California has instituted a new foreclosure moratorium. The state's much anticipated 90-day foreclosure moratorium law has gone into effect, and the hope is it will delay and ultimately reduce and stop the number of foreclosure filings. The new law will be going into effect just as lenders and banks are starting to increase the number of home repossessions following expiration of earlier foreclosure moratoriums instituted by the state government of California.
The California Foreclosure Prevention Act, passed as Assembly Bill X2 7 by lawmakers in February and recently signed by Gov. Arnold Shwarzenneger, has several main components to it, including :
• Banks and other mortgage lenders will submit applications to the state of California outlining their loan modification programs and foreclosure assistance plans. That gives them a 30-day exemption from the moratorium. More on loan modifications.
• If the necessary groups in the state government OKs a mortgage lender's modification program, the lender is permanently exempt from the 90-day foreclosure moratorium.
• If the modification program submitted is rejected by the state government, a mortgage lender has just 30 days to upgrade the plan and to be reconsidered for the exemption.
Click here to get a list of counselors to ensure you receive the moratorium.
California residents will have access to a list of banks and lenders that comply with the state's requirements no later than July 2009.
The new law will be strongly encouraging mortgage lenders and banks to follow the Obama administration's Making Home Affordable Program. That federal government mortgage assistance program encourages banks and lenders to reduce interest rates. In addition, California officials will be able to encourage deeds in lieu or short sales as options in which banks will accept less than owed for homeowners who want to leave the residence or those who do qualify for loan modifications.
May people who are in favor of the new foreclosure moratorium say it will make both banks and lenders try harder to keep borrowers in their residences. As what this plan will be doing is ensure that loan servicers have well detailed and comprehensive loan modification programs in place to provide mortgage help, or these lenders will be denied rights to foreclose on their own schedules as must abide by the new delay.
While it is true that state of California can't guarantee or force loan modifications of for all people who need help, the bottom line is that the law is rooted in another state power that gives it leverage with lenders to ensure they are providing foreclosure and mortgage assistance.
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