California Homeowner Bill of Rights May Provide Additional Protections Against Foreclosure. The Bankruptcy Code May Already Provide Many You Don't Know About.

California has recently enacted landmark legislation that intends to end many lender abuses in the forelcosure process.  This legislation is generally referred to as the Homeowner Bill of Rights.  Among other things, this legislation may give homeowners the right to sue their lender for failing to adhere to certain standards of fairness in dealing with borrowers who are behind on their payments.  The legislation also intends to end "dual tracking" - the confusing, all-too-common situation where the lender is discussing modification with the borrower, but simultaneously pursuing foreclosure.  Many borrowers have lost their homes while they thought they were being reviewed for a modification.

It remains to be seen how this legislation, which takes effect in 2013, will effect homeowners.  Will lenders be less aggressive about foreclosures?  Or could it have the opposite effect that it was intended to, and result in lenders refusing to consider borrowers for loan modifications so they can put them on the "single track" to foreclosure?  

Luckily, the Bankruptcy Code already provides many options to stop a foreclosure immediately, even if you are applying for a loan modification.  In addition, bankruptcy allows you to strip equity lines and second mortgages when the house is worth less than the balance of the first mortgage.  These powerful features of the Bankruptcy Code, in conjunction with the Homeowner Bill of Rights, put consumers on much firmer ground than they were on at the beginning of the housing crisis.  Have questions about using bankruptcy to stop or delay a foreclosure, while wiping out other debts that make the mortgage payment unaffordable?  Contact us for a free consultation.