From the Union-Trib:

A new, 90-day state moratorium on foreclosures went into effect this week to give homeowners more time to avoid losing their homes.

But because the California Foreclosure Prevention Act exempts lenders from the moratorium if they submit modification programs for review, few owners are expected to benefit from the law, government officials and industry leaders said.

As of yesterday, 39 institutions, which handle most lending activity in the state, had won 30-day exemptions from the moratorium while their plans are being reviewed. Seven of those, including Bank of America, had obtained approval for their plans and received permanent exemptions.

“My view is if we can even help one family avoid foreclosure, it’s a win,” said Assemblyman Ted Lieu, D-Torrance, who sponsored the law. “The goal of this bill is not to put in a moratorium as much as it is to get banks to run loan modification programs to keep people in their homes long-term.”

The new moratorium would extend to six months the time between the notice of default and the foreclosure sale, which is double the current time, officials said. Eligible loan modification programs must offer favorable terms for principal residences bought from 2003 through 2008.

Since the beginning of last year, about 200,000 loan modifications have taken place in the state, said Department of Corporations spokesman Mark Leyes. Over that same period, more than 304,000 homes have been foreclosed on, according to MDA DataQuick.

Even with loan modifications, many homes still are foreclosed because two-thirds of approved changes have not made monthly payments more affordable, said Paul Leonard, state director of the Center for Responsible Lending.


As expected, the big lenders have already been exempted from the new moratorium, here’s the list:

Ted’s prediction of this new law helping one family will be about right.

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Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, which began in September, 2005. Stick around!

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