It seems like a no brainer -- ban lenders from foreclosing on California homes if borrowers are in the process of applying for a loan modification.
It also allows homeowners to sue lenders if they went ahead and took the property anyway.
But the lending industry is out in full force at the Capitol making sure the bill gets killed. The Center for Responsible Lending counted at least 20 lobbyists applying pressure to lawmakers.
"We're trying to protect those foreclosures, which can be avoided," St. Sen Mark Leno, D-San Francisco, said. The Assembly is the final hurdle before approval and lawmakers rejected it earlier this week. They insist their no vote wasn't influenced by lobbyists -- they just didn't think it was good bill since a federal program already prevents foreclosure during pending loan modifications. Assm. Diane Harkey, D-Dana Point, is a former banker herself. "If we don't allow the market to achieve a level where it's at the bottom, and we keep holding it up artificially, it's just going to prolong the pain," she said. But Leno points out the federal program covers only 80 percent of lenders and more needs to be done. RealtyTrac found nearly one in 400 homes in the U.S. received a foreclosure filing last month and it's worse in California, with one in 200 homes. For Modesto, ground zero for the state's housing crisis, it's one in 102 homes. James Powers, who has gone through a successful loan modification, wished he had the protections offered in this bill during his agonizing 8-month application process. "Every day, that's all you worry about, losing your home," he said. Time is running out. Leno must bring his bill up for re-consideration by the end of the Legislative year on Tuesday.
