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California forgoes new foreclosure law

Critic says legislation was 'unnecessarily burdensome'

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Editor's note: This story has been edited to clarify that SB 1178 had not been signed into law.The California Assembly has rejected a bill that would have placed more homeowners under the protection of an existing state law that requires loan servicers to consider distressed borrowers for a loan modification before beginning foreclosure proceedings on them.SB 1275, which sailed through the Senate on June 3 in a 21-12 vote, failed to garner enough support in two Assembly votes. The bill went down to defeat Monday in a 30-36 vote that was mostly on party lines, with Democrats supporting the bill and Republicans opposed.The Center for Responsible Lending issued a statement Wednesday calling the bill "the major foreclosure prevention legislation of the session," and attributing the bill's defeat to "a massive lobbying blitz from banks and other mortgage industry lobbyists."California already has a law on the books requiring loan servicers to contact distressed homeown...