May 14, 2013 > Corbett bill for homeowners, borrowers passes Senate
Corbett bill for homeowners, borrowers passes Senate
Submitted By Sergio Reyes
Senate Majority Leader Ellen M. Corbett (D-East Bay) announces that SB 426 passed from the Senate May 6, 2013. This important bill strengthens existing deficiency protections for borrowers after losing their homes in foreclosure. SB 426 specifically prohibits deficiency collections and adverse credit reporting on non-recourse loans following a non-judicial foreclosure.
Even though anti-deficiency protection for residential borrowers is longstanding policy in California, some creditors and debt collectors continue to contact and even harass borrowers after foreclosure in order to collect the debts by non-judicial means. These groups continue to report debts as delinquent on borrowers' credit reports, making it more difficult for borrowers to rebuild their credit after a foreclosure.
"Though anti-deficiency protections already exist for individuals that lose their homes through the short sale process, some creditors and debt collectors are improperly attempting to collect on the original debt and continuing to ruin an individual's credit in cases of foreclosure," Senator Corbett said. "SB 426 clarifies state law to ensure that Californians can move ahead following a foreclosure and protect them from potentially endless harassment or ongoing negative credit reporting. It is important that we protect struggling borrowers and homeowners from these unethical-and soon-to-be illegal-practices."
Governor Jerry Brown previously signed two bills authored by Senator Corbett that strengthen anti-deficiency protections. SB 458 expanded anti-deficiency protection for all loans on a home following a short sale in 2011 and SB 1069 extended deficiency protections to purchased money loans that have been refinanced in 2012.
Senator Corbett also served as a Lead Author of the "California Homeowner Bill of Rights". Passed in 2012, this pioneering and comprehensive legislation protects homeowners and borrowers during the mortgage and foreclosure process.
SB 426 is co-sponsored by the Housing and Economic Rights Advocates and the California Reinvestment Coalition. The bill is supported by the California Association of Realtors and the Center for Responsible Lending.