Friday, October 24, 2008

California Law Offers Repreive On Mortgage Defaults

According to DataQuick, 79,511 homes were lost to foreclosure in California for the three months that ended Sept. 30, a 228% increase over the same period a year earlier and the highest number since the company began tracking foreclosures in 1988.


Fortunately, a new state law appears to be dramatically slowing the foreclosure process -- at least for now. The law effectively blocks lenders from initiating foreclosure proceedings until 30 days after contacting the borrower or making "due diligence" efforts to do so.

However, all is not well. Although there is now a delay in foreclosure actions, it is not expected to prevent widespread mortgage workouts later on.

The first wave of foreclosures, mostly from people who took out adjustable-rate mortgages in 2005 and 2006 that later reset at a higher rate that they could not afford, is probably ending. But with the economy slowing down and expectations of rising unemployment, a new wave of foreclosures could hit early next year.

Read the full article here.