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April 24, 2024 - On Tuesday, Assemblywoman Pilar Schiavo announced that AB 2424, a pivotal bill aimed at protecting homeowners facing foreclosure, often at times when they are at their most vulnerable, has successfully passed out of the Assembly Committee on Banking and Finance and the Assembly Committee on Judiciary.
“Often in too many real world situations when people are at their most vulnerable - like after the passing of a partner, when they’re experiencing dementia or other health challenges, or in the middle of a divorce, 120 days of failure to make a mortgage payment is simply not enough time to correct the situation or to make arrangements to either bring the loan current or to otherwise sell the property,” said Assemblywoman Schiavo. “For some families, a home is their only substantial asset. This legislation will reform foreclosure rules when payments have fallen behind due to unforeseen circumstances, seeking to preserve a portion of the lifetime investments in the property while assuring the banks get repaid,” said Schiavo.
Currently, when a homeowner can’t pay back their mortgage loan, the lender is authorized to sell their home at an auction; first, the lender takes back the loan balance, and the homeowner receives any surplus from the sale. In the process, the homeowner often loses tens, or even hundreds of thousands of dollars when banks sell for extremely low prices. On the other hand, investors frequently benefit from these auctions, making money on the backs of the homeowners who are losing money in the process..
In many instances, these homeowners are low-income, elderly, immigrant, or disabled people. For members of these communities, their home is often their only asset, and home equity is their lifetime savings. The loss of even a single dollaris irreplaceable, putting them at increased risk of poverty and homelessness.
“AB 2424 still ensures the mortgage holder gets repaid, and it also seeks to balance the equities, so that both the bank and the owner of the property get a fair share of their interest in the value of the home,” said Assemblywoman Schiavo.
“The Consumer Federation of California thanks Assemblymember Schiavo for authoring this important bill," said CFC Executive Director Robert Herrell. "Foreclosure is a nightmare even in the best of circumstances, but California's current foreclosure system excessively punishes the most vulnerable Californians. AB 2424 would provide a clear pathway to allow these foreclosed Californians meaningful access to the sometimes substantial equity gains coming from their foreclosed properties and a critical lifeline to benefit from their most meaningful asset in life."
Assemblywoman Pilar Schiavo was elected to the California State Assembly in November of 2022 to represent the 40th Assembly District, representing the Northwest San Fernando Valley and the Santa Clarita Valley. Upon her election, she was appointed as Assistant Majority Whip by the Speaker of the Assembly and now serves as Chair of the Assembly Committee on Military and Veterans Affairs. Prior to her election, Assemblywoman Schiavo was a Nurse Advocate and Small Business Owner who worked in the labor movement for more than 20 years. Throughout her career, Assemblywoman Schiavo helped deliver healthcare, including reproductive healthcare, to more than one million people and fought to put critical dollars in the pockets of workers. In the Northwest San Fernando Valley, she co-founded an organization that helped secure housing for Veterans experiencing homelessness, co-founded an organization that delivered more than 50,000 meals to people in need, and increased resources to help keep our communities safe. Assemblywoman Schiavo lives in Chatsworth with her daughter Sofia where they love to hike in the Santa Susana Mountains.
Source: Assemblywoman Pilar Schiavo
