States across the country are proposing a range of new rules that would make it more difficult for banks to foreclose on troubled homeowners, the Wall Street Journal reported today. The moves have been prompted by concerns that lenders have been inefficient in restructuring mortgages, which results in unnecessary foreclosures, while using shoddy paperwork to repossess homes. Lenders are strongly resisting the measures, arguing that they will introduce new bottlenecks in the foreclosure process that could obstruct the incipient housing recovery. The biggest showdown between lenders and lawmakers could occur as soon as today in California, when the state legislature is set to vote on an overhaul detailing new requirements banks must follow in the foreclosure process. While similar measures have failed in each of the last two years, the state's attorney general, Kamala Harris, has pushed strongly for the bills, improving the odds the bills will pass. Nationwide, 25 states have bills contemplating changes to various laws governing the foreclosure process, according to the National Conference of State Legislatures. In Oregon, the state's outgoing attorney general proposed new rules covering how banks handle loan modifications. New York's assembly is considering a measure that would criminalize foreclosure paperwork forgeries.
