This bill would also ban certain designer mortgage loans such as the option arm mortgage. The option arm mortgage, also known as the pay option arm, allows borrowers to pay less than the interest that is due by adding the unpaid interest to the balance of the mortgage loan. The bill would also allow some homeowners to refinance their homes without being responsible for any penalties or unnecessary fees.
The new bill may help some homeowners, who have these risky loans, potentially avoid foreclosure. During the fourth quarter of 2007, California’s default notice fillings more than doubled leading to the highest number of defaults in over 15 years.
Even with the emergency rate cut the Feds issued earlier in the week many California’s are not able to take advantage of refinancing their mortgage because of declining home values. If you have an adjustable rate mortgage and have the slightest bit of equity, you are urged to take a look at refinancing options. Mortgage rates are the lowest they have been in over 3 years and the current market trend tends to favor home values continuing to decrease for another year or two.
You can find more resources pertaining to the steps California lawmakers are taking to help homeowners avoid foreclosure at the California Mortgage page of Future Planning Financial. You will also be able to find the latest mortgage rates and local mortgage lenders.
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Lower Price
Lower rates are not going to help sell a house this time around. Banks and Investor have finally woken up that housing price can decline like anything else. Why would they keep lending to people if the asset backing the loan will go down in value? And if the current legislation passes to allow judges to modify the loan terms, why would any investor or bank lend money for home loans when all a person has to do to keep the house is claim bankrupcy. The judge would be able to modify the loan terms and possible modify the loan balance based on asset value. Uh? The judge will determine the balance of the loan even if it was the barrower why signed up for the loan balance. Why would any bank or investor lend money for such an uncertain environment?