Supreme Court being Warned About Loan Companies Skirting Foreclosure Law
June 24th, 2009
The Supreme Court was warned by legal personnel and residents that the lenders might try to skirt a new foreclosure homes law of California that had been enacted to contain the housing crisis by reducing the numbers.
One complaint was that these companies would just remain “sitters” during compulsory mediatory hearings that are required by the law. The other complaint was that it was more than difficult to find out who is the owner of the loan on which the borrower is being foreclosed upon.
Robert Hager an attorney of Reno said that generally the lenders advance loans with the money they get from various investors. He argued that in the past year banks have been fed on the millions of bailout money given out to them during the past year. As such it is the taxpayers of this country who own the loans.
Lauren Kay, a resident of Reno said, “No one can tell me who owns my loan. Countrywide says it is only the servicer of the loan.”
The Supreme Court task force has developed a tentative rule by which a borrower who gets a default notice after July 1st (it being the date when the law comes into force) has the right to ask for a hearing before a mediator, appointed by the court, to find out if the lender would be amenable to new loan terms. Both parties – borrowers and lenders, would be expected to submit modification suggestions to the mediator.
The judges did not make comments on the issues raised about lenders skirting the term about mediation and the difficulties of locating the final holder of the mortgage. However they said that on the basis of what they have come to know they will accordingly change the regulations.
The first public hearing on the suggested regulations was on Tuesday. There will be another hearing. These rules would activate the Assembly Bill 149 that had been initiated by speaker of the assembly Barbara Buckley (Democrat) and stamped into law by Governor Jim Gibbons. The rules would be finalized by 29th June 2009. The actual work of mediators sitting down with both parties would begin from August.
Chief Justice Jim Hardesty is hopeful that about 1,200 to 1,500 borrowers of home mortgages will apply for mediation each month. Buckley thinks that the new legislation would save 17,700 units from the jaws of foreclosure. But she repeatedly stressed that only those who could afford with the mortgages will benefit.
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