California Foreclosure and Mortgage Help

Foreclosure moratorium
California recently passed a foreclosure moratorium that help prevent foreclosures by delaying the foreclosure process for owner-occupied homes in which the first mortgage was recorded between Jan. 1, 2003 and Jan. 1, 2008.

The law signed will delay mortgage foreclosures in California by 90 days. The goal is to allow additional time for lenders and homeowners to agree to a solution that will help the homeowners stay in their home, and that will also make sense for the lender to agree to.

However, there is a loophole in the moratorium. Lenders can still foreclose on the home if the lender has a mortgage modification program currently in place that meets provide some combination or mortgage assistance and meets other criteria. Among those other criteria that qualify for an exemption to the new law include are a deferral of a portion of the principal that is owed and also lower interest rates for at least five years on the extension of loan terms.

However, just because a lender or bank has a mortgage modification program it does not mean that they are putting these plans in place and in action with homeowners. The new law does not force them to grant a modification to a family in need of mortgage help.

Also, many experts, lenders, and other people think that struggling homeowners in California and their mortgage lenders already have plenty of time to search for mutual solutions to help prevent a foreclosure, and that this new, extended 90 day moratorium is not needed. For example, a California state law that was passed just last year already increased the required period from first notification of a potential foreclosure to the final sale of a families home by 30 days, to a total of 141 days, which many feel is more than enough time for someone to receive foreclosure help. This new California foreclosure moratorium will go into effect in June of 2009.

California also has in place Law SB 1137. This regulation requires that banks, financial institutions, and other mortgage lenders need to meet with homeowners or their mortgage counselors prior to filing a notice of default on their unpaid loan. The lender needs to communicate with the homeowner and clearly go over all the options that are available to the homeowner to prevent a foreclosure. In addition, the bill goes on to requires that borrowers be giving at minimum 30 days after the meeting with the lender to take necessary steps to save their home. Lenders who operate in California and for some reason are not able to set up a punctual meeting with the borrower can start the foreclosure process 30 days after the lender has demonstrated a good faith effort to meet with and work with the homeowner, but the homeowner may have not cooperated and desired mortgage assistance.

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