Gov. Arnold Schwarzenegger signed a 90-day moratorium on California home foreclosures (legislation SB2X-7 and AB2X-7) amid criticism that the law likely won’t put a dent in the skyrocketing pace of repossessions.
Here’s what you need to know:
- The bill, as part of the state’s recent budget deal, safeguards owner-occupied residences that had first loans on the books between Jan. 1, 2003 and Jan. 1.
- Under the moratorium, state lawmakers can make exceptions for loan servicers, enabling them to foreclose anyway.
- Eligible lenders must meet certain criteria and have active mortgage modifications underway. Some of those criteria include: an extension of loan conditions, a portion of the principal in deferral or at least five years of lowered interest rates.
- To qualify for foreclosure immunity under the moratorium, a lender’s loan adjustment plan must include a modification of monthly payments “targeted†at 38% of a homeowner’s income. That’s slightly more lenient than President Obama’s 31% of income payment-lowering in his administration’s recently unveiled Homeowner Affordability and Stability Plan.
- Bankers, including members of the California Bankers Association, California Mortgage Bankers Association and others, are anything but pleased with Schwarzenegger’s foreclosure moratorium. In a joint letter to the state, they claimed the bill “will create uncertainty, delay economic recovery and stifle home sales.â€
- The moratorium will take effect at the end of May.
- Currently, thanks to a state law that passed last year, the required time period from first notification to final sale was increased from 30 days to 141 days.
Check back soon for updates on this historic moratorium and the soaring Southern California foreclosures market.
Your trusted connection to the local bank-owned foreclosure market,
Sincerely,
Mark Shandrow
REO Broker-Associate
Keller Williams Realty
markshandrow.com
