“We must act in the best interests of Californians and our state’s economy,” Perata said in a written statement. “The mortgage crisis has hit like a tornado, and it’s imperative we do everything we can to prevent this cyclone from devastating more families and their communities.”

North Coast Sen. Patricia Wiggins (D-Santa Rosa) co-authored the bill.

“California is facing a serious threat to our state and local economies as a result of skyrocketing home foreclosure rates,” Wiggins, who represents Lake County in the state Legislature, said in a statement issued by her office. “I am glad to help lead legislative efforts by co-authoring Sen. Perata’s bill. Solving the mortgage crisis is critical not only for affected homeowners but for the well-being of our communities as a whole."

Seven of the nation’s 16 metropolitan areas with the highest rates of foreclosure are in California. Foreclosures are not only painful for the families who are forced from their homes but for the neighborhoods surrounding them that can see vacancies increase, properties fall into disrepair and housing values decline.

Lake County hasn't been untouched by the spike in foreclosures. Foreclosure rates in 2007 nearly doubled over 2006, as Lake County News has reported.

Perata's and Wiggins' measure, Senate Bill 926, requires lenders to meet in person with borrowers to discuss restructuring options. Borrowers must also be provided a list of Housing and Urban Development (HUD)-certified financial counselors to help them sort through their options.

The legislation steps up notice requirements, giving homeowners more advanced warning that a change in their mortgage payments is coming. To help limit the impact of a foreclosure on the surrounding neighborhood, the bill mandates that lenders maintain foreclosed properties or face a $1,000 per day fine.

SB 926 passed the Banking, Finance and Insurance Committee Wednesday and the Judiciary Committee on Tuesday. The bill moves next to the Senate Appropriations Committee for consideration.

Key provisions of the bill include:

– Notice to consumers regarding resets: Loan agents must provide borrowers a notice 120, 90 and 45 days prior to a change in mortgage payments due; notices must meet certain criteria; including being in the language the loan was originally negotiated.

– Lender requirements to help borrowers avoid foreclosure: Lender must contact the borrower to provide restructuring options at an in-person meeting before a notice of default can be filed. The lender must also provide the borrower a list of HUD-certified credit counselors available to assist the borrower. The notice of default must include a sworn statement that the lender met with the borrower or tried with due diligence to contact the borrower for an in-person meeting. The notice must also include the terms of the existing loan, including the reset amount and the restructuring options that were offered.

– Notice to property residents that the foreclosure process has begun: Require a party filing a notice of foreclosure sale to also mail a notice to tenants in order to alert them that the property owner is facing foreclosure and that the tenant may lose their ability to live in the house.

– Give tenants additional time to move from a foreclosed property: Increase the current notice required to be given to residential tenants of foreclosed properties to 60 days prior to eviction.

– Require maintenance of foreclosed properties to diminish the impact on the value of the neighboring homes: Failure to maintain a foreclosed property is a nuisance and violators shall be subject to civil fines and penalties of up to $1,000 per day. “Failure to maintain” includes failure to adequately care for the property including but not limited to, permitting excessive foliage growth that diminishes the value of surrounding properties, allowing trespassers or squatters, or permitting mosquito larva to grow in standing water. Fines and penalties collected pursuant to this section shall be directed to local nuisance abatement programs. These provisions shall not preempt stronger local ordinances.

– This is an urgency measure.

– All provisions will sunset on December 31, 2012.

For more information on the crisis and the bill, go to Senator Perata’s Web site, at www.senate.ca.gov/perata. Visit Wiggins' Web site at http://dist02.casen.govoffice.com/.

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Donna Christopher - This would appear Author | 01-18-2008 10:54:39 on face value to be something to actually help the homeowner as opposed to interest rate cuts by the Fed that help big money. But I still have to wonder how the heck folks got into these loans to begin with, yeah I know there has been predatory lending, but geez, if you can barely make a 2k a month payment what makes ya think you can swing a 5k a month payment when the rate raises. Minimum but adequate housing folks, forget the McMansions.

purplegirl - So True IP:208.106.99.xxx | 01-18-2008 11:48:36 I agree with you on that, totally and completely, Donna. It is nice that people may get some help with the foreclosure process but what would be really helpful is a little education of real world math. It doesn't take a genius to figure out that if you can't afford to rent a house for $1,000 a month you can't afford to own a house for $2,000 a month. Nor does it take a genius to realize that 0 money down means more money with higher interest rates to pay later or that a balloon mortgage means it gets bigger as time passes. Nor does it take a genius to realize a year ago that we were headed for a recession and most likely a depression where the house you are paid for isn't going to be nearly worth what you paid for it in a year or so. All that being said, I think that the lenders need to be getting more than a slap on the wrist for this set up. They knew EXACTLY what they were doing, even if the average person didn't. When everyone begins defaulting and the foreclosures start, they will still have control of the property which will be more than the average people who got sucked in and have that just lost everything. And, really, this bill doesn't seem to do much for the average person except give them a little time. With foreclosures up more than 200% it is going to give "homeless" and "down and out" a whole new meaning.

RayPerry - How I see it. Author | 01-18-2008 18:28:32 It looked like Lake County had been discovered and property values were finally reaching an even level with the rest of the state. The median price was over $300,000. The availability of cheep land attracted builders who could see that they could make a profit on a project. As prices continued to rise, every one and their brother got into the real estate market with the hopes of making it big. Lenders were loose on their requirements allowing many marginal loans to go through and perhaps not fully disclosing the risks of the adjustable rate mortgages (ARM's) the buyers were taking. To say the least, everyone was happy, property values were rising, houses were selling and life was good. Then reality set in. Those ARM's matured and folks couldn't make the payments. Panic set in and the lenders tightened up the requirements. It was a little too late, like shutting the barn door after the cow was loose. It is harder to get a loan now, even with good credit and a decent down. Yea, interest rates are good but who can qualify? Only the folks with very high scores and large downs are able to finance a home. Even then, many lenders are looking for excuses not to loan, any reason. In times like these, there is much more supply than demand, prices are dropping. Lake county is showing a slight increase in value over the short term and we are not hit as hard as the rest of the country mainly because we have not equaled the value of the surrounding counties. Many can still afford the payments but fewer homes are being sold. Rentals are going to be more in demand because people just can’t buy that new house. The smart investor will snap up a few of the bargains out there and cash in on this current market.

purplegirl - RayPerry So True Registered | 01-19-2008 12:36:14 "he smart investor will snap up a few of the bargains out there and cash in on this current market." True, there is always a bright side for someone, no matter how bad things get. If you know how to do it. Anyone who has dealt with foreclosure auctions and REOs could be easily get some great deals soon. I have seen it done, all it takes is someone who has the ability to take advantage of the market. And, quite honestly, I do hope that a few Americans do take advantage of the market because if they don't and the banks go under you can bet that China And Saudi Arabia will step in to "help" out and end up owning most of America.

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