A proposed bank accountability bill in California that had received considerable national attention has suffered something of a setback, but that doesn’t mean we’ve seen the last of it. Assembly Bill 935, sponsored by Bob Blumenfeld of Los Angeles, would require mortgage servicers to pay a $20,000 “community reimbursement charge” prior to the conclusion of any foreclosure.
Blumenfeld’s office says the fee would help offset the direct and indirect effects that foreclosures have on a community, including strains on public safety and loss of economic activity. The fee can also be used for affordable housing construction, to encourage small business loans, and to help mitigate losses in funding for public education as a result of losses in property tax revenue and depressed property values. One in five U.S. foreclosures takes place in California, and Blumenfeld’s office contends that the fee would put $12 billion back into the hands of communities hit hardest.
Another California bill, AB 729, would have ended the dual-track system that banks use to move forward on a foreclosure while a homeowner seeks modification. Both failed to move out of committee, but as of Shelterforce press time, both were scheduled for reintroduction.