Majority Democrats sent the homeowner protection package to Gov. Jerry Brown despite opposition from business and lending organizations and most Republican legislators.
The Assembly approved the legislation on a 53-25 vote, and the Senate followed quickly on a 25-13 vote.
The protections would extend further than the $25 billion national mortgage settlement that was reached earlier this year with the nation's top five banks, which include Bank of America, Wells Fargo, JP Morgan Chase, CitiGroup and Allied Financial.
The Legislature heavily debated whether California homeowners should be given more rights when facing foreclosure. There's the argument that something needs to be done to stop the wave.
"We have experienced a 'Titanic' of foreclosures that's sinking the economy," said state Assemblyman Mike Eng (D-Alhambra).
Opponents say all this does is open the door to more lawsuits against lenders where attorneys get rich.
"Somebody has to pay off the attorneys. I can't believe we're doing this. This is ridiculous," said state Assemblywoman Diane Harkey (R-Dana Point). "Right now we have 352 days for a foreclosure. That is plenty of time to get your house in order."
The Homeowner Bill of Rights:
- Bans dual-tracking so that banks can't foreclose on your home while you're pursuing a loan modification.
- Requires one single point of contact at the mortgage provider.
- Increases penalties for the much-criticized practice of "robo-signing," which is automatic approval for foreclosure without reading documents.
- Lets homeowners sue for significant violations.
California Attorney General Kamala Harris took the lead in both the national mortgage settlement and the effort to put much of it into state law.
"What we did today is we gave those families some promise that they can be in a system that allows them a fair opportunity," said Harris.
The passage of the Homeowner Bill of Rights gives Luis Viscarra of San Francisco some hope. He has a loan modification now and takes comfort in knowing the bank cannot foreclose on him if Governor Brown signs it.
"This bill will be very good because there will at least guidelines," said Viscarra. "There is nothing. The banks make their own laws, and we don't have any protection."
The bill now heads to Governor Brown's desk. The Governor late Monday afternoon signaled he would sign the bill, praising the attorney general for consumer protections that are long overdue.