Foreclosure starts in California took a massive tumble last month as new state laws aimed at prohibiting certain aggressive bank repossession practices went into effect.
The real estate website ForeclosureRadar.com reported a 60.5% decline in California default notices in January from December. The number of default notices — the first formal step in the state’s foreclosure process — fell 77.7% from December 2011. A total of 4,500 such filings were logged last month, the lowest number of default notices since at least September 2006, when the website’s records begin.
The website gave no reason for the sharp decrease in notices of default, but noted that the drop came in January, when a package of tough new laws that provide homeowners with some of the nation's strongest protections from bank repossession practices went into effect.
Most notably, the Homeowner Bill of Rights bans the practice of “dual tracking,” in which a lender seizes a home while the owner is negotiating to lower mortgage payments.
Passed last year, the legislative package was sponsored by California Atty. Gen. Kamala D. Harris and written by 10 Democratic lawmakers.
The laws also outlawed so-called robo-signing -- the improper or faulty processing of foreclosure documents -- and would allow state agencies and private citizens to sue financial institutions, under limited conditions, for economic compensation and for additional civil damages of up to $50,000 if lenders willfully, intentionally or recklessly violate the law.