California Foreclosure Bill

Tags: california, Foreclosure, lenders, loans, mortage
Posted in Foreclosure, May 1st, 2008 |

Trying to slow down the alarming pace of the crisis, the California Senate has given the green signal to a foreclosure bill on Monday. For a month the bill had been tossed around between the parties leading to a stalemate.

Now the bill has seen the light of day. According to it, the lender will have to try at least three times to get in touch with the borrower personally or by telephone. This will be within 30 days from sending the default notice. When the communication lines open, the lender will try and find out the financial position of the borrower and seek alternatives to foreclosure.

The President of the Senate Pro Tem Don Perata (D-Oakland) introduced the bill. The last one is similar to the one he had introduced earlier. In the latter the two parties would have had to sit face-to-face but it fell one short of the required majority in January. Except for one, all the Republicans voted against it. The bill has now been amended to allow phone conferences - allowing the mortgage banking party to drop its opposition. This time the bill could go through with 10 opposing. Their concern was that the reeling mortgage industry would get into a worse jam. George Runner (R-Lancaster) said that the worry continued to remain because the bill ‘still has the potential to interrupt liquidity in the market’. However Dustin Hobbs of California Mortgage Bankers Association supported the bill because he said that its primary clause is something that everyone is unanimous about – communication between lenders and borrowers. For final approval the bill now moves on to the Assembly.

The bill will give the borrowers 30 days after talks with the lender, to take the necessary steps for keeping their houses. The law applies only to those mortgages contracted between 1st January 2003 and 31st December 2007. This was the period in which all the difficult loans debuted. The bill also is strict about the maintenance of vacant houses by the repossessing lenders.

Perata stressed that the biggest problem is to ensure that before people are evicted from their houses they get an opportunity to sort out the matter with the lender on a personal level.

The foreclosure figures of California are depressing. In the first quarter of this year the numbers were a record high since the last 15 years.