The California Association of REALTORS® (C.A.R.) has issued a Red Alert, asking members to contact state legislators to urge for their “NO” vote on conference report AB 278. C.A.R. opposes provisions of the anti-foreclosure legislation sponsored by the state Attorney General, which will allow anyone to stop the foreclosure process by filing a lawsuit, with or without merit. The Silicon Valley Association of REALTORS® joins C.A.R. in asking all REALTORS® to respond to C.A.R.’s Red Alert and contact their respective state legislators.

Action Item
Please call your State Senator today at 1-800-969-3310 and enter your NRDS ID, followed by the “#” sign to be connected. Ask your Senator or his or her staff to vote “NO” on the conference report. Please note: C.A.R. is only targeting Democratic Senators only for this mobilization effort.

C.A.R. has supported careful and balanced reforms to the foreclosure process. However, C.A.R. opposes this conference report because it will further delay the housing recovery by inviting bad faith lawsuits and defaults, and make it difficult for even well-qualified borrowers to obtain financing.

Initially, the Attorney General had sponsored a package of bills, the so-called the “Homeowners Bill of Rights.” For procedural reasons, the majority of these bills have been under consideration by a Conference Committee made up of six legislators. REALTORS® had the opportunity to educate these legislators about C.A.R.’s concerns as part of Legislative Day and since then, C.A.R. lobbyists have been working directly with the conferees and legislative staff to make them aware of the unintended consequences of some of these proposals. The Conference Committee has now issued its final report and it may be considered by both houses of the Legislature as early as Monday, July 2.

One provision allows any borrower, no matter what the circumstances, to file a lawsuit. This will encourage opportunistic lawyers to pursue frivolous lawsuits, bringing unnecessary and unjustifiable delays to an already difficult and time consuming process. The language is so vaguely written that borrowers don’t even have to show that they have been harmed to file suit and be awarded damages. One-sided attorneys’ fees may still be awarded only to plaintiffs based on the very broad definition of a “prevailing party” in the report.

C.A.R. believes by restricting a lender’s ability to foreclose and exposing them to unnecessary liability, this report will dry up inventory, and it will further discourage lending other than to the most highly qualified borrowers. If lenders don’t have the remedy of foreclosure to ensure they can recover their security in appropriate situations, they will be less likely to lend; credit will be less available; and the housing market recovery will limp along even more slowly.

Additionally, these bills will artificially slow down the foreclosure process, keeping properties off the market that are legitimately in foreclosure. Finally, by removing the threat of foreclosure, the bill erodes the incentive for short sales, as well.

Advertisement