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California lawmakers pass historic foreclosure protections

State lawmakers approve what would be the nation's strongest legislation to help financially troubled borrowers stay in their homes. Gov. Jerry Brown is expected to sign them this week or next.

July 03, 2012|By Marc Lifsher and Alejandro Lazo, Los Angeles Times

The housing crisis has hammered California: Although mortgage delinquencies and home repossessions have eased, more than 362,000 California homes were in foreclosure or seriously delinquent as of March 31, Mortgage Bankers Assn. data show. About 30% of all California homes with mortgages would not be able to command a sales price high enough to pay off the mortgage, according to research firm CoreLogic.

If the bills had been law a few years ago, they would have saved many homeowners much time, anxiety and heartache, said Rose Gudiel, who knows the problems all too well. The state worker from La Puente ran into unexpected financial difficulties in 2009 and fell slightly behind on her mortgage payments.

For three years, Gudiel said, she tried to get a loan modification but couldn't get a straight answer about her status. She received a foreclosure notice in early 2011 but refused to vacate her home. The bank granted new terms only after Gudiel, backed by activists with the Alliance of Californians for Community Empowerment, made the news by getting arrested during a protest.

Gudiel, 35, said she can afford to stay in her three-bedroom house, where she lives with her parents and brother, now that her monthly mortgage payment has dropped to $1,800 from $2,400.

She said she likes the legislation: "It's a good thing, because at least you're able to get an answer and don't have to go through the extremes that I had to do."

Some of the proposed rules that state lawmakers approved Monday are already finding their way to borrowers because of the national mortgage settlement and other agreements reached last year between banks and federal regulators.

Alberto Gutierrez of Panorama City, another homeowner and alliance activist, said he gave up in frustration trying to get a loan modification from his bank last year. But recently the bank assigned him an officer to handle his case.

"Within the last four months," the 39-year-old Gutierrez said, "I have been able to make more headway than I did all of last year."

Lifsher reported from Sacramento, and Lazo from Los Angeles.

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