Loan Modification

New California Law Extends Time Periods For Foreclosures

By Doug Jacobs

An additional 90 days has been added, is some cases, to the length of time for a California homeowner to cure a default in mortgage payments.  The California Foreclosure Prevention Act went into effect on June 15, 2009. This bill extends the current 90 day period in California’s non-judicial foreclosure process between notice of default and notice of sale to 180 days.

Unfortunately, the law is limited in its application to a principal residence occupied by the borrower at the time of the default and only if the loan is the first lien against the residence and was recorded between January 1, 2003 and January 1, 2008.

A mortgage loan servicer can apply to the California Real Estate Commissioner for an exemption to this law (reducing the time period for cure back to 90 days) if they have implemented a loan modification program with specified features. Once the Real Estate Commissioner concludes that the program meets the necessary requirements, the mortgage loan servicer will receive a permanent exemption.  Eventually a list of exempt lenders will be published.

Faced with a growing number of foreclosures, the Calfiornia legislature is at least trying to do something.  Unfortunately, like many of the “modification” plans, this bill has an easy “out” for the mortgage companies.  All they need to do is to have in place an appropriate means to modify loans.  Nothing says they have to grant any modifications!

Full post as published by Mortgage Law Network on June 16, 2009 (boomark / email).