Here we go again, more government intervention – the latest authored by Ted Lieu, from El Segundo (home of the World Champion Los Angeles Lakers).
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.
Lenders can avoid the 90-day moratorium if they have a loan modification program in place that is based on the FDIC’s program.
I read on another site that this was a big loophole. It says “if they have a loan modification program in place” — no mention of whether or not they actually issue any loan modifications. Still, it remains to be seen if the banks actually do follow through with their foreclosures or just tuck them away in Never-Neverland with everything else they are sitting on.
So if my first falls into the 90-day moratorium category, but my second doesn’t, can the second still forclose? Or does having the right-timed 1st save me?
Do you think most firsts written in the time-range period will fit the FDIC loan mod criteria? Or do you supect that a lot will still get foreclosed anyway? Are there many banks not doing the FDIC program?
This letter was first published 11 years ago; however with everything going on today it seems like some poeple have lost their common sense. This might explain some of the problems facing our economy today and in the future.
Death of Common Sense
By Lori Borgman
Published March 15, 1998
http://infohost.nmt.edu/~armiller/commonsen.htm
So, do most lenders have a qualifying loan modification program in place so they can avodi this? And what exactly does such entail?
There’s got to be some way to make money on this, with such clear indicators of market effects. This will (obviously) bring down foreclosures during the next few months, which the NAR and mass-idiocy-media will spin to mean housing is recovering, which should mean housing-related investments go up in value. Then, predictably, the mass of pending foreclosures will hit when it expires (mid-September), and within a month or so the updated statistics will show that the only effect of this last in a long line of moronic legislative feces has had no effect other than to reward deadbeat borrowers with another couple free months of rent at the expense of taxpayers (who are paying the bank’s losses for them courtesy of the Obamanation). That should cause housing-related investments to plummet again around October, which should make shorting somewhat profitable.
Unless, of course, virtually every investor sees this latest idiotic debacle for exactly what it is, and values accordingly, in which case there won’t be much profit potential, just a period of time to wait for the misguided manipulation to run its course. I wouldn’t want to be one of the unfortunate people who wanted to buy a house in the next 4-5 months, though; this garbage just makes it that much harder to evaluate the real market value of property, you’re probably better off waiting at least six months to move on anything, and that’s assuming the next legislative malfeasance doesn’t happen by then. Bad times for everyone (except the freeloaders being subsidized by the taxpayers, as previously noted).
“I wouldn’t want to be one of the unfortunate people who wanted to buy a house in the next 4-5 months”
yes, I would fall into that category. We are renting and have been looking in the Carlsbad area to buy. We don’t have millions of cash sitting in the bank, so I guess you could say we are somewhat limited to what we could afford. (No $4 million La Jolla pad for us). But sadly the inventory kind of stinks right now. We are *this* close on making the decision to continue renting. Which really stinks because we have school age children and would really like to be more settled.
Anyone that has a house in Carlsbad they’d like to rent out to a non-smoking, pet-free family with excellent credit let me know!
sigh….
f*** moratoriums.
let them all foreclosure and we can finally return to some normalcy.
Jeebus.
i love it when I type slow and skip works.
Let them all fall into foreclosure!!!!
Well, as I’ve written before, it’s my opinion that one of the unfortunate victims of all the malignant government manipulation, aside from the people looking to buy a house and are having those plans delayed indefinitely by market manipulation, are the people who make a living off a healthy RE market (eg: good honest RE agents such as Jim and others, etc.). There will be many job losses and much hardship in the RE industry which would have been largely prevented if the government had just allowed the housing market to correct quickly, instead of creating this extended state of limbo where no smart money wants to buy anything other than bargain basement foreclosures, because everyone knows the market has a long ways yet to fall, but the main driver of correcting prices (REO resales) is being impeded by idiotic politicians. It really is unfortunate for almost everyone involved.
This BS is really stupid. They just guaranteeing higher mortgage rates to compensate bond investors (other than our own government) for the risk of arbitrarily having to wait 3 months before they can get their money back.
Don’t forget, Jay, there is also the very real risk that the effective value of your bond will have decreased [further] during those three months, meaning there is additional risk. Also, every contract manipulation such as this adds to the uncertainty about how much the government will interfere in private contracts in the future, which also increases risk for the bond holders. All three of those should serve to make bond buyers demand higher premiums, pushing up mortgage rates.
On the other hand, the market could probably also use some higher mortgage rates to help push the prices to correct faster, so there might be a silver lining there, if not for the Fed currently printing money to keep mortgage rates artificially low at the expense of taxpayers and savers. I wonder what would happen to rates if the people ever get fed up enough with the Fed to force them to stop wasting money subsidizing GSE borrowing…
Erin wrote:
We are *this* close on making the decision to continue renting. Which really stinks because we have school age children and would really like to be more settled.
Please, please, please don’t worry too much about being “settled.” If your kids come home to the same house every night, to parents or guardians who obviously love them (and each other) and there is a reasonable amount of routine and stasis for them to depend on, then guess what: you are every bit as settled as you need to be.
I grew up with parents who rented. We lived in maybe seven different places, all in the same town, by the time I graduated high school. I never felt for a moment that mine was a rootless life at the time, nor do I now in retrospect. Moving every couple of years is nothing to kids, as long as it’s within a reasonably small area (as a rule of thumb, let’s say within the boundaries of the local high school or middle school). Three or four years is quick to us, but to kids it’s like a lifetime.
I had friends during the bubble years who insisted on buying houses for the kids’ sake. I practically begged them to keep renting. I wish they had listened, and I’ll bet they do too. Their lives and households would have been a lot more stable and “settled” now if they had.
It’s your life, but take it for what it’s worth from a stranger on the Internet: don’t feel bad for a second about making the decision to keep renting, if indeed you do so.
^^^What PC said ^^^
My parents were RE brokers and investors (though only mom actively practiced RE sales). Because of this, we usually moved every two years or so — from **purchased** house to **purchased** house.
In the meantime, I had many friends who had always lived in rentals…the very same rentals that their parents still live in today, twenty-thirty years later.
In our neighborhood (Carlsbad), most of the people who’ve bought since we moved here in 2004 have had to sell/got foreclosed on. Some of these “purchased” homes have turned over multiple times. We, on the other hand, are entering our sixth year in our rented home, and plan to stay here until we find something that suits our needs and is priced at pre-bubble levels (2001 or lower).
Enjoy your neighborhood and family, and consider yourselves “settled” for as long as you live there.
Best of luck to you!
We are at the bottom. The recession is over. The housing market in CA has stabilized and the banks are all well capitalized to deal with any future losses. This moratorium is just for the fun of it.
Erin, we have a 4 bedroom 2 bath in Olde Carlsbad with a big fenced yard close to all great schools. What price range are you looking at?
“Teddy” Lieu actually represents me in the Legislature. Actually, he doesn’t represent me, he represents all the real estate and builders in the area. Shorewood Realtors is the local heavyweight in real estate and their business has gone to seed. Their agents are trying to hold onto their “investments” or are trying to get incredibly high prices for the properties they own. They sent out word to Teddy to do something many months age and he introduced the 3 month delay on NOD. Now the foreclosure moratorium. The guy is a tool for the industry, nothing more.
Hey Jim,
LAKERS!!!
I am thinking this law will only affect the small time note holder, not the big ones.
Dept of Corps has adopted regs to get exemptions from the new law:
http://www.corp.ca.gov/OLP/pdf/rm/0509-FEO.pdf
Under the regs, and the exemption application format at the end of the regs, major servicers who have already signed on to the Making Home Affordable Plan or FDIC streamlined plan will have their applications sail through, and the exemption will be effective as of the filing of the application for exemption with the commissioner, before the commissioner approves the application.
So I see no delay on NODs under the new law for the major servicers, only the little ones.
PC and CA Renter,
Thank-you for the kind words. I was a military brat and did move quite a bit growing up. It wasn’t that bad as we pretty much bounced back and forth between 2 bases. My husband and I were military and we’ve moved between NC and California a couple times. The kids have always done pretty pretty well with the moves, but this last move back to Cali was tough on my oldest (having to leave good friends etc.) But we here to stay.
ARK,
Less than $3,000 a month preferably.
I have read what everyone had to say, there are exceptions to this rule it’s not a good thing. 1031 exchanges got hit very hard with bad loans, not everything is a standard home that got hit, butapartment buildings, etc. Some poor people have tenants that don’t have the money to pay there rent and the owners are loosing there property, take your heads out of the sand and look around. There are some real lives out there that did not deserve this and have done everything right, this might help get people in the right position or maybe the banks will try to work with them. I can’t stand people that talk on such a large and mindless chatter, when not eveyone nor everything is the same.
j.