News, insight and some thoughts about the Sacramento-area real estate market

« Lyon Real Estate: we are nearing bottom at the low end of market | Home Front main page | Former subprime lender getting his 15 minutes of fame »

March 21, 2008

Pushing the rock back up the mountain

In January it failed by a single vote to win a two-thirds majority in the California Senate. That was SB926, a bill that would make lenders meet for a personal face to face workout session with their struggling borrowers before they could begin the foreclosure process.
The bill also aimed to make banks maintain their repossessed properties to minimize impacts on state neighborhoods. As a foreclosure prevention measure it was a favorite of housing activists and Democrats and disliked immensely by the lending industry. The lenders prevailed.

Now the bill is back as SB1137 and has a first hearing before the Senate Judiciary Committee on Tuesday, March 25, at 1 p.m., Room 112.

This bill, too, would force lenders and loan servicers to meet with borrowers to try and work things out, at least by phone, and not begin foreclosure proceedings until 30 days after that meeting. (Or, not begin foreclosure until 30 days after showing that they seriously tried to find the borrower and failed).

The requirement to maintain properties is again in the bill, introduced by Senate President Don Perata of hard-hit Oakland, Sen. Ellen Corbett of San Leandro, who chairs the Judiciary Committee, and Sen. Mike Machado, who represents one of the hardest-hit regions for foreclosures in the U.S., San Joaquin County. All are part of the Senate's ruling Democratic majority.

So again, as foreclosures continue to rise, the Democrats will try to outmanuever the lending industry inside the Capitol. The bill is once more an ugency measure that would take effect immediately upon winning two-thirds majorities in the Senate and Assembly and a signature from Gov. Arnold Schwarzenegger.

It is a long way back up the mountain. It is possible it will be months before it takes effect if it passes at all. The bill has to clear the Senate by May 30, the Assembly by Aug. 31 and get a green light from the governor by Sept. 30.