A mortgage bill aimed at slowing down the foreclosure epidemic in California, a state which faces an estimated loss of $111 million in tax revenues as a result, was rejected by a single vote Wednesday, according to the LA Times.
The proposed legislation, bill SB 926, failed by a 26-14 vote, as it needed a two-thirds majority to pass because it was market urgent.
Of the 40-member Senate who voted, 14 of 15 republicans voted no, claiming the bill was flawed and would have would have “resulted in endless litigation.”
The bill called on mortgage lenders to contact at-risk borrowers to arrange in-person meetings regarding loan modification options and to provide a list of HUD certified counselors to borrowers before filing a Notice of Default on a residential property.
It would have also required lenders to notify borrowers of pending mortgage rate changes, while providing tenants in foreclosed properties more time to find a new residence.
Additionally, it would have penalized the legal owners of foreclosed properties up to $1,000 per day for failure to maintain such properties.
Opponents to SB 926 included Republicans, the California Bankers Association and the California Mortgage Bankers Association, who argued that the measure would burden an already strained industry.
Despite its failure to gain approval, Senate President Pro Tem Don Perata (D-Oakland) plans to reintroduce the bill as early as spring.
“There are some things, albeit minor, that we can do in California to help those who are ensnared in the so-called sub-prime mortgage crisis,” Perata said. “There are enough reasons for us to try to slow this process down.”