Charlene CrowellColumnistsFinancial Literacy

Homeowner Bill of Rights: Protecting Families from Life’s Financial Storms

In recent weeks, multiple news sources have reported on the 10-year anniversary since the onset of the nation’s foreclosure crisis. Between 2007 and 2011, 10.9 million homes went into foreclosure, with 8 million completing that process. Additionally, $1.95 trillion in lost property value affected both families who lost their homes to foreclosure, as well as their nearby neighbors who remained in their homes.

Less prominently revisited in these retrospectives were the disproportionate losses suffered by Black and Latino communities. Together, these two ethnicities absorbed $1 trillion wealth losses.

None of us can change the past, but what we can and should learn from it and take steps to ensure that harms caused are acknowledged and never repeated. The creation of the Consumer Financial Protection Bureau (CFPB) was authorized at the federal level. But across the country, states also took initiatives as well.

For example, California became the first state in 2012 to create a Homeowner Bill of Rights (HOBR). A state legislative package was enacted to end many mortgage ills, such as banning mortgage broker kickbacks for unfairly placing borrowers into more expensive loans than necessary. Another harmful practice included mortgage servicers who assured borrowers that a refinance was in progress while at the same time, beginning the formal foreclosure process. HOBR was an important part of a legislative package that broadly addressed a wide range of mortgage woes.

It took years of advocacy before the California Assembly passed the initiative. At the urging of consumer advocates and the former state Attorney General Kamala Harris, the HOBR gained support from civil rights organizations, banks, credit unions, labor unions and consumer groups. Borrowers, lenders, workers and advocates all agreed the legislation was fair and responsible to improve the foreclosure tsunami.

For consumers, however, the most heralded legal provision, included the right to have their own day in court. If mortgage servicers did not comply with the law, borrowers could sue and seek financial redress. Borrowers were also assured of timely notification on the status of their loan modifications and gained the right to appeal modification denials.

Unfortunately, as much legislation affords, “sunsets” — dates by which specific legal requirements expire — took the real teeth out of HOBR since 2017. Such times are also the moments when leadership can emerge and replace what was lost.

California state Sen. Jim Beall, who also chairs the state’s Senate Transportation and Housing Committee, sponsored a 2018 HOBR that restored the previously lost provisions. Moreover, on Sept. 14, California Gov. Jerry Brown signed the new bill into law.

Beyond restoring the right to appeal a loan modification denial, the updated bill also resurrects:

  • Requirements that loan servicers provide homeowners with written notices to confirm receipt of their loan modifications applications and whether any necessary application items are missing; and.
  • Requirements that servicers send written denial notices with sufficient information and sufficient time to appeal a questionable denial.

“Californians can once again count on the protections that helped thousands of homeowners hold onto their houses during the 2008 financial crisis,” Beall noted. “Lenders will have to provide timely notifications on the status of a loan modification application and homeowners will have the right to appeal denials.”

For Graciela Aponte-Diaz, California Policy Director with the Center for Responsible Lending, the 2018 bill reinstates safeguards to help families stay in the homes.

“Foreclosures have rattled our housing market, especially for owners who have been hit hard by natural disasters,” Aponte-Diaz said. “Homeowners need protection against procedural abuses — this bill helps us accomplish that goal.”

Today, consumers in Minnesota and Nevada have similar HOBRs.

It just seems sensible that other locales where billion-dollar property losses were suffered due to recent storms or wildfires would be well-served if their respective states also implemented their own HOBRs. In just the past year, locales as diverse as Arizona, Florida, the Carolinas and Texas have also suffered tremendous losses and will need years to fully recover financially.

The bottom line is that whoever you are or where you live, housing is needed. At a time when most working families are dedicating an increasing amount of income to provide a home, it should be apparent that these homes deserve protection — not just from weather storms; but life’s financial storms.

As former President Lyndon Johnson spoke in a June 4, 1965, address to Howard University:

You do not wipe away the scars of centuries by saying: Now you are free to go where you want, and do as you desire, and choose the leaders as you please.

You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say, ‘you are free to compete with others,’ and still justly believe that you have been completely fair.

Thus is it not enough just to open the gates of opportunity. All our citizens must have the ability to walk through those gates.

Charlene Crowell is deputy communications director with the Center for Responsible Lending. She can be reached at

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