California Foreclosure Moratorium for 90 Days

Friday, the California Legislature approved legislation SB2X-7 and AB2X-7. The legislation specifies a 90-day foreclosure moratorium on homes throughout California.

Sponsored by Sen. Ellen Corbet (D-San Leandro), the bills protect owner-occupied homes in which the first loan was recorded between Jan. 1, 2003 and Jan. 1, 2008. “Many people in our communities are facing the terrible specter of foreclosure,” Corbett was quoted as saying.  “I’m just trying to find a way to help.”

The two bills do provide some help for servicers in that they allow servicers be exempt from the moratorium if they have an approved loan modification program in place that meets the following criteria:

• a deferral of a portion of the loan’s principal, for example,
• or lowered interest rates for at least five years
• or an extension of the loan terms.

A previous law passed in California in 2008 increased the required time period from first notification to final sale by 30 days to a total of 141 days.

There are many who berate the bills. They feel it provides unfair help to those homeowners who bought more house than they could really afford in the hopes real estate prices would continue their meteoric upward trend virtually forever. Others feel this simply delays the inevitable recovery we are all desperately waiting for.

The California Bankers Association vehemently condemned the bills .