Lots of calls today from folks wanting the scoop on the “new moratorium” here in California. Seems that some have misinterpreted the new law and believe that it may have a big impact.
The new law adds 90 days to the existing 3 months between the filing of a notice of default and a notice of trustee sale, but exempts servicers (lenders) who put in place a loan modification program.
Overall the law makes little sense to me. Why our legislators are pushing lenders so hard to lockvhomeowners in a prison of debt and delay the inevitable is beyond me,
but much like SB1137 last year, they are once again back at it with
another attempt to force loan mods that I believe will again fail to make any real difference.
We expect most lenders have at least applied for an exemption from this law by submitting their loan mod program. As such we expect no immediate change in foreclosure activity. Even if the state gets tough and denies the servicers application for the exemption, those servicers have a chance to resubmit, and the mortatorium still won’t apply to them for 30 days after the denial.
The moratorium also applies only to owner occupied ifrst mortgages made between 2003 and 2007, though that is the majority of foreclosures we see today.
Bottom line – if we see any impact at all it likely won’t be until August or September. But these payment based loan mods are largely better for servicers than homeowners, so I can’t imagine that servicers won’t at least put a program in place. We will of course keep an eye on it.
For the complete details see the bill itself: http://leginfo.ca.gov/pub/09-10/bill/asm/ab_0001-0050/abx2_7_bill_20090220_chaptered.pdf
I have not seen anywhere other than talk and blogs that they put an additional 90 day moratorium. The law you have posted is the original moratorium and does not reference a 90 day extension. Does anyone know more if it truly was extended?
No, the original “moratorium” (using the term loosly as neither of these is technically called a moratorium), was SB 1137, here: http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=sb_1137&sess=PREV&house=B&author=perata
And yes, the law above truly did go into affect… but remember it only affect those that did not apply for an exemption at this point.
The press has really blown this one way out of proportion.
Unfortunately, most people have been led to believe that the 90-day
extension applies to all loans in California. Very far from the truth!!!
The best way to try and understand the new 90-day extension is to read Section 2923.52 of the California Civil Code. It states exactly which loans are affected. You will see that very few are. If you read Sections 2923.53-.55 you will see, as Sean already mentioned, that if a servicer/lender has a loan modification program in place, it will be exempt. Many of the people I’ve talked with say that most lenders already have a loan modification program and that the real purpose of Section 2923.52 is to force those that don’t into setting one up. By doing so, they will then be exempt from the 90-day extension. And the beat goes on……
In my expirence it seems that alot of homeowners facing foreclosure are non-english speaking, elderly, or fairly uneducated. I’m not trying to sound steretypical, but that is just my expreince. My clients did not know very much about the foreclosure laws that were acting against them. I feel the government should design a better program to further educate homeowners about thier new laws. It would save them alot of time from recieving requests from unqualified homeowners and take false hopes away from the millions of homeowners that do not qualify for thier “bail out plans”