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State legislation to protect homeowners from foreclosure while pursuing a loan modification, widely supported by consumer groups but opposed by the banking California industry, has failed in the state Assembly.
SB1275, which was rejected 36-30 late Monday, would have required lenders to provide homeowners with a fully considered loan modification decision prior to foreclosing. Unlike federal initiatives, it would have given homeowners the right to sue the lender if that process did not occur.
The bill addressed what has become a far-too-common scenario for homeowners delinquent on their mortgages: While negotiating a loan modification, their lender forecloses. Long delays for hundreds of thousands of homeowners nationwide seeking modifications also have been blamed on poor performance by mortgage servicers.
