On June 15, 2009 Assembly bill X2 7 signed by Gov. Schwarzenegger goes into effect. It gives delinquent homeowners an additional 90 days before lenders can foreclose, technically speaking 3 months + 90 days. The intent of the bill is to require lenders to work with owners in order to prevent foreclosure.
Companies can be exempt by showing that they have a loan modification program in place, including lowering owner payments to a target of 38 percent of their income or they can extend the term of the loan to 40 years. Several companies have already applied. To learn who has earned the exemption visit – www.corp.ca.gov.
The law impacts loans made between 2003 to 2007 and does not require a servicer to violate contracts for ” investor-owned loans.” The most risky loans were those made by investment banks and if the servicing contract says forclosure is preferable to a loan modification, nothing in the law stops foreclosure. The law does not require a bank to provide a modification to a borrower who is not willing or able to play under the modification.
The bottom line is borrowers will get an additional 90 days. Allowing them to fall behind in the mortgage payments for six months before a bank/ loan servicer is able to start the foreclosure process. If you have been hoping to buy a foreclosure you might have to wait until next year.
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
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Janet McCarthy
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