Treasury streamlines HAFA Short Sale Program

The U.S. Treasury Dept. this week announced new guidelines to streamline and standardize the HAFA Short Sale Program, which provides a $3,000 relocation incentive for qualified homeowners.

Among the changes, Treasury’s Supplemental Directive 12-07 to the Making Home Affordable Program shortened the decision timeline to “essentially 30 days,” in line with new Fannie Mae and Freddie Mac short sale rules, and will not require financial documentation from some distressed homeowners.

Major changes to the HAFA program include:

PRE-DETERMINED HARDSHIP: Borrowers with 90-plus-day delinquencies and a FICO score below 620 will be classified as having a “pre-determined hardship” with less required documentation.

Homeowners who meet the criteria will only need to complete a Hardship Affidavit to be considered for HAFA approval. The current Request for Mortgage Assistance (RMA) form qualifies as a Hardship Affidavit, Treasury says.

QUICKER ANSWERS: Servicers now have essentially 30 days to approve, reject or counter a HAFA short sale offer.

For pre-approved HAFA short sales, in which the applicant has been prequalified for the program:

If an offer meets the minimum price and terms of a pre-approved HAFA short sale, the servicer must issue the approval within 10 business days of receiving the offer. Offers less than the pre-approved terms must be acknowledged with an approval, rejection or intent to counter-offer within 10 business days of receipt, and the counter-offer must be generated within 30 calendar days.

Servicers can accept lower offers “so long as the proposed sale is in the best interests of the Investor,” according to the MHA guidelines.

For offers sent without a pre-approval:

The bank must acknowledge receipt of a complete offer within 10 business days. If the seller is more than 90 days delinquent on their mortgage and has a credit score less than 620, the servicer must issue a short sale approval, rejection or counter-offer within 30 calendar days.

For borrowers who are not three months behind and/or have credit scores above 620, the 30-day clock doesn’t start until the servicer receives a Hardship Affidavit completed by the seller and the buyer.

In either case, the servicer can extend the 30-day window but must give written updates every 15 days until it reaches a resolution.

EVERYONE SIGNS OFF: The buyer in a HAFA short sale will now be required to sign a new Hardship Affidavit in which they affirm that the sale is an “arm’s-length transaction” and they are not giving the seller any compensation.

Previously, only the seller and real estate agents were required to acknowledge the arm’s-length requirement.

LENDER BENEFIT: Treasury has increased the reimbursement to the lender for permitting part of the sale proceeds to pay junior lienholders, making the program more attractive for the banks.

For HAFA short sales closed on or after Dec. 1, 2012, the first-mortgage lienholder will be reimbursed up to $5,000 of the $8,500 that it allows to a junior lien, such as a home equity line of credit or other second mortgage.

That amount increases from the previous maximum of $2,000.

SHORT SALE LEASE-BACK:  supplemental directive adds the following specific language to the Making Home Affordable handbook: “The terms of any sale approved by the servicer that provides an option for the property to be sold to a non-profit organization with the stated purpose that the property will be rented or sold to the borrower.”

In March 2011, Treasury first referred to this groundbreaking initiative in Supplement Directive 11-02, which introduced the concept to servicers. Servicers subsequently did nothing to implement the option in their HAFA guidelines.

Other companies inspired by Treasury’s foresight recently launched programs in California. (Do you qualify for the new Short Sale Lease-Back Program? Call 951-778-9700 today for an interview.)

Supplement Directive 12-07 now may open the door a bit further for this type of short sale.

INVESTOR PURCHASES: HAFA currently prohibits a buyer form reselling a home within 90 days of the HAFA transaction. That time restriction has been shortened to 30 days, though a resale for 20 percent more than the previous purchase price would have to wait at least 90 days.

The new short sale rules — which do not apply to loans owned or backed by Fannie Mae, Freddie Mac, the Veterans Administration (VA), the Dept. of Agriculture’s Rural Housing Service or the Federal Housing Administration (FHA) — kick in Feb. 1, 2013, though servicers can implement them immediately. A short sale occurs when a home is sold for less than is owed on it and the bank discounts the payoff.

The HAFA Program earlier this year was extended through the end of 2013. HAFA requests must be submitted to a servicer by Dec. 31, 2013, and the transaction must be closed on or before Sept. 30, 2014.

Do you qualify for the New HAFA Short Sale program?

Find out now by emailing Anna Mikaelyan, Certified Short Sale Consultant, directly at info@AdvancedShortSales.com.

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Short Sales Speed Ahead Causing 5-Year Low in Foreclosure Activity

A stronger economy and housing market and an increase in short sales brought foreclosure activity in California down to the lowest level since 2007, according to a report from San Diego-based DataQuick.

The number of residential properties entering the foreclosure process, or that received a Notice of Default (NoD), totaled 49,026 in the third quarter of this year, down from 10.2 percent and a steep 31.2 percent drop from the 2011 third quarter, DataQuick revealed.

The most recently quarterly figure is the lowest since the first quarter of 2007, when 46,760 NoDs were recorded. NoDs reached a high of 135,431 in the first quarter of 2009.

Short sales in California were up, accounting for 26 percent of resale activity in the third quarter, up from 24 percent in the previous quarter and 22.9 a year ago.

“[D]uring the past year, we’ve seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress. That may change after New Year’s because the temporary ‘debt forgiveness’ feature in the tax code is set to expire as part of the so-called ‘fiscal cliff’,” explained John Walsh, DataQuick president.

Foreclosure resales were down in the third quarter, accounting for 20 percent of all resale activity in the state. In the second quarter of this year, foreclosure resales accounted for 27.8 percent of all resale activity and 34.2 percent a year ago. At its peak, foreclosure resales reached 57.8 percent in the first quarter of 2009.

If you have any comments or questions about short sales, please email Anna Mikaelyan at azshortsales@gmail.com or visit her website at http://www.advancedshortsales.com/ 

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Article Resource:

http://www.dsnews.com/articles/foreclosure-activity-in-california-slows-to-5-year-low-2012-10-18

2013 is the Year of Short Sales!

Even though the number of foreclosure filings has risen dramatically in recent months in some parts of the country—specifically in judicial states—the ratings agency DBRS expects total foreclosure filings to show evidence of a steady decline in 2013 when compared to 2012.

This is due to “the record number of servicers that are using short sales as their primary loss mitigation tool to prevent delinquent loans from entering foreclosure,” the agency’s analysts said in a research note issued Monday.

The Office of the Comptroller of the Currency (OCC) found evidence of such a shift as early as 2012’s first quarter. With the release of its Q1 mortgage performance report, the federal regulator noted that the number of home retention actions implemented over the January-to-March timeframe was down 36.7 percent from a year earlier, while the number of short sales increased 19.7 percent. 

New short sale actions completed during the first quarter of this year totaled 59,996, according to the OCC’s latest report covering about 60 percent of all first-lien mortgages in the United States. Over the second-quarter period, another 63,403 short sale actions were completed by the 60-percent subject population. 

While it will be another two-and-a-half months before theOCC releases its third-quarter mortgage performance data and mitigation numbers, anecdotal evidence from those in the field suggests the increase in short sales is likely to carry forward.  

Rudimentary projections based on the quarter-to-quarter increase seen earlier this year would mean another 138,000 completed short sales during the second half of 2012 among the 60-percent first-lien population analyzed by the OCC.

DBRS believes short sales will be an effective loss mitigation tool for curbing the industry’s shadow inventory backlog of unsold REO properties. Short sales are an effective way to get the home sold without having to incur the cost of foreclosure, preparing the home for sale, paying a listing agent, and maintaining the property, therefore lowering loss severity, the agency’s analysts noted.

As a result, DBRS expects short sales to be one of the key loss mitigation techniques used in 2013 with more servicers delegating or automating their acceptance and counter offer process in order to be more responsive to short sale bids on properties.

If you have any comments or questions about short sales, please email Anna Mikaelyan at azshortsales@gmail.com or visit her website at http://www.advancedshortsales.com/ 

ArticleResource: http://www.dsnews.com/articles/ratings-agency-forecasts-stronger-year-for-short-sales-in-2013-2012-10-15

California's Median Home Price at Four-Year High!

If you're still wondering if you should keep waiting for more price drops, wonder again!  

Interest rates are at an all-time LOW!  

According to Warren Buffet, investing into Single Family Homes is the smartest decisions Americans could make right now for their future.

The California Association of Realtors (C.A.R.) continued to report a shortage of inventory in September, which is limiting home sales but seems to be pushing up median home prices.

According to C.A.R., the median home price in California is now at the highest level in more than four years.

The statewide median price of an existing, single-family home reached $345,000 in September, up 0.3 percent from August’s $343,820 median price. The gain was also a 19.5 percent increase from September 2011, the highest yearly gain since May 2010 and the biggest gain overall since August 2008, when the median price was $352,730. For seven straight months now, prices have been increasing monthly and yearly.

Sales, on the other hand, fell in September, sinking 5.2 percent from a revised 510,910 in August and declined 1.2 percent from a revised 490,280 a year ago.

“Sales in the inland and coastal markets continue to move in different directions. Low inventory – especially in distressed areas – is dampening sales activity,” said C.A.R. President LeFrancis Arnold.

LeFrancis added, “The Inland Empire and the Central Valley have experienced double-digit sales declines compared with last year. Meanwhile, sales were higher in San Diego and most Bay Area counties, where the economies appear to be growing faster than the rest of the state.”

Housing inventory in September increased, but still stayed below the norm of a six- to seven-month supply. The Unsold Inventory Index for existing, single-family homes stood at 3.7 months in September, up from a revised 3.2 months in August and 5.3 months in a year ago, according to C.A.R.

“For the state, at 3.7 months of supply, unsold inventory is still less than half what it would be in a normal market,” said C.A.R. VP and chief economist Leslie Appleton-Young. 

Appleton-Young continued, explaining that a constrained supply at the moderate and lower end of the market has led to a nearly 28 percent drop in sales of homes priced under $200,000 and a more than 15 percent drop in sales for homes priced between $200,000 and $300,000. 

However, Appleton-Young said homes in the upper price range, where inventory isn’t as much of an issue, saw increases. “[S]ales of homes priced $400,000-$500,000 rose more than 14 percent, and those priced above $500,000 increased more than 15 percent,” she noted.

If you have any comments or questions about short sales, please email Anna Mikaelyan at azshortsales@gmail.com or visit her website at http://www.advancedshortsales.com/ 

Fast Help For Homeowners (FHFH) Act, H.R. 6153 Introduced To Speed Up Short Sales

Congressman Jerry McNerney (D-Stockton) introduced the Fast Help For Homeowners (FHFH) Act, H.R. 6153, to help speed up the short sale process, a necessary step to addressing the housing crisis.   McNerney’s bill was met with broad bipartisan support and industry endorsements.

“For far too long, the housing downturn has challenged our region.  My bill is one commonsense step we can take to help shore up the housing market and provide much-needed relief for homeowners.  Our region has been ground zero for the housing crisis, and I am committed to fighting for folks in our communities who have been hit hard,” said McNerney.

The Fast Help For Homeowners Act requires a second mortgage lender of a federal mortgage loan to review and make a decision on a short sale agreement within 45 days.  If the lender does not make a decision within that time frame, the short sale will be deemed approved on the 46th day.

Short sales can help both lenders and homeowners.  Often, it is far less costly for a lender to negotiate a short sale agreement than go through the foreclosure process.  A short sale is also less damaging to a homeowner’s credit score than a foreclosure.

The Fast Help For Homeowners Act has broad industry support, receiving the endorsements of the: National Association of Realtors; California Association of Realtors; Central Valley Association of Realtors; NeighborWorks Home Ownership Center, Sacramento Region; California Association of Real Estate Brokers (CAREB); and Stockton NID Housing Counseling Agency.

“The National Association of REALTORS applauds Congressman McNerney for his efforts to improve the short sale process and provide distressed homeowners an alternative to foreclosure.  NAR stands ready to collaborate with Congressman McNerney and Congress to enact legislation that will help homeowners stave off foreclosure.” – Maurice “Moe” Veissi, President of the National Association of REALTORS.

“C.A.R. applauds Congressman McNerney for introducing this common-sense piece of legislation.  California REALTORS® support the FHFH Act because it will require subordinate lien holders to respond to short sale offers in a fair and reasonable amount of time, ensuring distressed properties are brought to market and aiding in the recovery of the general economy.” – LeFrancis Arnold, President of the California Association of Realtors.

If you have any comments or questions about short sales, please email Anna Mikaelyan at azshortsales@gmail.com or visit her website at http://www.advancedshortsales.com/ 

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New Short Sale Guidelines from Fannie and Freddie

Homeowners of underwater properties have a reason to rejoice thanks to the introduction of new guidelines from the two government-sponsored enterprises (GSEs) – Fannie Mae(FNMA) and Freddie Mac (FMCC). On Tuesday, the Federal Housing Finance Agency (:FHFA) – the regulator for these two GSEs – announced a number of guidelines that are expected to make short sale simpler and easier. With the implementation of the guidelines effective November 1, short sale of properties would speed up.

The new measures announced by FHFA will have to be followed by mortgage servicers. These will consolidate the current short sale programs into one streamlined program and enable lenders and servicers to promptly and easily get eligible borrowers for short sale. 

As part of the new set of rules, property owners with mortgages from either of these two GSEs will be able to short sale their homes despite making timely payments of interest and principal if they have an eligible hardship (death of a borrower or co-borrower, divorce, disability or relocation for a job). The servicers will be able to allow short sales without any additional permission from these GSEs.

Moreover, both GSEs will be lowering the number of documents required to complete a short sale, thereby aiding those homeowners who are in danger of foreclosure. Further, it would also improve the efficiency of the servicers in completing a short sale.

In addition, the servicers will make guidelines clearer and more uniform, leading to faster processing and execution of short sales. Further, the GSEs will offer a maximum of $6,000 to the holders of the second liens (once the short sale is complete), so that mortgage holders do not haggle over the proceeds of the sale.
Moreover, while approving the short sale of property, servicers would evaluate the ability of the homeowner to pay the difference between the balance loan amount and the current sale price of the home. In cases where the property owner has the ability to pay the differential amount, the GSEs will waive off the right to follow deficiency judgment.

Though the FHFA did not provide any projections related to the number of homeowners eligible for the new short sale initiative, there are about 4.6 million borrowers with mortgages backed by GSEs. Out of these, approximately 80% have not missed any loan payments.

The new short sale guidelines are a part of the FHFA’s Servicing Alignment Initiative that is expected to simplify the GSEs plan for short sales and other modes to prevent foreclosures. In framing the new streamlined short sale process, the FHFA and the GSEs worked in collaboration with the National Association of Realtors (:NAR). The NAR believes that improving the short sale procedure would help homeowners avert foreclosures and also stabilize the value of residential property going forward.

However, one of the biggest fall-outs of the additional short sales is expected to be for those banks that have provided second mortgages to the borrowers. They will have to record losses on home-equity loans. Some of the major providers of second liens include Wall Street biggies – JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Citigroup Inc. (C) and Wells Fargo & Company (WFC).
Nevertheless, the new short sale process is also expected to be in the larger interest of the overall housing sector and economy. In addition, the real estate agents and home owners planning to sell their property would also benefit from this simplified process.

If you have any comments or questions about short sales, please email Anna Mikaelyan at azshortsales@gmail.com.

(this article can be found on yahoo - http://finance.yahoo.com/news/short-sale-guidelines-gses-194435152.html )

The Bank as Your Landlord???

Citigroup's odd foreclosure rental program

The bank is trying to dump loans and claim it's helping borrowers at the same time.

FORTUNE -- Citigroup is getting into the rental business, at least it says it is.

On Wednesday, the bank launched a program to rent out 500 homes to homeowners who are having trouble paying their mortgage, rather than put the loans in foreclosure and kick the owners out. Homeowner advocacy groups and liberal economists have been pushing banks to offer the option to rent to borrowers nearing foreclosure. So the fact that Citi (C) was becoming the second large bank - Bank of America launched a similar program in March - to try out a rental program that would alleviate some of the pain of foreclosure seemed like good news

Click here to read more:
http://finance.fortune.cnn.com/2012/08/10/citigroups-odd-foreclosure-rental-program/


If you have any comments or questions about short sales, please email Anna at azshortsales@gmail.com.

Report estimates 8 million children hurt by foreclosures

One in 10 U.S. children has been or will be affected by the nation's surge in foreclosures, a new report says.

Five years into the foreclosure crisis, an estimated 2.3 million children have lived in homes lost to foreclosure, according to a report from First Focus, a Washington, D.C-based bipartisan advocacy group focused on families.

Another 3 million children live in homes at risk of foreclosure because home loans are in the foreclosure process or are seriously delinquent. And 3 million children lived or live in rental homes lost to foreclosure or at risk, the report says.

"Children are the often invisible victims of the foreclosure crisis," said report author Julia Isaacs. She did the study while at the Brookings Institution and is now a senior fellow at the Urban Institute's Labor, Human Services and Population Center.

Isaacs analyzed foreclosure and U.S. Census Bureaudata to estimate the number of children affected. The report is the second released by First Focus on the crisis' impact on children, and the organization says it's the first to estimate the number of children affected who live in rental properties.

Not surprisingly, the impact on children is greatest in states that were hardest hit by the foreclosure crisis. In Nevada, almost 1 in 5 children lived or live in owner-occupied homes that were lost to foreclosure or are at risk of being lost, Isaacs estimates.

Elsewhere, the percentages fall to 15% in Florida, followed by 14% for Arizona and 12% for California. In Alaska and North Dakota, only 2% of children are affected, the lowest rates in the country.

Being forced from home affects children's health, interrupts development and hurts their performance in school, said First Focus President Bruce Lesley.

For every forced move that occurs during a school year, a child's math and reading scores drop as much as if they'd missed a month of school, Isaacs says, based on a synthesis of 16 studies.

Isaacs warns that the number of affected children could be even larger. Her estimates are based on mortgage loans made from 2004 to 2008, which captures the bulk of risky loans that contributed to the housing bubble. But it doesn't cover loans outside of that time. The estimate also fails to adjust for the possibility that loan delinquencies may be higher in families with more children, the report notes.

(Repost from USA TODAY)

If you have any comments or questions about short sales, please email Anna at azshortsales@gmail.com.

Grumpy Old Couple, Fannie and Freddie, say NO!

Fannie, Freddie regulator says no to reducing mortgage principal

Fannie Mae and Freddie Mac will not lower the amount struggling homeowners owe on their mortgages, their regulator declared Tuesday after a months-long delay.

The Federal Housing Finance Agency said its analysis found that principal reduction does not prevent foreclosures while saving taxpayers money.

"FHFA has concluded that the anticipated benefits do not outweigh the costs and risks," said Edward DeMarco, the agency's acting director, who has steadfastly resisted calls to implement the loan modification technique.   
Treasury Secretary Tim Geithner, however, is not taking no for an answer. He quickly shot off an eight-page letter to DeMarco urging him to change his mind. In it, Geithner argued that allowing principal reduction would ultimately save taxpayers as much as $1 billion.
"I do not believe it is the best decision for the country," Geithner wrote. "You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis."

Click here for full article: http://money.cnn.com/2012/07/31/real_estate/fannie-freddie-principal-reduction/index.htm

If you have any comments or questions about short sales, please email Anna at azshortsales@gmail.com.

59 Percent of U.S. Metros Post Higher Foreclosure Activity in First Half of 2012

California accounted for seven of the 10 highest metro foreclosure rates and 10 of the top 20 metro foreclosure rates during the first half of the year. Florida accounted for four of the top 20 metro foreclosure rates, and Illinois accounted for two of the top 20. Georgia, Arizona, Nevada and Colorado each had one city in the top 20.

“Increasing foreclosure starts in many local markets helped push total foreclosure activity higher in the first half of this year compared to the second half of 2011,” said Brandon Moore, CEO of RealtyTrac. “Those foreclosure starts are welcome news for prospective buyers and real estate brokers in many local markets where a shortage of aggressively priced inventory has been holding up sales activity. Markets with increasing foreclosure starts will likely see more distressed inventory for sale in the form of short sales and bank-owned properties in the second half of the year.” 

Facing Foreclosure After 50

A new report from AARP finds that foreclosure rates for people over 75 grew eightfold from 2007 to 2011, and that the risk of “serious delinquency” on mortgages has grown fastest for people over 50.
 MABLETON, Ga. — Roy Johnson fell so far behind on his $1,000-per-month mortgage payments that last year he allowed the redbrick, three-bedroom ranch he had owned since 1963 to lapse into foreclosure.

 “I couldn’t pay it any longer,” he said. “One day, I woke up and said, ‘Hell, I’m through with it. I’m walking away from the house.’ ” That decision swept Mr. Johnson, 79, into a rapidly expanding demographic: older Americans who have lost their homes in the Great Recession. As he hauled his belongings by pickup truck from this Atlanta suburb and moved into his daughter’s basement, Mr. Johnson became one of the one and a half million Americans over the age of 50 who lost their houses to foreclosure between 2007 and 2011. Of those, the highest foreclosure rate was for homeowners over 75.

Once viewed as the most fiscally stable age group, older people are flailing. On Wednesday, AARP released what it described as the most comprehensive analysis yet of why the foreclosure crisis struck so many Americans in their retirement years. The report found that while people under 50 are the group most likely to face foreclosure, the risk of “serious delinquency” on mortgages has grown fastest for people over 50.

While the study classified even baby boomers as “older Americans,” its most dire findings were for the oldest group. Among people over 75, the foreclosure rate grew more than eightfold from 2007 to 2011, to 3 percent of that group of homeowners, the report found.

“Despite the perception that older Americans are more housing secure than younger people, millions of older Americans are carrying more mortgage debt than ever before, and more than three million are at risk of losing their homes,” the report found. “As the mortgage crisis continues, millions of older Americans are struggling to maintain their financial security.”

The report was based on nationwide loan data that covered a five-year span. The profile of those facing foreclosure has changed since 2007. As the average age and wealth of those people rise, their foreclosures are less likely to involve high-interest loans. In fact, most foreclosures are now the result of prime loans rather than subprime ones, according to the Federal Reserve Bank of New York.

Instead, older Americans are losing their homes because of pension cuts, rising medical costs, shrinking stock portfolios and falling property values, according to Debra Whitman, AARP’s executive vice president for policy. They are also not saving enough money. Half of households whose head is between 65 and 74 have no money in retirement accounts, according to the Federal Reserve.

At CredAbility, an Atlanta-based credit counseling agency, the average age of callers needing help has risen to 49 from 43 in recent years. Scott Scredon, a spokesman for the agency, said most older Americans facing foreclosure are frugal but are unable to live on fixed incomes with the rising cost of living.

“When we think of foreclosures, we think of someone who was a little reckless and spent beyond their means,” he said. “The older the person, the less likely that is to be the case.”

Foreclosures create unique challenges for older people, Ms. Whitman said. They are less able to find new jobs and more vulnerable to becoming homeless, analysts say.

In Fort Lauderdale, Fla., Charlotte Orton’s three-bedroom apartment has been under foreclosure for four months. Since losing her job as a real estate agent, Ms. Orton’s only source of income has been Social Security payments of $1,200 per month.

If she is evicted, Ms. Orton, 69, who has no family members in Florida, says she does not know where she will live.

“This is the lowest point in my entire life,” she said. “If I were in my 30s, it would be easier to get employment. But all they want to know is what your recent experience is, and the real estate market has collapsed.”

Other older foreclosure victims have managed to negotiate with banks to stay in their houses. Josephine Tolbert, 76, was temporarily evicted from her house in San Francisco for two weeks. Protesters from the Alliance of Californians for Community Empowerment staged a sit-in at Bank of America, and eventually Ms. Tolbert was able to renegotiate her loan.

“At my age, I don’t know what I would have done,” she said. “But let me tell you, it was a fight.”

Selling houses is also a challenge for many older people. The value of real estate has collapsed, especially in wealthy suburbs of Atlanta, Dallas, Chicago and other sprawling metropolitan areas.

For Mr. Johnson, it was painful to watch the house he built 48 years earlier sell for only $33,000 at auction last year.

Now he lives in what his 55-year-old daughter calls his “man cave” in her basement. It is an hour away from his old house. Although Mr. Johnson is grateful to have been helped by a relative, he misses having space for all of his belongings and the tree from which he made pear preserves.

“I planned to die in that house,” he said. “But I guess it won’t work out that way.”

A version of this article appeared in print on July 19, 2012, on page A14 of the New York edition with the headline: Facing Foreclosure After 50.

California Takes the First Step to Protect Homeowners!

California homeowners now have some of the best foreclosure protection in the nation. Governor Brown came to San Francisco Wednesday to sign a bill ending what he calls "abusive home lending tactics."

California has one of the highest foreclosure rates in the country and this new law is supposed to slow down that rate, but critics say that might slow down the markets' recovery as well.

"We're done. We're done with robo-signing. We're done with false promises. We're done with the runaround," Attorney General Kamala Harris, D-California, said.

Governor Brown signed into law the nation's toughest protections for homeowners facing foreclosure. Much of the national mortgage settlement agreed to by five banks earlier this year now apply to all mortgage providers doing business in California and make the terms permanent. "I find it almost incomprehensible that so many smart people and so many rich people could screw things up so profoundly and cause so much suffering and get off in many cases," Brown said.

Beginning January 1, the Homeowner Bill of Rights will:

• Ban "dual-tracking" (which is when banks pursued foreclosure even though the homeowner was seeking a loan modification)
• Require one contact person per customer
• Increase penalties for robo-signing (which automatically approves foreclosure without anyone reading documents)
• Let homeowners sue for violations

The California Bankers Association is concerned about the potential spike in litigation. "If you mess with the process and the markets, that could increase the costs for future homebuyers," California Bankers Association spokesperson Beth Mills said.

The state Attorney General estimates about 700,000 Californians are in the foreclosure pipeline right now. Because the law doesn't take effect for another five months, it's unclear whether the new law can help them, but troubled homeowner Merrie Jo Musni of San Francisco is excited about the possibility of having one point of contact at the bank because she's already dealt with six. "I've been diagnosed with high blood pressure, something my family doesn't have. The stress is incredible," she said.

And lawmakers are not done. They're working on giving renters more protections if their rental is in foreclosure and letting non-profits have first dibs in buying a foreclosed home.

(Copyright ©2012 KFSN-TV/DT.)