In California, distressed homeowners will be able to have a fighting chance against foreclosure ever since the passing of the new state legislation Senate Bill 1137. The said law requires the mortgage lender or servicer to contact the troubled homeowners in order to discuss their mortgage problems. The attempt to communicate will then be recorded and attached to the Default Notice.
Governor of California Arnold Schwarzenegger signs the new state legislation Senate Bill 1137
Since the implementation of the new state legislation, the foreclosure filings have declined dramatically. In some cities, filings dropped by as much as 80 percent.
Although this would seem good news, many analysts consider the decline to be misleading.
Analysts are saying that the decline in foreclosure filings does not mean that the mortgage problems are being solved. In most cases, it is just a matter of paper work. Even if the records are showing that fewer homes are entering the initial stage of foreclosure, it could only mean that the filings are just being delayed. And eventually, they will catch up unless the lenders change their policies on mortgage loan modifications.
In addition, there would seem to be no evidence that the lenders are considering negotiating with the troubled borrowers. For instance, the number of Trustee Sale in the state has been rising. If the lenders have been working hard to keep these homeowners in their homes, this should not be the case.
It is also not surprising that lenders are having a hard time agreeing to a loan modification since most of the borrowers in trouble have two or more mortgages. This certainly makes negotiations more difficult and complicated.
As of August, California has the second highest foreclosure rate in the nation with one filing for every 130 households. Compared to last month, the foreclosure rate has actually increased by 40.73 percent. Nationwide, foreclosure rate remains to be high, with one filing for every 416 households.
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