These laws do a lot to swing the foreclosure and loan modification process in the favor of homeowners, and every state should do their most to attempt to emulate this legislation. This is especially true for states that have experienced the worst of the mortgage crisis, such as Florida, New Jersey, and Pennsylvania. States such as Nevada and New York have already taken steps toward enacting similar legislation.
The most common way to get out of foreclosure is through loan modification. However, the loan modification process is typically unfairly biased in favor of mortgage lenders, especially for homeowners whose mortgages are serviced via the "Big 4" banks (Bank of America, Wells Fargo, Chase, Citibank). Those banks are infamous for deliberately making loan modification nearly impossible for many distressed homeowners; there have even been stories of homeowners becoming mentally ill or dying from the stress of home loan modification with these banks. These lenders do this because they want homeowners to be forced into foreclosure and/or into enrolling into the government-sponsored HAMP loan modification program. It's not just for these banks to have so much power over a homeowner's destiny, especially because taxpayer-funded stimulus money is what kept these same banks afloat during the recession.
Homeowners have 3 choices when it comes to foreclosure: they can let go of their house, they can fight their bank in court, or they can seek a loan modification, then attempt to have the foreclosure cancelled. Bank delays aside, loan modifications are the most pain-free route for most homeowners in the long and short term; especially if fighting a foreclosure in court means facing the formidable legal opposition of one of the Big 4 banks.
California's version of the Homeowner Bill of Rights guarantees a homeowner's right to a loan modification request after the foreclosure process has started. As long as the modification request is pending, then the foreclosure process is halted in court. If a modification is granted, then the foreclosure is automatically halted. If a modification is refused, then a homeowner has the ability to appeal the denial and restart the process over again. In other words, foreclosure is all but impossible if a homeowner wishes to get a home loan modification, and banks are pressured into making loan modification easier for homeowners, or else risk having a case backlogged in court. This would prove especially powerful in states such as New Jersey and Florida, where scandal, an outdated legal system, a very large number of foreclosures, and even natural disasters have already kept many foreclosure cases backlogged in courts for years.
The simple answer is that a state should wish for its homeowners to be treated fairly. Too many homeowners are being victimized by their banks, and it's only right that every homeowner should have a legal and easy way to fight back against their lenders.
Beyond even that, though, it comes down to money. Many states have experienced serious budget shortfalls since the beginning of the recession, so many states need access to as many tax dollars as possible. More homeowners in their non-foreclosed homes mean more tax dollars for the state, so it benefits homeowners and the state to have a homeowner Bill of Rights. By that same token, it's also mutually beneficial for this legislation to be strictly enforced, too. Also, it costs banks and the state a lot of time and money for a case to linger in court. If a bank can resolve a homeowner's foreclosure expediently instead of letting it languish within the court system, then that's good news for the bank and the state.
As you can see, everyone; the state, the mortgage lender, and the homeowner benefit from the homeowner bill of rights. States such as Nevada and New York have adopted similar laws, it remains to be seen why similar legislation is not in place in every state in the nation. If your state hasn't already adopted a homeowner bill of rights, then be sure to contact your local state representative to find out what's taking so long. Your house may be at stake.
Illinois House of Representatives: http://www.ilga.gov/house/
Illinois State Senate: http://www.ilga.gov/senate/
New Jersey State Senate and General Assembly: http://www.njleg.state.nj.us/members/legsearch.asp
Florida House of Representatives: http://www.myfloridahouse.gov/Sections/Representatives/representatives.aspx
Florida State Senate: http://www.flsenate.gov/Senators/Find
Pennsylvania State Senate and House of Representatives: http://www.legis.state.pa.us/cfdocs/legis/home/findyourlegislator/
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