The California legislature has passed legislation that forbids lenders from foreclosing on any California property for the next 90 days. The moratorium starts today. The legislation was passed to ward off the expected flood of foreclosures that everyone has been hearing is “coming” after the expiration of the federal moratorium which expired in April. With the 90 day Notice of Default and the thereafter 20 day Notice of Trustee Sale, many of those homes would be coming on the market in the coming weeks. The last time lenders did a rush of foreclosures, the housing market here in California plummeted. As a result of the foreclosures, homes were vandalized, trashed, abandoned and boarded up creating eyesores in many neighborhoods. The moratorium will ensure that over the traditional summer sales season, housing markets and in turn, housing prices, will stay strong.
The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
Known as the California Foreclosure Prevention Act, this legislation is only a temporary stopgap. After the 90 days, banks will once again be allowed to do foreclosures. Statistics show that there have been more than 365,000 foreclosures in California since early 2007. The legislation is not clear as to what will happen to those foreclosures that have been already scheduled.
Both the California Act and the federal Making Home Affordable Act encourages lenders to cut interest rates or rewrite loans to affordable levels.
You can go to makinghomeaffordable.com and input your financial information. It will tell you if you qualify for a loan modification. Many lenders also have websites that will allow you to input your financial information and tell you whether they can do a loan modification as well. Beware of companies telling you that they can do a loan modification for a fee. Most banks deal directly with the borrower AND if you go to the website and input your information and get declined, its a sure bet that the company will not do any better.
Better to do a short sale, save your credit, save your money, and buy again in two years.