Being one of the key contributors to the success of the $25 billion federal foreclosure settlement, California Attorney General Kamala Harris had to expect that trying to literally adopt the major components of the federal agreement and make them permanent fixtures in California law was going to face potentially harsh criticism. Plus, she wanted to expand the impact of the federal agreement to effect more than just the nation’s big 5 lenders but instead apply to all lenders and mortgages in the state.
Well indeed the California Homeowner Bill of Rights does all that, and thus it has been criticized and picked apart. In April the package received a good tongue lashing from none other than the Federal Housing Finance Agency (FHFA), the agency charged with overseeing the conservatorship of Fannie Mae and Freddie Mac. The FHFA put forth its two cents worth of commentary in a letter from its general counsel describing what the agency feels is wrong with what Harris is trying to accomplish at the state level and how it conflicts with federal law.
Members of the California Democratic Congressional Delegation quickly responded with a letter of their own addressed to FHFA General Counsel Alfred Pollard, questioning both the content and intent of his message.
The response states in part that Pollard’s letter was “not requested by the Conference Committee” and that it “questions the needs for states to enact laws seeking to assist homeowners at risk of foreclosure, on the grounds that such laws needlessly delay foreclosures. After a careful review, we have concluded that your letter is devoid of any substantive analysis, takes the path of least resistance, which is most beneficial to the financial industry but most harmful to at-risk homeowners…”
While this battle ensues, two of the components passed out of both houses of the state legislature in late May. Assembly Bill 1763 and its companion bill, Senate Bill 1474, were passed unanimously with bipartisan support, allowing Harris’ office to impanel a special grand jury to investigate and prosecute multi-jurisdictional financial crimes against the state.
The other bill that passed with bipartisan support was Assembly Bill 1950 which extends the statute of limitations from one year to four years for violations of the law connected with foreclosure-related scams including acting as a real estate agent without a license, and charging up-front fees for loan modification services.
Stay tuned. This political football game could run into overtime as the election season heats up.
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