Under existing California law, a lender can initiate a foreclosure by recording a notice of default. After the expiration of 90 days, the lender can record a notice of sale. For first mortgages recorded between January 1, 2003 and January 1, 2008, the lender must now wait 180 days before giving notice of a sale date unless the lender or loan servicer has an approved loan modification program in place. The new legislation expires on January 1, 2011.
In January 2009, lenders commenced more than 2800 foreclosures in San Diego County. Like many other legislative proposals, the intent of this legislation is to force lenders and loan servicers to be more reasonable in offering loan modifications to troubled homeowners. However, it is unclear how many of those 2800 foreclosures will be prevented by this legislation.
With the vast array of options available for struggling homeowners, the most important advice is to seek the assistance of a qualified attorney. For some, the best option might be a Chapter 13 bankruptcy to strip an unsecured second mortgage from their home. For others, the best option might be an experienced attorney who specializes in loan modification services. For now, the California legislature has offered homeowners additional time to negotiate and incentives to lenders to cooperate with reasonable modification requests. Whatever you decide to do, hire a professional and don’t go it alone.