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Time running out on CA foreclosure bill

August 27, 2010 12:00:00 AM PDT
New state legislation that would ban lenders from foreclosing on borrowers who are trying to get loan modifications failed to pass the California State Assembly this week.It is drawing a lot of criticism and lobbying dollars from the lending industry.

"They're working overtime and they've got very deep pockets," said Democratic State Senator Mark Leno, who sponsored the bill.

The Center for Responsible Lending counted at least 20 lobbyists applying pressure to lawmakers to kill the bill.

The State Assembly voted down the legislation earlier this week with many members claiming it was unnecessary because a federal program already exists.

Assemblywoman Diane Harkey, a Republican from Orange County, voted against the bill saying it would harm California markets in the long run.

"If we don't allow the market to achieve a level where it's at the bottom, and we keep holding it up artificially it's just going to prolong the pain," she explained.

But Leno pointed to the fact that the federal program applies only to 80 percent of lenders and more needed to be done to protect California families from unnecessarily losing their homes.

According to data on RealtyTrac, the rate of foreclosure in California is much worse than the national average which is one in every 400 homes. In California one of every 200 homes is foreclosed upon.

James Powers, a homeowner who has gone through a successful loan modification, wished he had the protections offered in this bill during his agonizing eight-month application process.

"Every day that's all you worry about - losing your home," he said.

Senator Leno must bring the bill up for reconsideration before the end of the legislative year on Tuesday.


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