Reuters: U.S.: California lawmakers approve foreclosure-protection law

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California lawmakers approve foreclosure-protection law Jul 3rd 2012, 01:15 Tweet Share this Email Print Related News Stockton, California files for bankruptcy Thu, Jun 28 2012 Insight: Evidence suggests anti-foreclosure laws may backfire Wed, Jun 27 2012 REFILE-INSIGHT-Evidence suggests anti-foreclosure laws may backfire Wed, Jun 27 2012 Top Massachusetts court limits foreclosure relief Fri, Jun 22 2012 UPDATE 4-Canada toughens borrowing rules to cool housing market Thu, Jun 21 2012 Analysis & Opinion The eminent domain brush fire Stockton hits the wall Related Topics U.S. » Housing Market » A pile of clothes and a sofa sit outside a foreclosed home in Los Angeles, California, October 25, 2010. Credit: Reuters/Lucy Nicholson SAN FRANCISCO | Mon Jul 2, 2012 9:15pm EDT SAN FRANCISCO (Reuters) - California legislators on Monday approved a sweeping bill aimed at stopping abusive practices by mortgage lenders and helping homeowners avoid foreclosure. The legislation, among the most ambitious of its type in the nation, would bar banks from moving ahead with foreclosures while still negotiating with homeowners over loan modifications, a practice known as "dual-tracking." It would also allow lawsuits against banks for so-called "robo-signing," in which foreclosure documents are signed en masse without review. Revelations about robo-signing helped lead to a $25 billion settlement of a multi-state foreclosure lawsuit against major banks. California Attorney General Kamala Harris, a central player in the foreclosure lawsuit settlement, also played a lead role in developing the legislation approved Monday. Governor Jerry Brown has not formally weighed in on the legislation, but he is expected to sign it in the coming days. The California law, and others like it around the country, is opposed by banks, mortgage servicers and some real estate market professionals. They say that such legislation imposes unnecessary burdens on lenders and has the effect of delaying, rather than preventing, foreclosures. That, in turn, may impede the long-term recovery of the real estate market. In response to such criticisms, the final legislation was amended so that it applies only to first mortgages, and only to homeowners who still occupy their residences, among other changes. California is among the states hardest-hit by the housing meltdown. The city of Stockton last week became the largest municipality ever to file for bankruptcy, in part because of a devastating housing collapse that has given Stockton one of the highest foreclosure rates in the nation. (Reporting by Jonathan Weber; Editing by Lisa Shumaker) Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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