News release
Assemblywoman Pilar Schiavo, D-Chatsworth, announced that Assembly Bill 2424, a bill aimed at protecting homeowners facing foreclosure, has successfully passed out of the Assembly Committee on Banking and Finance and the Assembly Committee on Judiciary.
“Often in too many real-world situations when people are at their most vulnerable — like after the passing of a partner, when they’re experiencing dementia or other health challenges, or in the middle of a divorce, 120 days of failure to make a mortgage payment is simply not enough time to correct the situation or to make arrangements to either bring the loan current or to otherwise sell the property,” Schiavo said in a news release.
“For some families, a home is their only substantial asset. This legislation will reform foreclosure rules when payments have fallen behind due to unforeseen circumstances, seeking to preserve a portion of the lifetime investments in the property while assuring the banks get repaid,” Schiavo added.
Currently, when a homeowner can’t pay back their mortgage loan, the lender is authorized to sell their home at an auction; first, the lender takes back the loan balance, and the homeowner receives any surplus from the sale.
In the process, the homeowner often loses tens, or even hundreds of thousands of dollars when banks sell for extremely low prices, the release said.
In many instances, these homeowners are low-income, elderly, immigrant, or disabled people, the release said.
“For members of these communities, their home is often their only asset, and home equity is their lifetime savings. The loss of even a single dollar is irreplaceable, putting them at increased risk of poverty and homelessness,” the release said.
Schiavo added: “AB 2424 still ensures the mortgage holder gets repaid, and it also seeks to balance the equities, so that both the bank and the owner of the property get a fair share of their interest in the value of the home.”
“The Consumer Federation of California thanks Assemblymember Schiavo for authoring this important bill,” CFC Executive Director Robert Herrell said in the release. “Foreclosure is a nightmare even in the best of circumstances, but California’s current foreclosure system excessively punishes the most vulnerable Californians. AB 2424 would provide a clear pathway to allow these foreclosed Californians meaningful access to the sometimes substantial equity gains coming from their foreclosed properties and a critical lifeline to benefit from their most meaningful asset in life.”
