California imposed a 90-day moratorium on housing foreclosures under a new law that took effect Monday.
The law is expected to make lenders try harder to keep borrowers in their homes.
Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.If the bank does not renegotiate, the home owner still has 90 days until the bank can take the house.
That warning period, supporters of the law contend, will grant at least some people having trouble with a mortgage the opportunity to come up with other options on their own.
Supporters acknowledge the California Foreclosure Prevention Act won't stop thousands of foreclosures from eventually happening, but noted it was an important step towards a systematic review of delinquent home loans.
There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.
"California is ground zero for foreclosures. We're getting about 80 to 90,000 foreclosure filings every month. That's one every 30 seconds, so until we start mitigating the number of foreclosures, our economic recovery is going to be hampered," said Assemblyman Ted Lieu, the Torrance Democrat who authored the bill.
The state bill passed in February is similar to the Obama administration's Making Home Affordable Program that began in March.
Both encourages lenders to cut interest rates or rewrite loans to affordable levels.
Most banks have already been doing this, in preparation for this new law…don’t expect this to have much of an impact in slowing down the avalanche of foreclosures that is heading this way.
All this really does is give people in foreclosure a little more time to live in their homes for free.
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