The recently-enacted Homeowner Bill of Rights may have “changed hundreds of years of real estate law and may have turned California into a judicial foreclosure state with financial firms on high alert,” according to one prominent California trial attorney.

“In California, they just gave trial lawyers a nuclear weapon to use against the industry,” said Bob Jackson, president and attorney at Irvine, Calif.-based Jackson & Associates. Jackson spoke at HousingWire’s REperform Summit, a mortgage servicing conference in Dallas.

“The Homeowner Bill of Rights is the most massive change in the last 100 years of real estate law,” he said. “It used to be servicers were in the business of enforcing simple contract law. What the loan servicer did is they enforced the contract, but that is no longer how the game is played.”

The bill of rights, which was legislation designed by California Attorney General Kamala Harris, gave borrowers standing to legally address violations of the new foreclosure legislation.

Click here to read more at HousingWire.

On June 28, 2012, the United States Supreme Court dismissed the case of First American Financial Corporation, v. Denise P. Edwards, stating that review had been “improvidently granted.”

This leaves standing the Ninth Circuit Court of Appeals decision in Edwards v. The First American Corporation, in which the California court rejected First American’s argument that the plaintiff could not sue for a RESPA violation because she had not been overcharged for title insurance.

In the underlying case, the plaintiff, Edwards, sued First American, alleging that First American paid illegal kickbacks in exchange for the referral of title insurance business. The plaintiff claimed that, in connection with the purchase of her home, Tower City referred the title insurance to First American, and that this referral was illegal under RESPA.

First American moved to dismiss the class action complaint on the ground that plaintiff had not suffered any financial injury and, therefore, she had no standing to sue. The District Court agreed with plaintiff and denied the motion to dismiss.

The Ninth Circuit agreed with the District Court. The Ninth Circuit explained that RESPA does not require a showing of an overcharge. Rather, a plaintiff has a statutory cause of action under RESPA even when there is no showing of an injury separate and apart from the violation of the statute itself.

The Supreme Court’s dismissal of the First American case leaves the Ninth Circuit’s decision as the controlling law in California. A consumer may bring a claim, including on behalf of a class, for a RESPA violation even when the consumer has not been overcharged, or otherwise directly injured, as a result of the violation.

This decision will open the floodgates for aggressive class action attorneys to go after corporations that may have broken the law. This could cost the industry millions of dollars and countless hours of work time.

The bottom line is that now, even inconsequential financial gains can get you into a lot of trouble.

Could our real estate industry be in danger of facing another 2008-styled collapse?

We are still recovering from a lending system that saw banks like Countrywide package mortgages together and sell them to investment groups who sold them again and again until nobody knew who owned the loan.

It was the unregulated sale of these residential home assets to people who knew very little about the market and clearly didn’t manage their loan portfolio which ultimately hurt America.

Could history be repeating itself?

Banks are now selling large portions of their REOs in packages to hedge funds and private equity groups that know very little about the real estate marketplace. Even though they are now packaging homes instead of loans, doesn’t this sound familiar to you?

Shouldn’t banks put their REO inventory in the hands of the people who know the most about local real estate – agents and brokers?

Sure, average home prices in California are rising – ever so slightly – because inventory is at an all-time low, in part because millions of REOs have been pulled off the market and out of the hands of agents and brokers. Could this just be a short-term fix that will create another long-term problem?

What do you think? Give us your feedback or tweet your comments with #REInsider.

A California bank executive was convicted by a federal grand jury last week on six counts of mail fraud for his part in a complex mortgage fraud scheme. Joel Blanford, 44, of San Ramon, faces up to 30 years in prison and a fine of up to $250,000, or twice the value of the gain or loss, whichever is greater.

This case is the product of an extensive investigation conducted by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.

From approximately April 2003 through October 2005, Blanford, while working as a sales representative for Long Beach Mortgage, a wholesale subprime lender and former subsidiary of Washington Mutual Inc., participated in a scheme to defraud his employer.

Blanford earned compensation based on the volume of loans processed by Long Beach Mortgage. He was convicted of paying a loan coordinator in cash and checks to falsify documents, provide false verification of borrowers’ employment or professional licensing status, and to turn a blind eye to fraudulent representations contained in loan applications and other documents submitted to Long Beach Mortgage.

In each of the years 2003, 2004, and 2005, Blanford received, before taxes and payroll deductions, more than $1 million in commissions and other compensation from Long Beach Mortgage as a result of his scheme. Between April 2003 and October 2005, he paid the loan coordinator more than $50,000 in checks alone.

An earlier trial of Blanford resulted in a hung jury, although this federal jury didn’t seem to have the same trouble.

Not only do real estate professionals have to worry about HUD and the CFPB, but now the FBI is getting more involved – look out criminals.

“It began with a housing crisis they alone didn’t cause; it ends with a housing crisis they didn’t correct,” Ryan is quoted as saying during his rollout speech at the GOP Convention in Tampa.

Unfortunately, that’s all Ryan had to say about the housing crisis and what his platform would do to fix it. And while a political convention isn’t the best place to expound on how a ticket with his name on it would address the crisis, it’s good to know that it’s at least on his mind.

But what does he mean? Do he and Mitt Romney have a plan? Click here to read the commentary from Housingwire contributor Kerri Ann Panchuck. She quotes GOP spin-artist Ed Pinto of the American Enterprise Institute.

Pinto believes the platform from the GOP incorporates the four principles he also suggests for housing reform. Those principles include some type of assurance that the housing finance system can function without direct financial support from the government; ensuring mortgage quality and adequate capital behind mortgage risk; making sure programs for low-income families are on budget while limiting their risks to homeowners and taxpayers; and establishing that the GSEs should be gradually eliminated.”

It seems that the housing crisis will be (and should be) an important part of the discussion during this election season.

California took another big step towards becoming one of the most favorable states in regards to homeowners rights when Gov. Jerry Brown signed a bill Monday forcing owners of foreclosed and vacant homes to maintain the property or face up to a $1,000 fine per day of violation.

The bill is part of the Homeowner Bill of Rights, a slew of new legislation drafted and introduced through state lawmakers with the assistance of California Attorney General Kamala Harris.

The latest enacted bill gives local governments the power to impose a fine of up to $1,000 a day for code violations. The local governments must give owners, including banks, at least 14 days to start fixing the alleged violation and 30 days to complete the correction before issuing the fine.

Interestingly, one of the violations includes “not failing to take action to prevent mosquito larvae from growing in standing water or other conditions that create a public nuisance.” This comes after a woman in Studio City, recently diagnosed with the West Nile virus, traced the contraction to mosquitoes breeding in a nearby foreclosure’s neglected swimming pool.

The new bill could be costly for careless owners of these homes. One of the largest owners of REO homes is Fannie Mae, which, according to its latest financial filing, owns more than 10,000 REO properties in California as of June 30.

If an investor or homeowner buys a property that was foreclosed on at any point since Jan. 1, 2008, the local government must give at least 60 days to remedy any violations found since taking title. The law does give room to provide less time “if deemed necessary.”

If you’re an REO expert, RE-Insider would love to hear from you. How are you planning on educating your buyers about the new Homeowners Bill of Rights?