Shortly before April 15, California lawmakers passed a bill that will provide relief to Californians who have lost their home to foreclosure, sold their home in a short sale or obtained a loan modification by conforming state tax policy to federal rules that do not tax homeowners for forgiven mortgage debt. That bill is a step in the right direction, but earlier legislation, SB94, which prevents anyone from taking up-front fees to negotiate a loan modification, definitely is not.
And now the Federal Trade Commission wants to take that bad law nationwide.
SB94 by Sen. Ron Calderon, D-Montebello (Los Angeles County) was designed to crack down on greedy loan modification companies that took thousands of dollars from desperate homeowners but produced few or no results for them.
Those consumers need protections. That’s why the measure passed by an overwhelming margin.
But the bill contained major flaws that have resulted in unintended consequences….
You can read more by clicking here.
The Chronicle published another article on the front page today which discusses the increasing frequency with which banks are pursuing second mortgage debt for individuals whose homes have already been foreclosed on:
California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase – home equity lines of credit and second loans taken out after purchase – are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers.
You can read the full article here.
John Corcoran is an Associate with Plastiras & Terrizzi law firm in San Rafael, California (Marin County). He advises clients on real estate matters, small business issues, estate planning, and general civil litigation. He may be reached at email@example.com or (415) 472-8100 x211.