A new state law, that was passed back in February, took effect on Monday June 15th.  The state of California is imposing a 90-day moritorium on housing foreclosures that is intended to make lenders try harder to keep borrowers in their homes.  Loan companies supposedly must prove that they made an attempt to modify before foreclosing.  However, most of the big lenders likely have a program in place and can apply for an exemption. 

So it is unclear as to how many homeowners will actuall benefit from the new law.  But it will likely push the smaller lenders to fall in line and work more diligently with their delinquent borrowers.

Moratorium Guidelines:

• Applies to first mortgages from 2003 to 2007
• The loan must be on your principal residence
• Borrower must have received a notice of default
• Current loan servicer does not have a modification program in place

This may or may not have a significant effect on the San Diego Real Estate market availability as far as foreclosed properties coming on the market.  I feel that the extra cost that banks must incur is more of a deterrent to foreclosure than the state mandated moratorium.  It is often in the bank’s best interest to offload the property rather than spending $50,000+ to hire a trustee and foreclose.

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