Rodney K. Brown, president and CEO of the California Bankers Association, is responding to the April 15 Viewpoints article "Legislature can ban 'dual tracking' and save homes," which said, "The bills would outlaw dual track by requiring banks to halt the foreclosure process while they are reviewing a homeowner's application for a modification."

During the past several years there have been historic efforts by the government, financial services industry and consumer groups to help millions stay in their homes. The California Bankers Association has worked with the Legislature to enact nearly 50 bills addressing everything from loan origination to post-foreclosure practices.

This year, there are again several dozen proposed measures focusing on many of these same areas, including two measures prominently supported by California Attorney General Kamala Harris.

Senate Bill 1470 and Assembly Bill 1602 would result in a de-facto moratorium on foreclosures. To the extent that loan modification efforts fail, foreclosure is an unfortunate but legal process set forth in the deed of trust that each borrower agreed to when they obtained their mortgage.

CBA agrees that this process must be respectful of the rights of borrowers, but we cannot support legislation giving borrowers a right to sue, irrespective of whether they have experienced real harm, as a means to simply delay the inevitable and further forestall the foreclosure process.

Additionally, these measures fail to narrowly target at-risk borrowers and apply broadly, including to the increasing population of borrowers who strategically default. The measures also fail to require borrowers to tender any portion of their monthly mortgage payment as a good-faith effort demonstrating their desire to remain in the home. For borrowers who strategically default and have no intent to remain in their home, this legislation will be used as a delay and leveraging tactic.

Furthermore, recent actions by federal regulators and state attorneys general may overlap and contradict these measures. The national mortgage settlement contains new servicing standards, including that "borrowers must be thoroughly evaluated for all available loss mitigation options before foreclosure referral, and banks must act on loss mitigation applications before referring loans to foreclosure." The Consumer Financial Protection Bureau will also issue national servicing standards effective Jan. 1, 2013.

Finally, unlike previous foreclosure-avoidance legislative efforts, these measures propose extraordinarily restrictive and permanent changes to law. The temporary nature of the foreclosure crisis was acknowledged in the national mortgage settlement, yet these measures seek permanent changes to California law, locking a set of procedures inflexibly in statute.

As the economy in California and the nation is improving, this legislation must be carefully considered as it will directly influence our recovery and emerging improvements in the housing market. Well-intentioned efforts to help distressed borrowers may further restrict future access to credit and have a real impact on new homebuyers.

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