SANTA ANA (CBS) — A landmark measure aimed at preventing lenders from throwing California homeowners out of their homes while renegotating their mortgages was one step closer to becoming law on Monday.
But as KNX 1070′s Charles Feldman reports, one Orange County lawmaker is warning the legislation could ultimately harm the local housing market.
The first-of-its-kind measure is headed to the desk of Governor Jerry Brown after state lawmakers gave their approval. Brown is expected to sign off on the legislation.
The bill will prevent lenders from initiating foreclosure proceedings while other remedies are being sought along and will require them to provide a contact person or persons that would deal directly with the homeowner on a continuing basis.
Republican State Senator Tom Harman is among those who opposed the measure negotiated by the Democratic majority in Sacramento and fears the move will allow lawyers for homeowners who get injunctions preventing foreclosure to collect huge fees.
“Going forward, I think we’re going to see a host of lawsuits by members of the trial bar,” said Harman.
But union leaders like California Labor Federation Executive Secretary-Treasurer Art Pulaski applauded what he called a “clear victory” for families struggling to pay their mortgage.
“While the big banks and their GOP allies fought this much-needed reform tooth and nail, in the end the legislature chose common-sense reform over the banks’ special interest power,” said Pulaski. “That’s good for California and a positive sign for our democracy.”
The measure extends an national mortgage settlement with five banks to all lenders in California.
An estimated 500,000 homes statewide are in some stage of foreclosure, with Latino families 22 percent more at risk of foreclosure, according to the state Attorney General’s website.
Upon Brown’s approval, the law would take effect beginning in January.