California Homeowner Bill of Rights
The California Homeowner Bill of Rights was unveiled in February 2012, and is a package of legislation designed to protect homeowners and tenants from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state’s urgent mortgage and foreclosure crisis.
Homeowner Bill of Rights Legislation Being Crafted Behind Closed Doors
The CLTA has been making its concerns known on the Homeowner Bill of Rights Bills and has proposed several changes to the legislation to protect the title industry and lenders in California. In an extremely unusual move the bills were pulled out of the policy committees in their respective legislative houses and put into a Conference Committee. The Conference Committee has held some hearings, at which the CLTA made its views known, but the hearing schedule has been developed on an ad hoc basis.
The Conference Committee has not yet produced amendments to the legislation, so what may end up in the legislation is uncertain. The CLTA has shared language with the Office of the Attorney General, who is sponsoring the legislation, in order to address title company concerns. The CLTA is also working with a coalition opposed to the legislation in its current form.
The CLTA has coordinated with the ALTA and lender groups to alert the Federal Housing Finance Agency (FHFA) on the potential negative impact of the bills on the secondary market. The FHFA sent a letter to the California Legislative Conference Committee on May 11 expressing its concerns about certain provisions in the legislation. The FHFA is worried that some of the proposals under consideration in the conference committee present unnecessary and counterproductive approaches to addressing housing market issues and the needs of homeowners and tenants according to the FHFA. In response to the FHFA letter, fourteen members of the California Democratic congressional delegation sent a letter to the Federal Housing Finance Agency criticizing its involvement and opposition to the Homeowner Bill of Rights package.
The CLTA, like all the interested parties, is waiting to see what language will emerge from the process. The worst situation would be a Nevada style situation where legislation that became effective on October 1,2011 brought a dramatic downturn in foreclosures and a corresponding drying up of inventory, resulting in cash investment buyers beating out owner occupants for homes.
What is a Statement of Information?
A Statement of Information, (SI), is a form routinely requested from the buyer, seller and borrower in a transaction where title insurance is sought. The completed form provides the title company with information needed to adequately examine documents so as to disregard matters which do not affect the property to be insured, matters which actually apply to some other person.
What happens if a buyer, seller or borrower fails to provide the requested Statement of Information?
Per the California Association of Realtors® contract, sellers are required to provide the Statement of Information to their escrow holder within 7 days of acceptance of the contract. Without a Statement of Information, it would be necessary for the title company to list as exceptions from coverage judgements, liens or other matters which may affect the property to be insured. Such exceptions would be unacceptable to most lenders – whole interest must also be insured, and will prohibit the close of escrow.