I'll be at the Town Hall Los Angeles meeting today where Bank of America CEO Ken Lewis will be speaking on "Mending Our Mortgage Markets." CNBC's Closing Bell hopes to carry some of the speech live, and I will blog it as well. However, it sounds like between the Fed, Congress, and the Great State of California, the mending is being done without BofA. Next week the Federal Reserve is expected to reveal new rules limiting the ability of lenders to give loans to people who can't prove their ability to repay. And in California, Gov. Schwarzenegger has signed a law covering loans made between 2003 and 2007 which will do the following:
GIVE FAILING HOMEOWNERS NOTICE
The law gives a homeowner 30 days notice that their loan is going into default, in order to give the homeowner time to try to refinance or remedy the situation. The lender must contact the homeowner "in person or by telephone" to assess his/her financial situation and "explore options to avoid foreclosure." The lender has to provide the borrower with a toll-free number to HUD to find a counseling agency. A lender can go ahead and file a notice of default if it has tried repeatedly to reach the homeowner but failed.
TENANTS CAN STAY 60 DAYS
Current law in California mandates that a tenant living in a home that's been foreclosed on get 30 days notice before having to vacate. The new law extends that to 60 days notice. This expires Jan. 1, 2013, which I guess tells us how long the state thinks we're going to be in this mess. Plus, the law slaps a fine of $100 on anyone who tears down a "notice of sale" on a home within 72 hours of posting it. That notice should include a note to anyone living in the home which says, in part, "Foreclosure process has begun on this property, which may affect your right to continue to live in this property. Twenty days or more after the date of this notice, this property may be sold at foreclosure. If you are renting this property, the new property owner may either give you a new lease or rental agreement or provide you with a 60-day eviction notice."
KEEP THE GRASS GREEN
The law also imposes fines of as much as $1,000 a day on the owners (banks) of properties in foreclosure if they do not maintain the properties--in other words, if they let the lawns die, called "foreclosure brown" in some parts of the state. This part of the law also expires Jan. 1, 2013. However, we're in a drought, and one homeowner has already been fighting off fines for a brown lawn because he was trying to conserve water.
NOW FOR SOMETHING COMPLETELY DIFFERENT
Depressed enough about the housing meltdown? Watch the YouTube video profiled in the New York Times this week. It'll renew your faith in the human spirit.