California Law may soon add an additional requirement of Good Faith. A Bill under consideration in the California Senate, and soon to be considered in the California Assembly apparently, "would require lenders to make a good-faith effort to notify defaulting borrowers about the availability of any loan modification programs." The Los Angeles Times Editorial Board supports this Bill. Editorial, "Foreclosures and Loan Modification Programs" (Los Angeles Times Online, Tuesday, August 17, 2010).
The main opposition to the Bill, according to the Times' Editorial, is that "the main federal mortgage modification program imposes the same notification requirements on lenders before filing a notice of default". However, the Federal Law does not impose penalties for a violation, so that the California State Senate Bill would provide some 'teeth' to a violation of Good Faith in this regard. Id.
"Everything is changing, but nothing is new," goes an old saying. Adding some 'teeth' to an alleged violation of Good Faith is the very reason that Courts fashioned a cause of action to remedy alleged Insurer Bad Faith.
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