California Assemblymember Ted Lieu, D-Torrance, has introduced Assembly Bill 1588 – the Monitored Mortgage Workout Program (MMW) – which would provide for state-appointed monitors to ensure homeowners and servicers have a chance to negotiate mortgage workouts. Such monitors are critical to the Obama administration's Home Affordable Modification Program, Lieu says.
A.B.1588 is sponsored by Los Angeles Mayor Antonio Villaraigosa and jointly authored by Lieu; Speaker Karen Bass, D-Los Angeles; and Assemblymember Pedro Nava, D-Santa Barbara.
Any borrower who receives a notice of default (NOD) would be eligible to participate in the MMW, which would be administered by the California Housing Finance Authority (CHFA). The borrower would be responsible for communicating to the CHFA his or her intention to participate in the plan within 30 days of receiving the NOD.
If a borrower elects to participate, a monitor would be appointed to oversee the loan modification process. The monitor shall have certain minimum enumerated qualifications, according to Lieu's proposal. Servicers would not be able to foreclose on a home until the monitor's assessment is completed.
The monitor would assist the parties in assessing the affordability of any loan modification and analyzing the net-present-value economic effect of modification on the lender. If the parties are unable to modify the loan bilaterally, the monitor would be expected to prepare a "reasonable loan modification proposal that satisfies the guidelines" of HAMP, if such a proposal is feasible.
If the lender rejects the proposal or acts in bad faith during negotiations as determined by the monitor, the borrower would be allowed to seek to enforce the monitor's proposed loan modification in an expedited court action.
Conversely, if the borrower rejects the proposal or acts in bad faith as determined by the monitor, the foreclosure process will resume pursuant to existing state law, according to A.B.1588.
SOURCE: Office of Assembly Speaker Karen Bass