A new law which took effect June 15, 2009 requires that banks in California give homeowners at least three months notice or attempt to renegotiate the existing loan before they can foreclose on the existing mortgage.
California leads the majority of the states in the total number of foreclosures which has wrecked havoc with the housing market, driving home prices down to all time lows and affordability levels. In an attempt to help homeowners stay in their homes, Assemblyman Ted Lieu sponsored a bill to force banks to work with distressed owners. The reason for the bill according to Lieu is California is ground zero for foreclosures. “We’re (California) getting about 80 to 90,000 foreclosure filings every month. That’s one every 30 seconds, so until we start mitigating the number of foreclosures, our economic recovery is going to be hampered.”
This new law will not materially affect the number of foreclosures in California due to the steep price declines and high unemployment numbers that are adversely affecting homeowner’s ability to cover their monthly mortgage. However, it will force lenders to take a more proactive approach before the final foreclosure step. They will have to demonstrate that they actively tried to refinance or modify the loan.
Many fear that this new law will forestall the foreclosure process and inadvertently create a false illusion of stability in the California housing market. Mean while, when these foreclosures work their way through the system, house prices will drop even further creating more stress on the real estate market.
Written by Andee Allen. She is freelance writer, Strategic Media Coach/Consultant, Real Estate Investor, and California Realtor (License #01854926). You are welcome to contact Andee at andeeallen@gmail.com or on her website at www.strategicmediacoach.com.
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