, and balanced every budget.”  So, does that mean that he floated bonds to take on the debt needed to pay off the debt?  I’m not trying to be funny… that’s what it says on his site.


Wagner’s a lawyer involved with the Orange County Bar Association and he’s served as a Judge Pro Tempore in the Superior Court of Orange County.  He also founded the Orange County Chapter of the Federalist Society, which is “a national organization of conservative lawyers, judges, and law professors committed to ensuring a judicial integrity and strict adherence to the Constitution of the United States.”


Were I a betting man, and I am, I’d have to bet he’s a vote against the Homeowner’s Bill of Rights, but I’m certainly willing to be proven wrong.


Scoreboard says…


So, based on that cursory analysis and absent any information to the contrary, I’d say that as far as the “special committee” goes, the score at halftime is:


BANKERS – 4                        CONSUMERS – 2


Under just about any other circumstances, I’d say that based on who the committee’s members are… the fix was in.  I’d stop following the Homeowners Bill of Rights and just wait to read bad legislative news once again… “Killed in committee, but thank you for playing.  The End.”


But, this time I’m not so sure how this will turn out, especially if I were to be successful at getting others involved… like I was with Norm Rousseau’s suicide, for example.  Or even half that successful would probably do it.


Which, of course, ultimately comes down to you.


Here’s why I think this time could be different:


  • Attorney General Kamala Harris is publicly backing the Homeowner’s Bill of Rights.  It’s the first thing you see when you visit her website.  And it’s an election year.


  • Servicer abuses and misconduct are now very well documented and widely known.  The DOJ settlement provides some $17 billion in principal reductions nationwide, and California gets the majority of that amount.  Plus, there’s another $8 billion involved.  That’s going to keep a light shining on whatever is happening for a while.


  • California is the third hardest hit state, but its size makes it number one by far.  Our state budget deficit is the result of the foreclosure crisis, and the austerity ahead is going to touch everyone’s life, not just those at risk of foreclosure, and last for several years.


  • This time, everybody’s watching, which is why the politicians pulled the Bill of Rights proposals into a “special committee.”  It’s dark in there and they’re hoping they can kill it without anyone seeing who done it.  But that’s not going to be easy this time around.


  • This time, maybe enough Californian’s have been affected by the crisis, or see that they’re about to be affected by the crisis, so they’ll actually take the time to send emails and contact their elected representatives… and ask that their friends and family do the same.


The only way this country ever gets onto a path not fraught with risk of pain, civil unrest, and violence is if some balance is restored.  The pendulum has been allowed to swing too far to one side… it can’t stay there… the question is how is gets pushed back.  As Robert Reich says in his brilliant book, “Aftershock,” the two choices are radical revolt or radical reform.  (If you haven’t read it I HIGHLY recommend it.”)


Regardless, the fact that our elected representatives still have such a rudimentary understanding of the crisis and its impact on our society is proof that we are failing to educate them.  Homeowners are spending more time talking about robo-signing than they are talking to their elected representatives at the state and federal levels.


I’m not saying we should stop anything.  But I am saying we need to significantly expand our communications capabilities.  And I know we can do so fairly easily…


… Norman Rousseau taught me that.


More people read, shared, forwarded and talked about the story I wrote about Norm’s suicide than any of the articles I’ve written in the past.  And that’s sad.


Consider the following 3 facts:


A. When it comes to our politicians, there’s only one thing more important than money in this country… and that’s getting reelected.  If politicians think banking lobby money is what’s needed to get them reelected, then they’ll vote with the banking lobby.


But, if they realize that by voting with consumers they won’t need banking lobby money to get reelected… and that if they do vote with the banking lobby, there’s not enough money in the world to get them reelected… why, then they’ll vote with consumers.


B. There are only two ways to gain real political influence in this country.  One involves having a lot of money, and on that front we’ll never win… they’ve got the money advantage cornered.


The other way to gain political influence is to have a lot of people, and that’s currency we should be able to come up with in the thousands, or even millions. Already, there are easily 20 million Americans that have been directly affected by the foreclosure crisis… enough to sway a national election if organized.


C. This is an election year.  Right now, in Washington D.C. those in the House of Representatives all know that soon, they’ll be coming home to campaign for reelection in their home districts.  And right now, they’re polling their constituents and likely voters to see what’s on their minds, because they don’t want to come home to find people throwing tomatoes at them.


If any one of them received 500 emails on the same topic right now, they’d start sweating like Rick Santorum at HomoCon-2012. 


(Or, maybe like… Tim Geithner at a Save My Home convention?  Pelosi on a duck hunt with Cheney?  Boehner at a Hallmark Film Festival?  G.W. Bush on Jeopardy?)





The special committee is reviewing what are considered to be the “more far-reaching of the proposals.”


So, what the heck does that mean?  Well, it includes things like a law that would, according to the San Bernardino County Sun


“… prohibit foreclosures whenever a homeowner makes a timely application for a loan modification, mandate that banks establish a single-point of contact for borrowers facing foreclosure, and let borrowers challenge proceedings in court, among other things.”


Well, why didn’t you say so?  Good Lord, those things are incredibly “far reaching.”  In fact, I could have sworn that one of them just reached out from Sacramento and tickled my tushie some 400 miles away.  That’s some reach, I’ll tell you what.


Banking industry representatives are said to oppose these ideas on grounds that they may encourage strategic defaults and spurious lawsuits.


To which I would only reply: Prospice tibi, ut Gallia, tu quoque in tres partes dividaris.


(Latin, meaning: “Watch out, you might end up divided into three parts, like Gaul.”)


Come on, banking industry representatives… why would any of those things increase the probability for strategic default, or was that just all you guys could come up with on short notice.  What happened to, “there won’t be any more lending or borrowing costs will rise?”  Those didn’t make any sense either, but I was getting comfortable with them nonetheless.  Strategic default?  Phooey.


And spurious lawsuits?  I’m not sure we both understand what that word means, that is to say… I do… but do you guys?  Would you like to know what’s causing the spurious lawsuits in California?  I’ll be happy to tell you.


It’s SB 94, which was your idea in the first place, was it not?  Don’t try to tell me that it was Senator Calderon’s idea because clearly he’s a marionette.  You chase all the legitimate lawyers away from helping homeowners modify loans and what you get are spurious lawsuits by the hundred.  Haven’t you figured that out yet?


Attorney General Harris has said exactly what I was suggesting several months ago when the settlement was first announced, albeit a tad prematurely.  She said it’s important to strengthen due process by writing some of the provisions of the national mortgage settlement with the nation’s five largest banks into state law.


Finally, there is intelligent life in politics.  It absolutely takes my breath away that finally, someone in a position of power actually agreed with me about something.


And I wrote the following on March 1, 2012


If the new servicer standards were made into state law that had a private right of action and a provision for attorneys fees, that would save homes and stop foreclosures, and it would do so more effectively than any amount of money.


I’m not talking about bailouts for borrowers, I just want the rules associated with a national program to be followed and enforced, and I think every homeowner in the country should and would want that too, regardless of whether at risk of foreclosure or not at this moment.


Every homeowner in America should want federal programs to operate as they were intended to operate.  It’s not about who is at risk of foreclosure and who isn’t.  It’s simply about being in favor of basic fairness in our federal or state programs.  No one should oppose any of those ideals, and those that suffered as a result of being deprived such fairness would engender sympathy from others.


We simply have to do what the Attorney General is suggesting… otherwise all we’ll have are another set of HAMP guidelines, and we don’t need another set of useless guidelines that no one follows and no one can enforce.


No one should want that, by the way, because we understand that “HAMP HAPPENS.” 


But, if HAMP HAPPENS TWICEstrategic defaults and spurious lawsuits are going to look like a picnic at the beach on a sunny day with someone you love.



Okay, I’m a HUGE fan.  Brilliant!  How can I help?

 Reach me anytime at

Mandelman out.

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