Lieu, Mayor Villaraigosa & Speaker Bass Announce Monitored Mortgage Legislation
California Political Desk
October 15, 2009
(LOS ANGELES) – On the heels of the Governor signing AB 260 (Lieu), landmark mortgage reform legislation, Assemblymember Ted Lieu (D-Torrrance) joined with Los Angeles Mayor Antonio Villaraigosa, Speaker Karen Bass and other members of the Legislature to announce the first field hearing on AB 1588, the Monitored Mortgage Workout Program. AB 1588 would provide for state-appointed monitors to ensure homeowners have a chance to work out with their lenders a plan to prevent home foreclosure. Such monitors are critical to the Obama Administration´s Home Affordable Modification Program.
AB 1588 is sponsored by Los Angeles Mayor Antonio Villaraigosa and jointly authored by Assemblymember Lieu, Speaker Karen Bass and Assemblymember Pedro Nava.
"As distressed homeowners continue to be at the mercy of lenders unwilling to modify their loans, it is imperative that we do whatever we can to keep people in their homes," said Assemblymember Lieu. "I am honored to work with Mayor Villaraigosa and Speaker Bass on a much needed tool to help California families."
Today´s hearing is the first in a set of interim hearings to be conducted across California aimed at assessing success rates banks have had so far in modifying loans of their struggling borrowers. In a recent report by the Obama Administration´s Home Affordable Modification Program, participating financial institutions modified only nine percent of eligible mortgages.
"We need to do a lot more to stop foreclosures,"said Assemblymember Lieu. "This legislation is an innovative approach to this crisis that will force both parties to work together to avoid foreclosure."
As proposed, the Monitored Mortgage Workout Program (MMW) would provide for the following:
Any borrower who receives a Notice of Default (NOD) is eligible to participate in a MMW Program administered by the California Housing Finance Authority (CHFA).
The borrower must communicate to the CHFA his or her intention to participate in the plan within 30 days of the NOD.
If a borrower elects to participate, a Monitor is appointed to oversee the loan modification process. The Monitor shall have certain minimum enumerated qualifications.
Once the MMW Program has been initiated, no further steps may be taken to foreclose until the MMW Program has been completed.
The Monitor shall assist the parties in assessing the affordability of any loan modification and analyzing the net present value economic effect on the lender of modification (versus foreclosure).
If the parties are unable to modify the loan bilaterally, the Monitor shall prepare a reasonable loan modification proposal that satisfies the guidelines in the President´s Plan, if such a proposal is feasible.
If the lender rejects the proposal or has acted in bad faith during negotiations as determined by the Monitor, the borrower may seek to enforce the Monitor´s proposed loan modification in an expedited court action.
If the borrower rejects the proposal or has acted in bad faith as determined by the Monitor, the foreclosure process will resume pursuant to existing state law.
AB 1588 is sponsored by Los Angeles Mayor Antonio Villaraigosa and jointly authored by Assemblymember Lieu, Speaker Karen Bass and Assemblymember Pedro Nava.
"As distressed homeowners continue to be at the mercy of lenders unwilling to modify their loans, it is imperative that we do whatever we can to keep people in their homes," said Assemblymember Lieu. "I am honored to work with Mayor Villaraigosa and Speaker Bass on a much needed tool to help California families."
Today´s hearing is the first in a set of interim hearings to be conducted across California aimed at assessing success rates banks have had so far in modifying loans of their struggling borrowers. In a recent report by the Obama Administration´s Home Affordable Modification Program, participating financial institutions modified only nine percent of eligible mortgages.
"We need to do a lot more to stop foreclosures,"said Assemblymember Lieu. "This legislation is an innovative approach to this crisis that will force both parties to work together to avoid foreclosure."
As proposed, the Monitored Mortgage Workout Program (MMW) would provide for the following:
Any borrower who receives a Notice of Default (NOD) is eligible to participate in a MMW Program administered by the California Housing Finance Authority (CHFA).
The borrower must communicate to the CHFA his or her intention to participate in the plan within 30 days of the NOD.
If a borrower elects to participate, a Monitor is appointed to oversee the loan modification process. The Monitor shall have certain minimum enumerated qualifications.
Once the MMW Program has been initiated, no further steps may be taken to foreclose until the MMW Program has been completed.
The Monitor shall assist the parties in assessing the affordability of any loan modification and analyzing the net present value economic effect on the lender of modification (versus foreclosure).
If the parties are unable to modify the loan bilaterally, the Monitor shall prepare a reasonable loan modification proposal that satisfies the guidelines in the President´s Plan, if such a proposal is feasible.
If the lender rejects the proposal or has acted in bad faith during negotiations as determined by the Monitor, the borrower may seek to enforce the Monitor´s proposed loan modification in an expedited court action.
If the borrower rejects the proposal or has acted in bad faith as determined by the Monitor, the foreclosure process will resume pursuant to existing state law.
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