charlene_crowell_1.jpgA few days ago, the Department of Housing and Urban Development released data showing that more than 620,000 troubled homeowners had received more than $50 billion in principal reductions and savings. These actions were the direct result of the National Mortgage Settlement, negotiated by America’s largest banks, state attorneys general, and the administration of President Barack Obama.

Despite this success, the Congressional Budget Office recently reported that 13.2 million mortgages remain underwater, owing more than the homes are now worth.


Earlier this year, the Center for Responsible Lending and its ally Consumers Union jointly offered state policy remedies known as Homeowner Bills of Rights (HBORs) that would protect homeowners, further reduce foreclosures and stabilize local housing markets. 

Key to these state initiatives is that homeowners gain a private right of action and the right to halt a foreclosure sale when a servicer breaks the law. The foreclosure cannot proceed until the servicer complies with the law. 

Other HBOR recommendations called for lawmakers to:
• Ban “dual-tracking,” the practice by mortgage servicers of pursuing foreclosures while at the same time processing a request for a loan modification; 
• Require lenders to establish straightforward timelines, clear procedures for homeowner outreach, detailed denial notices and an affidavit detailing the homeowner’s rights to appeal; and
• Require lenders to engage in loss mitigation activities to prevent avoidable foreclosures.


For communities of color, where the economic recovery has yet to be felt, HBORs are particularly important due to well-documented disparities in foreclosures. For example, black Floridians’ risk of imminent foreclosures is double that projected for the entire state.

Earlier research by the Center for Responsible Lending found that over half (52 percent) of the lost wealth resulting from living in close proximity to foreclosures was borne by minority census tract homeowners.

In the District of Columbia and seven states — California, Florida, Illinois, Hawaii, Maryland, New Jersey and New York — an even greater share of lost wealth occurred in minority communities. 

Additionally, African Americans remain at a higher imminent risk of more foreclosures in Florida, New York, New Jersey, Ohio and Illinois.


Several states have worked to advance HBOR reforms including California, Minnesota and Nevada.

California is the first state to enact an HBOR, which took effect in January with a private right of action and servicer rules for foreclosing. In cases where the homeowners prevailed in legal disputes, the lender may become responsible for attorney fees and court costs.

Already, a California court recently ruled in favor of a state homeowner. A preliminary injunction halted  foreclosure proceedings in the case of Singh v. Bank of America where the lender dual-tracked the homeowner.

In Minnesota, where there were three times more foreclosures in 2012 than in 2005, their HBOR gives borrowers a private right of action to stop a wrongful foreclosure sale. Through a bipartisan effort, the state’s House of Representatives unanimously passed the bill. With a companion version having already passed in the state’s Senate, Governor Mark Dayton is expected to soon sign the measure into law.


In Nevada, a bill similar to that of California’s aims to codify a single point of contact with servicers, require civil penalties for banks that violate default procedures, and give borrowers a private right of action. The bill unanimously passed the state’s Senate and now awaits a vote in the Nevada Assembly. 
Hopefully more states will embrace the emergence of HBORs. In a recent blog post, Tracy Van Slyke, director of the

New Bottom Line, summed up the status of economic recovery:

“This work is not just about righting past wrongs. It’s also about the future of our retirement, our kids’ lives, and the kind of communities we want to live in and about our country’s economic future.”

*Pictured above is Charlene Crowell, a communications manager with the Center for Responsible Lending, can be reached at