What is Your State Doing to Help You Keep Your Home (Part 2)

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What is Your State Doing to Help You Keep Your Home (Part 2)

California is leading the country in foreclosure, so it should not be any surprise it leads the country in creating legislation to combat foreclosure.

Presently, California has several bills before its Congress to help home owners keep their homes.

One bill, AB 1588, which has already passed in the state, monitors the workout program between the mortgage company and borrowers. The advantage of the monitor system is that it would stop further foreclosure action on the home until the home owner was able to review all foreclosure alternatives. The latter is a huge deal because in most states the foreclosure proceedings continue even if you are doing a loan modification or short sale. The only way to slow down not stop the foreclosure proceedings in other states is to file a continuum in court.

Another bill, AB 1639, requires that the borrowers deposit half of his or her current mortgage payment into an account that is monitored by a Senate appointed administrator until such time that the loan modification is approved by both parties. This bill would also prevent the lender from reporting negative credit against the borrower during the loan modification.

Still yet, another bill, SB 931, prohibits deficiency judgment against home owners that sell their home using a short sale. A short sale is a sale where the lender receives less than what the borrower owes on the loan.

Along those same lines, bill AB 2024, would require that the lender give the borrower a written explanation as to why his or her short sale was not approved. This significant because it is a lot of work that goes into preparing the short sale package, and it is important that all parties know why it was not approved so that the parties are not wasting resources.

SB 1221 amends the timeline for filing notice of sale of a foreclosed home. The notice presently is three months with this bill it would be amended to 85 days after filing notice of default.

SB 1427 would require the lender to give the home owner information of what entity or persons who would be maintaining the property in the foreclosure.

A recent passed bill, SB 1275, requires lenders to let borrowers know of their right to seek foreclosure prevention options. It also requires the lender to attach both an application for a loan modification and the notice of default to the filed court motion of foreclosure.

In addition, this bill protects home owners who homes may be sold in error by the lender in an auction prior to the home owners receiving notice of approval of short sale or loan modification.

All the bills that are before California’s Congress and the bills that have been approved are necessary measures to prevent foreclosure and should be followed by other states.

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