|HOME LOAN MODIFICATIONS
With so many foreclosures and so many houses being upside down, banks and lending institutions are more willing than ever to modify home loans. In today's market of declining market values, banks and lending institutions stand to lose a great deal of money if a house goes into foreclosure. This fact alone can be used as a negotiation tool to convince a bank it needs to modify a home loan. Also, California bankruptcy law allows a debtor to completely remove and extinguish second (and third and fourth) deeds of trust from its property when there is no equity in the house to secure the second (or third or fourth) deeds of trust.* This fact too can be used to negotiate with a lender for a better loan. Even if a homeowner does not file bankruptcy, the fact that he can if the bank or lending institution does not modify the loan can put a great deal of pressure on a bank or lender to significantly modify the loan. Also, many loans, like adjustable rate loans, were made to homeowners who would never have the ability to pay them back, These types of loans cause serious legal and ethical issues which banks and lending institutions would rather avoid.
*This is only true in those jurisdictions which follow the decision of In Re Lam
1. What is the California Foreclosure Prevention Act (CFPA)?
The CFPA modifies the foreclosure process to provide additional time for borrowers to work out loan modifications. Civil Code Section 2923.52(a) requires an additional 90 day period beyond the period already provided before a Notice of Sale can be given in order to allow all parties time to pursue a loan modification to prevent foreclosure of loans meeting certain criteria identified in that section. An exemption from the additional 90 days is available for mortgage loan servicers that have implemented a comprehensive loan modification program.
A mortgage loan servicer who has implemented a comprehensive loan modification program may file an application for exemption from the provisions of Civil Code Section 2923.52(a). A mortgage loan servicer is not required to apply for the exemption; however, beginning June 15, 2009 all mortgage loan servicers who have not applied for an exemption are required to wait an additional 90 days before filing the Notice of Sale when foreclosing on a residential mortgage loan meeting the criteria established in Civil Code Section 2923.52(a).
2. Where are the legal provisions of the CFPA found?
On February 20, 2009, the Governor, signed ABX2 7 and SBX2 7, which established the California Foreclosure Prevention Act in the Civil Code. On June 1, 2009, Subchapter 14 was added to Chapter 3, Title 10 of the California Code of Regulations (CCR). These emergency regulations clarify the application of Sections 2923.52 and 2923.53 of the Civil Code.
The law and rules are available on our website or can be found at www.leginfo.ca.gov or www.oal.ca.gov
3. What is the effective date of the CFPA?
Beginning June 15, 2009 all mortgage loan servicers who have not applied for any exemption are required to wait an additional 90 day period before filing the Notice of Sale when foreclosing on a residential mortgage loan meeting the criteria established in Civil Code Section 2923.52(a).
4. Who is subject to the CFPA?
All entities that service residential mortgage loans on properties located in California are subject to the CFPA. This includes companies licensed by the Department of Corporations, Department of Financial Institutions, the Department of Real Estate and any other entity that services loans on properties located in California, such as national banks.
Law Offices of Robert J. Spitz.
204 N. San Antonio Ave., Ontario, CA
Serving Riverside and San Bernardino Counties
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