Senate Republican Leader Bob Huff
(R-Diamond Bar) warns that new legislation passed by Democrats who control the Senate will cause irreparable harm to the California housing market and responsible homeowners. No Republican supported SB 900
, which narrowly passed off the Senate Floor today.
The measure, opposed by the California Chamber of Commerce, California Financial Services Association, California Mortgage Association, California Mortgage Bankers Association, Civil Justice Association of California, California Bankers Association and Securities Industry and Financial Markets Association; United Trustees Association, has also drawn the opposition of the federal regulator of mortgage lenders.
“There’s no denying that home foreclosure is a significant and life-changing problem for many Californians and many California communities,” said Senator Huff. “But rather than find realistic and reasonable solutions to help those in need, Democrats are wielding a sledgehammer on our fragile housing market.
Senator Huff says the most troubling section of SB 900 further clouds the already confusing process of loan modification and foreclosure. The new provisions threaten to create a new source of “gotcha” lawsuits, forcing lenders to go through an elaborate, time-consuming and expensive process before they can foreclose on a property. If they fail to follow this extremely rigid process, these lenders would be forced into high-dollar payouts that could lead to lawsuits based in other statutes.
“This introduces a great deal of uncertainty into California's mortgage industry, as trial attorneys rush to sue banks and lenders on behalf of defaulting borrowers,” said the Senate Republican Leader. “This will inevitably increase costs for lenders in California to account for increased risk. These costs will be passed on to new borrowers and lenders will likely tighten credit standards to reduce risks, and make capital flow to other states.”
Senator Huff points out that SB 900 will do more than just hurt the home-lending industry. It also hurts families and communities who rely on those lenders for home loans, car loans, college loans, and even small business financing.
“This turns the dream of home ownership in California into a fantasy,” said Senator Huff.