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Homeowner Bill Of Rights For 'Flawed System'


I'm Maria Hinojosa and this is TELL ME MORE from NPR News. Michel Martin is away. Coming up, the state of Texas is trying to get its voter I.D. law back in place just in time for the fall elections. The Justice Department blocked the law in court earlier this year, but the fight isn't over.

But, first, California lawmakers have just approved a so-called Homeowner Bill of Rights. The law, signed just yesterday by Governor Jerry Brown, is supposed to stop what the governor calls abusive home lending tactics. It also makes it harder for lenders to seize a home and lets homeowners sue to stop the foreclosure process.

One of the top supporters of the reforms is California Attorney General Kamala Harris. She says more than 500,000 homes in California are in the foreclosure pipeline and she joins us now on the line from San Francisco.


KAMALA HARRIS: Thank you, Maria. It's great to talk with you.

HINOJOSA: So the California - the state of California is the first one to enact protections like these at the state level. Why did you and California lawmakers fight so hard for these bills? Why are you convinced that they will make a real difference?

HARRIS: Well, it comes on the heels of the National Mortgage Settlement that, you know, was negotiated by eventually about 49 of the attorneys general in the country around the robo-signing practices with the big five banks. And, through that process and the investigations that I've independently conducted in California on the foreclosure crisis, it became very clear that there are flaws in the system and they need to be fixed.

So we presented a package of bills that dealt with this and, together, those bills are called the Homeowner Bill of Rights and so they deal with something like dual track, which is an issue where folks are in the process of foreclosure. They're also trying to keep their home and pay a modified loan payment and then they get foreclosed upon with no notice.

Or another issue I heard up and down the state where families are trying to contact the bank. If they reach an individual, that person says they don't know about their case. They don't have the paperwork. The family then figures out a way to fax 50 pages of documents, only to call the bank the next time and, again, talk with a different person who's unfamiliar with their case. So one of the bills requires that there be a single point of contact assigned to that homeowner so that there can be consistency and transparency, frankly, in this system.

HINOJOSA: But are you convinced that - I mean, I think it's fascinating to have just these very simple things that could help homeowners who are just overwhelmed, but how - I mean, is there going to be a charge here - if suddenly there isn't a certain point of contact homeowners who are already in foreclosure then are going to have to start a legal proceeding against the company because it - you know what I'm saying? Like...

HARRIS: So you're exactly right. First of all, these are simple, practical solutions to a very flawed system and so it's an amazing thing. If we had more time to talk to you about the battle to get these bills passed - but the way that we will be able to make sure that they are real is by also having what we fought for, which are the enforcement mechanisms. I'm a career prosecutor, so very strongly, you've got to create rules and you have to have consequence and accountability if people break those rules so we can encourage them to pay attention to them.

And so we have a strong enforcement component in the California Homeowner Bill of Rights, which will allow the homeowner to sue if the banks and the servicing institutions do not comply with the rules as have been outlined.

HINOJOSA: All right. Well, we hope that you have one number where you can call to get your lawyer so you don't have to spend a whole year trying to find the right lawyer to take on this case, let's say.

HARRIS: Well, you know, but the first thing, also, though, is that what we do want to do is this. I mean, we wrote and passed these bills with an expectation that we would change the system and change it permanently, but my absolute goal is to make sure that the homeowners don't have to get to the point of suing. The goal is to have responsible homeowners be able to pay to stay in their homes and when we talk about the impact in California, it's very real.

We had 12 of the top 20 cities in the country hardest hit right here in California. And when you look at the impact and the desperate impact on our African-American and Latino families, it's profound. In fact, across the country, the net worth of African-American families fell 53 percent between 2005 to 2009 connected with this issue. The net worth of Latino families fell 67 percent between 2009 and 2012. Both groups, as we know, have placed a great deal of their wealth in their homes and when they lose their home, it is not just about some loss of real estate. It is their home and it is the investment in which they have placed, you know, the hopes for a college tuition for their children and their retirement and many other important goals.

HINOJOSA: If you're just joining us, this is TELL ME MORE from NPR News. I'm Maria Hinojosa and we're speaking with Kamala Harris. She's the attorney general of the state of California and we're talking about the state's new Homeowners' Bill of Rights.

It is an extraordinary statistic, what happened with African-American and Latinos at a moment of being encouraged of, you know, the American dream of home ownership to now have this, you know, what's being called the greatest transfer of wealth outside of the African-American and Latino communities. The greatest loss of wealth, perhaps historically.

How much was that conversation part of, as you say, the battle of getting the Homeowners' Bill of Rights through?

HARRIS: Well, part of the process was - you know, I frankly had town halls up and down the state, often without press, but just to sit down with homeowners and talk about their experience. And it just - you know, the anecdotal evidence bore out those statistics that I just shared with you.

You're talking about families who are - I do know there was one family. The woman was a domestic worker. She had a stroke. She couldn't work anymore and her husband - they were raising their children - then had to take time off of his job. Her illness became worse. He had to leave his job completely. They're going through the foreclosure process, but they're trying to play by the rules and this issue of a single point of contact and a lack of a single point of contact is what put them in a very dire situation. She's now better and is an activist in the community doing outreach with other Latino and immigrant homeowners to talk with them about how they can save their homes.

HINOJOSA: So you talk about this dual tracking by banks. Can you just, very quickly, tell us what dual tracking is and how your Bill of Rights would ban it?

HARRIS: So dual track - there are two systems. There's the system where the - and the homeowner is in both. The homeowner is going through, one, the system of foreclosure and, two, they are trying to and applying for a modification to their loan so that they can afford to pay it. So they're in thee process of them paying that modified loan payment and playing by those rules and they're just foreclosed upon without any notice.

HINOJOSA: It sounds entirely illogical.

HARRIS: And unfair. And unfair.

HINOJOSA: OK. Now, some critics, though, are quoted as saying that the rules in your Bill of Rights are actually going to make credit even harder to come by and down payments could become much higher, even more out of reach. So what do you say to people who believe banks just won't make mortgages available to anyone with less than perfectly, you know, wonderful credit reports?

HARRIS: Well, first of all, I think that's a red herring and it's false. The reality is this just puts transparency in a system that most people who believe in the American dream and are attempting to pursue it are in. It's a process of letting them all play by the same rules and so that means, by the way, that for the servicing institutions for the banks, it provides them, also, with consistency and clarity.

Single point of contact. So every conversation is between the same folks playing by the same set of rules and the same set of facts. That's best for both the homeowner and the lending institution because, invariably, if that homeowner can not afford to stay in their home, it will expedite that system, also, because everyone's playing by the same set of rules.

HINOJOSA: So we have 30 seconds left. So who gets the most from these rules? Future home buyers or the people who, right now, are at risk for foreclosure?

HARRIS: Current - the current home - we have about 700,000 homes and families in California in the foreclosure pipeline right now, Maria. And it will help them.

HINOJOSA: I'm sure that's very good news for them. Thanks so much for taking the time to speak with us. We know you have a very busy day.

HARRIS: Thank you very much.

HINOJOSA: Kamala Harris is the attorney general of the state of California and she joined us from San Francisco.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.