David Benson is on a mission to end all foreclosures in the state claiming that a ban on foreclosures will force banks and the government to help homeowners.
Benson filed papers with the California’s Secretary of State to amend the state constitution to make foreclosures illegal. Benson has received clearance to start collecting enough signatures – 807,615 – by Dec. 27 to get his amendment on the ballot to be voted on by state voters.
According to the story from Housingwire:
His plan would require lenders to assist borrowers unable to pay for their homes due to financial distress and illness.
It also would force lenders to reduce a loan’s principal amount to reflect declines in property value that go beyond 10%.
Benson’s proposal says any “loan issued for and secured by a home or property by any lending institutions, loan servicers, mortgagee, trustees and beneficiaries doing business in the state of California, shall be able to be refinanced without credit review or penalty at minimum cost, within 45 days of being requested.”
That provision would automatically apply if a borrower has maintained the mortgage for at least three years.
If the amendment is enacted, we at RE-Insider find it hard to imagine that it would have the desired effect. We suspect it would only make lenders tighten their lending guidelines and make it harder for potential homeowners to get a loan.
What do you think?