Back in February the California state legislators passed the Lieu Foreclosure Prevention Act, and our governor signed it into law.
They should have called it the “In Lieu of Foreclosure Prevention”, because it gives MORE incentive to those who default – an extra 90 days for the lenders to offer loan advice and modifications before filing an NOD. Those who are thinking of defaulting will have close to a year of free rent guaranteed, counting the usual 60 days after the trustee sale.
The law only protects owner-occupied homes from foreclosure where the first loan was recorded between Jan. 1, 2003 and Jan. 1, 2008. The time remains at 90 days for all other loans.
Lenders can avoid the 90-day moratorium if they have a loan modification program in place that is based on the FDIC’s program.
The law goes into effect today, so it’ll be interesting to see if the lenders sent out a bunch of NODs over the last couple of weeks.