Can SB 279 save California homeowners?

A recent editorial in the L.A. Times makes a simple argument for the support of SB 279, which is about to go before the California state Senate. The article, light-heartedly titled “Let’s Make a Deal on Foreclosures in California”, boils down the piece of legislation to one major point: that lenders would have to complete their assessment of a homeowner’s qualification for a loan modification before they could begin the process of repossessing the home through foreclosure.

Presumably, SB 279 would benefit California homeowners – particularly those for whom a loan modification would save their home, mortgage, and credit scores. Of course, it’s no guarantee that the number of approved loan modifications would actually increase.

The editorial caught our eye because of its pragmatic approach – rather than commending SB 279 for the good it will do for homeowners, the article argues for support of the law on the grounds that it will increase lender efficiency. Banks will be forced to do one thing at a time, and will therefore hopefully do that one thing a little bit better than they’ve been doing it.

The editorial also makes the diplomatic, if extremely cautious, move of downplaying lender culpability. It’s probably true that a great many lenders are “woefully understaffed” and that , but to refer to a robo-signing lender’s crime as merely “problematic” and “too disorganized and overwhelmed to stop itself” is quite the understatement.

Caution is probably called-for –  the bill had been dismissed by the Senate Banking Committee last month (shocker!), and is now on the table for the second time.

To read the bill itself, click here.

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