SENIOR SENATE PROPOSAL NO. 5

INTRODUCED BY SENIOR SENATOR JAFFEE

LEGISLATIVE COUNSEL'S DIGEST

SP 5: HOME MORTGAGES: FORECLOSURES

UNDER EXISTING LAW, THE DEPARTMENT OF CORPORATIONS LICENSES AND REGULATES RESIDENTIAL MORTGAGE LENDERS AND SERVICERS, AND MORTGAGE LOAN ORIGINATORS.

THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION TO CORRECT THE ABUSES AND VIOLATIONS THAT CONTINUE TO OCCUR IN CONNECTION WITH MORTGAGE FORECLOSURE PROCEEDINGS, ESPECIALLY THE ABUSES AND VIOLATIONS THAT OCCUR AS A RESULT OF THE ACTIVITIES OF MORTGAGE LENDERS AND SERVICERS.

VOTE: MAJORITY.

SP 5: RELATING TO MORTGAGES

WHEREAS, VARIOUS STATE LAWS REQUIRE THE LICENSING OF PERSONS EMPLOYED IN THE MORTGAGE LENDING INDUSTRY, YET RECENT NEWS REPORTS INDICATE THAT EMPLOYEES WITHOUT BANKING OR MORTGAGE FORECLOSURE KNOWLEDGE HAVE BEEN EMPLOYED TO REVIEW AND APPROVE MORTGAGE LOAN DOCUMENTS IN ORDER TO EXPEDITE THE FORECLOSURE PROCESS; AND

WHEREAS, RECENT NEWS REPORTS ALSO INDICATE THAT FINANCIAL INSTITUTIONS HAVE BEEN BUNDLING MORTGAGES AND SELLING THEM TO OTHER MORTGAGE LENDERS, MAKING IT DIFFICULT TO IDENTIFY THE MORTGAGE LENDER FOR ANY PARTICULAR PROPERTY; AND

WHEREAS, IN MANY CASES, MORTGAGE ELECTRONICS SYSTEMS SERVED AS THE MORTGAGEE OF RECORD FOR LENDERS, ALLOWING PROPERTIES TO CHANGE HANDS WITHOUT BEING RECORDED AS REQUIRED BY LAW; AND

WHEREAS, THE FEDERAL GOVERNMENT HAS PROVIDED INCENTIVES TO FINANCIAL INSTITUTIONS TO ENCOURAGE THOSE INSTITUTIONS TO MITIGATE OR AVOID UNWARRANTED FORECLOSURES; YET, MANY HOMEOWNERS RECEIVE UNCLEAR OR CONFUSING INFORMATION REGARDING MORTGAGE MODIFICATION AND FORECLOSURE PROCEEDINGS, AND HOMEOWNERS WHO RAISE QUESTIONS REGARDING THOSE PROCEEDINGS OR SEEK CLARIFICATION OF THE CONFUSING INFORMATION OFTEN RECEIVE RESPONSES TO THEIR QUERIES TOO LATE TO BE OF BENEFIT TO THEM TO ENABLE THEM TO OBTAIN A MODIFICATION OF THEIR MORTGAGE OR TO AVOID FORECLOSURE; AND

WHEREAS, FIFTY STATE ATTORNEYS GENERAL ARE CONDUCTING AN INVESTIGATION OF THE PROCEDURES AND PRACTICES EMPLOYED BY THE FINANCIAL INSTITUTIONS IN, AND 30 CONGRESSIONAL REPRESENTATIVES HAVE WRITTEN TO ATTORNEY GENERAL HOLDER, CHAIRMAN BERNANKE, AND ACTING COMPTROLLER WALCH, REQUESTING AN INVESTIGATION INTO POSSIBLE VIOLATIONS OF LAW AND REGULATIONS BY THOSE FINANCIAL INSTITUTIONS; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2011 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT THE STATE LEGISLATURE ENACT LEGISLATION TO CORRECT THE ABUSES AND VIOLATIONS THAT CONTINUE TO OCCUR IN CONNECTION WITH MORTGAGE FORECLOSURE PROCEEDINGS, ESPECIALLY THE ABUSES AND VIOLATIONS THAT OCCUR AS A RESULT OF THE ACTIVITIES OF MORTGAGE LENDERS AND SERVICERS; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE LEGISLATURE AND THE GOVERNOR TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT PRO TEMPORE OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.

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RN 11 18067