90 Day Foreclosure Moratorium

90 Day Foreclosure Moratorium

New law imposes a 90 foreclosure moratorium if lenders don’t modify loans

(SACRAMENTO) – Assemblymember Ted Lieu (D-Torrance) announced the California Foreclosure Prevention Act, ABX2 7 (Lieu), takes effect June 15, 2009. Beginning today, a foreclosure moratorium will give distressed homeowners an additional 90 days unless the lender implements a comprehensive and systematic loan modification program designed to keep people in their homes.

“We must put a stop to the unending tidal wave of foreclosures that has crippled our economy,” said Assemblymember Ted Lieu. “This law will help people stay in their homes by giving lenders a serious incentive to modify loans.”

“We’re seeing signs that the economy may be stabilizing and I’m hopeful AB X2 7 can get more homeowners to the light at the end of the tunnel,” said Speaker Karen Bass. “This important bill by Assemblymember Lieu will keep more Californians in their homes and stabilize neighborhoods, which is a necessary step for economic recovery.”

The California Foreclosure Prevention Act is designed to force Wall Street to help the citizens of “Main Street.” The Act will give lenders a choice: either enact a systematic and comprehensive loan modification program or face an additional 90 day foreclosure delay on all of your loans.

In order to avoid the foreclosure moratorium, a lender’s comprehensive loan modification program would have to be based, in part, on criteria set forth by the Federal Deposit Insurance Corporation. Additionally, loans could only be modified in a couple ways, including interest rate reductions, extension of the loan term, or principal reduction.

Homeowners in California continue to experience record foreclosures, a direct result of irresponsible lending. According to RealtyTrac, in April 2009, California posted the highest foreclosure rate in the nation, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity was up 42% from April of last year.

The California Foreclosure Prevention Act is the first law in the nation to impose a foreclosure moratorium and encourage quality loan modifications.

Assemblymember Ted W. Lieu is Chair of the California Assembly Rules Committee, the former Chair of the Banking and Finance Committee and represents the 53rd Assembly District.