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The Law of Unintended Consequences – Déjà Vu All Over Again?

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As our “My Take” columnist in the November 2012 issue of the Foreclosure News Report, George Eckert, a member of the California Mortgage Association Board of Directors who also chairs its Legislative Committee, gives his reasons as to why he feels the highly touted California Homeowner Bill of Rights may do more harm than good in the long run.

California Assembly Bill 278 and Senate Bill 900 are leaving the state’s mortgage brokerage community with a sense of Déjà Vu. Both were part of the multi-bill package better known as the California Homeowner Bill of Rights introduced and promoted by state Attorney General Kamala Harris.

The intent of these particular bills, Eckert writes, is to “impose on all mortgage lenders and servicers the terms of the nationwide foreclosure settlement entered into among 49 state’s attorneys general, the federal government, and the country’s five largest mortgage servicers.”

Eckert argues that these bills are in reality a flashback to Assembly Bill 489 introduced by Bay Area Assemblywoman Carole Migden back in 2001. AB 489 was targeted at alleged predatory lending practices perpetrated by “unscrupulous” mortgage lenders and brokers, much like AB 278 and SB 900 are targeted at stopping dual-tracking, robo-signing and other practices that allegedly cost many borrowers their homes.

Back in 2001, the industry argued that AB 489 would reduce the amount of available credit to the very borrowers it was intended to help. It took a while, but the industry’s prediction finally came to pass. Likewise, Eckert believes that this time around, even with all of Gov. Jerry Brown and AG Harris’ efforts to get these bills on the books as fast as possible, the unintended consequences will be similar to those resulting from AB 489.

“…it remains to be seen how the added burden of complying with this unnecessary legislation will impact an industry that is doing its best under difficult circumstances to help right the ship that is California’s housing market,” Eckert said.

Read the full article in the November 2012 issue of the award-winningForeclosure News Report. If you’re not a subscriber, subscribe now for a 30-day free trial subscription and you’ll get the November issue free.

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