When Oakland resident Debi Mason set out to prevent mortgage associates from the Bank of America from foreclosing on her sister Patricia’s Maxwell Park home in 2007, she had only a few friends, neighbors and advocacy groups to help fend off the foreclosure.

But last week, Mason, along with thousands of homeowners in Bay Area cities like Oakland and Richmond that have been profoundly effected by foreclosures and the ensuing blight, welcomed the new Homeowner Bill of Rights, a state law that seeks to crack down on mortgage fraud, prevent arbitrary evictions and ensure fair lending and borrowing practices for homeowners.

The law, which went into effect on January 1, 2013, restricts dual track foreclosures, under which a bank could foreclose on a home at the same time it was evaluating an application for a loan modification. According to the new law, mortgage servicers are restricted from pursing foreclosure proceedings once an application for a loan modification has been filed and is under review. They can only resume foreclosure proceedings after a complete application has been reviewed.

Under the new law, banks will be required to provide borrowers with a single point of contact who is familiar with the details of each case, rather than having them deal with several agents. It also makes provisions for local authorities to prevent blight in neighborhoods with foreclosed homes by requiring the owners of foreclosed properties to pay for upkeep.

The new law also imposes a $7,500 per loan penalty on lenders who record or file unverified documents from borrowers and gives the Attorney General’s office more time and resources to investigate mortgage fraud.

The Homeowner Bill of Rights, part of a broader agreement between the Attorney General’s office and lending institutions, was signed into law by Governor Jerry Brown on July 11, 2012. The law was first introduced in February 2012 in response to the climbing rates of foreclosures and supported by Assembly Speaker John Perez and Senate President Darrell Steinberg.

In Oakland, despite efforts by residents and consumer advocacy groups to push for a freeze on foreclosures until the law’s enactment, banks had been making last ditch attempts to foreclose on homes until the very last minute, Debi Mason said. The last sale date for the home of Patricia Mason, a retired teacher, was December 27, four days before the law came into effect, her sister said. “We got notices through FedEx telling us that our home was up for sale,” Mason said. “They made a serious push in the last few weeks but we were able to after talking to some bank officials we were able to get them to stop.”



Foreclosed properties that are currently listed for sale in Oakland. Made with data from ZipRealty. Foreclosed properties that are currently listed for sale in Oakland. Made with data from ZipRealty.

Mason said it was too early to tell what impact the new law would have on the rate of foreclosures in the Maxell Park neighborhood, where at one point last summer her sister’s home was one of four on her block in some stage of foreclosure. The neighborhood in East Oakland quickly became a rallying point for residents after a foreclosed home caught fire, resulting in the death of its occupants in July, 2012. The home remains boarded up for renovations, and homeowners in the in the neighborhood continue to fight to keep their homes.

But Mason said the bank had assigned her family a new representative and seemed a lot more willing to listen than before, when they had to deal with several different agents. “We have not seen its tangible impact yet, but I do feel that the attitude of the banks is a little bit different,” Mason said. “Before they were pushing and saying ‘No, no, no, we can’t do it,’ but now they are willing to talk about it.”

Other homeowners in foreclosure say that before the law took effect, they were struggling with the problems it seeks to ameliorate, including the confusion of negotiating with multiple bank agents. A day before the law came into effect, Oakland resident Gaylynne Hudson received a notice of sale on her home from Wells Fargo, with the bank notifying her that her Fruitvale home would be sold on January 7, 2013.

“I am between a rock and a hard place,” Hudson, a former employee of the Oakland Unified School District who lost her job last year, said two days before the sale. “The bank has been trying to sell my house for eight months. I made payments on time until I lost my job and I have done everything I can.”

Hudson said she had been in a forbearance agreement with Wells Fargo—under which she made payments towards her mortgage—for six months, and once the agreement expired, she requested a new application package. While negotiating for a renewal of her payment agreement with Wells Fargo, Hudson said she has also had to tussle with collection agencies and law firms acting on behalf of the bank.

“I can’t count how many people I have been working with over the years. They’ve been saying they do not have the documents to renew my forbearance application. Now they say its up to them to decide if they have the documents,” Hudson said. “It’s very hard to be clear with the bank. It’s really difficult, really stressful.”

A few hours before the scheduled sale this morning, 20 residents gathered outside the Wells Fargo branch at 3450 Fruitvale Avenue in Oakland to protest the sale of Hudson’s house. At least 45 minutes before its scheduled time of sale, the sale was postponed by another 30 days to February 7.

“I am thankful to all those who came out,” Hudson said. “The manager was not really helpful, but the sale has been postponed.”

In Richmond, over 100 foreclosed homes were up for sale as the law came into effect, with residents complaining that banks had proceeded with foreclosures even as homeowners tried to negotiate for modifications to their loans—or double-track them, one of practices targeted by the Homeowner’s Bill of Rights.

In south Richmond, Aloisa Mendoza is fighting to protect her home from a foreclosure sale scheduled for January 8 by Wells Fargo. Mendoza has sought the help of advocacy group Alliance of Californians for Community Empowerment (ACCE) to prevent the foreclosure, which she says the bank continued to pursue even as she was negotiating for a loan modification. Mendoza said her application for a modification was open when the law came into effect.

“They have been trying to foreclose while I was working with the bank,” Mendoza said, “The associate told me that my case is still open and ACCE told me that they cannot sell it because the law passed.”

”Her sale is on Tuesday and we are planning to take action on Monday to prevent the sale,” said Jovana Vasquez, a field organizer for ACCE Contra Costa County, who has been working on Mendoza’s case. ”For me, it seems like (selling the house would be) a clear violation of the new law. She has a claim that is open with the bank. That was confirmed with a representative today.”

Vasquez said cities like Richmond had been active in holding the banks accountable regarding blight prevention, and ACCE would work closely with city authorities to ensure that the new law is implemented and to help homeowners realize the full benefit of its provisions.

“It’s too early to say what role cities can play in implementing the new law, but it compliments what they have been trying to do and Richmond has been active in fighting against blight,” Vasquez said.

Similarly, in Oakland ACCE members said they were hopeful that the new law would assist residents who are trying to keep their homes. “I’m in the fight for the long haul,” said Mason. “I think we are in a pretty good position to negotiate.”

Wells Fargo spokesperson for the East Bay, Mariana Phipps, said the bank’s mortgage division was looking into the Mendoza and Hudson cases, which sparked protests from community groups this week.

“We are looking into the matter,” Phipps said. “Over the last year, less than 2 percent of owner-occupied loans in our servicing portfolio have resulted in foreclosures, and since January 2009 Wells Fargo has helped more than 823,000 customers with loan modifications, and has helped customers through $4.7 billion in principal forgiveness.”

Image: Gaylynne Hudson (back center) stands in front a Wells Fargo branch in Fruitvale with other Oakland residents who came to protest the sale of her home. Photo: Courtesy of ACCE.