California Three Month Foreclosure Delay Law
To encourage more loan modifications and forbearance agreements, the California legislature passed the California Three Month Foreclosure Delay Law. Effective on May 22, 2009, the new law requires lenders to wait an additional 90 days from the date of filing of a Notice of Default in the county in which the property resides before publishing a Notice of Trustee's Sale on a nonjudicial foreclosure of an owner-occupied principal residence of one to four units. Prior to the law, lenders waited only three months from the filing of the Notice of Default before publishing the Notice of Trustee's Sale.
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What Type of Loan Qualifies
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Under the new California law, a first purchase or refinance loan secured by an owner-occupied residence of ont to four units made between the years of January 1, 2003, and January 1, 2008, qualifies for an additional delay of three months before publication of the trustee's sale can begin.
Borrower Requirements
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As long as the borrower occupies the property as the principal residence at the time of default and has not surrendered the property or delivered the keys to the property to the lender, the borrower qualifies for the 90 day delay.
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Borrower Restrictions
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If a borrower has filed for bankruptcy, the 90 day foreclosure delay law does not apply. Bankruptcy laws will govern the foreclosure process. Furthermore, the 90 day foreclosure delay law does not apply if a borrower contacts an agency that assists homeowners in strategic defaults, a process that encourages homeowners to avoid their contractual loan obligations.
Lenders with Comprehensive Loan Modification Programs
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If a lender has a comprehensive loan modification, the lender does not have to wait the additional 90 days before advertising the trustee's sale. No provision in the new law exists to guarantee a compliance with offering loan modifications to borrowers in default.
Other Exceptions for Lenders
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Furthermore, any loan made, purchased or serviced by a California state or local public housing agency is exempt from the law. If a conflict exists between the new law and an existing contract with an investor-owned loan, the contractual agreement with the investor-owned loan will be honored.
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References
- Photo Credit private house image by amlet from Fotolia.com
