Norma Garcia

If you are a homeowner in danger of foreclosure or a renter living in a home that is the subject of foreclosure, the news from California is not good. A new report released today by the California Reinvestment Coalition revealed that abusive practices related to foreclosures continue to harm families and communities in California. As the state with the highest number of foreclosure in the nation, (according to Realtytrac.com there were 92,249 new CA foreclosure filings in May 2009 alone) this is deeply troubling, especially as federal and state plans have been launched to minimize the number of foreclosures.

The new report also revealed that California homeowners seeking modifications are still falling through the cracks and that loan servicers are doing very little to help borrowers, “despite countless statements from servicers that they are,” said CRC’s Associate Director Kevin Stein, the report’s author. The most common outcome is still foreclosure instead of a workable loan modification. The report also concludes that the number of evictions of innocent tenants who live in foreclosed upon properties is growing.

Key findings include:
• Fraudulent and deceptive lending practices fueled the current crisis, and have driven distressed homeowners to seek help.
• Loan servicers are still not working to solve borrowers’ problems and modify their loans
• Borrowers’ desperation has fueled a new predatory industry of high-cost loan modification “specialists” who are charging thousands of dollars in fees but providing little or no service
• Tenants are being severely impacted when their homes are subject to foreclosure and it’s very common for tenants to be denied their security deposits in a foreclosure related eviction.

CRC makes some very sensible recommendations to address these problems, among them urging the California Legislature to pass strong consumer protection laws to outlaw abusive loan practices. CRC also recommends requiring lenders to increase positive outcomes for borrowers seeking modifications and to increase protections for innocent tenants living in foreclosed upon properties.

To read the full report, click here: http://calreinvest.org/system/assets/195.pdf