This is the case of the banking industry shooting down a California initiative to rescue distressed homeowners from the imminent loss of their properties as a once solid state legislative proposal is now in the brink of collapse following a relentless campaign from financial institutions for its demise.

Once approved, SB1275 would have allowed homeowners the much needed breathing room as the bill requires lenders to extend loan modification considerations to homeowners prior to commencing foreclosure proceedings.

The legislative proposal would have also averted the prospect of painful foreclosure even in the midst of loan modification settlements as a provision was specifically included that enables homeowners to run to court for protection once foreclosure was enforced in the heat of a loan modification procedure.

Many of the bill’s sponsors pointed to a similar federal effort to empower beleaguered homeowners with some muscles to protect their properties but the national measures failed to attach the necessary enforcing mechanism for the stipulated rule.

And so the protective shelters for homeowners were in the brink of extinction even before seeing the light of the day just because banks felt threatened that the bill would serve as a dangerous precedent of lawsuits from borrowers and unduly delay foreclosure proceedings of homes unsuitable for any modifications.

The banking industry also argued that the bill could eventually end up as outdated and directly in contrast with existing and evolving federal rules.

Democratic State Senator Mark Leno of San Francisco said that he introduced the legislation to stop lenders apparent flaws in handling foreclosures and dealings with disadvantaged borrowers.

Leno said that banks would only continue their notorious incompetence in managing foreclosure matters unless they were held accountable, stressing that “banks caused this entire mess,” which eventually wrought devastation on homeowners, communities and cities.

In a report published by The Chronicle in June, a representative from California Bankers Association declared that the group was opposed to any form of private right of action but when asked for further comments on Thursday this week, nobody was available to issue a statement.

Leno revealed that the proposed bill hurdled hearings on all committee levels but surprisingly lost last minute tractions when the whole Assembly voted 38-37 in thumbing down the measure.

The senator noted that during the vote, 14 of his fellow Democrats either abstained or voted to junk the proposal but its sponsors managed to work for reconsideration vote on Tuesday next week, a session which Leno said would be mostly influenced by decisions along party lines.

Leno said that he is doing his best to convince his party mates to throw their support on the bill, which he said is aimed at preventing “avoidable foreclosures and letting lenders know that there are consequences to not doing their job properly,” that perhaps motivated the banking industry on its intent to kill the bill.