California Homeowner Bill of Rights

The California Homeowner Bill of Rights became law on January 1, 2013 to ensure fair lending and

borrowing practices for California homeowners.

The laws are designed to guarantee basic fairness and transparency for homeowners in the

foreclosure process. Key provisions include:

• Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing

the foreclosure process if the homeowner is working on securing a loan modification. When a

homeowner completes an application for a loan modification, the foreclosure process is essentially

paused until the complete application has been fully reviewed.

• Guaranteed single point of contact: Homeowners are guaranteed a single point of contact

as they navigate the system and try to keep their homes – a person or team at the bank who knows

the facts of their case, has their paperwork and can get them a decision about their application for a

loan modification.

• Verification of documents: Lenders that record and file multiple unverified documents will be

subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders

who are in violation are also subject to enforcement by licensing agencies, including the Department

of Corporations, the Department of Real Estate and the Department of Financial Institutions.

• Enforceability: Borrowers will have authority to seek redress of “material” violations of the

new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and

recovery of damages will be available following a sale. (AB 278, SB 900)

• Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days

before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer

of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that

exceptions intended to prevent fraudulent leases apply. (AB 2610)

• Tools to prosecute mortgage fraud: The statute of limitations to prosecute mortgage-related

crimes is extended from one to three years, allowing the Attorney General’s office to investigate

and prosecute complex mortgage fraud crimes. In addition, the Attorney General’s office can use a

statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in

multiple counties.

(AB 1950, SB 1474)

• Tools to curb blight: Local governments and receivers have additional tools to fight blight

caused by multiple vacant homes in their neighborhoods, from more time to allow homeowners to

remedy code violations to a means to compel the owners of foreclosed property to pay for upkeep.

(AB 2314)