More Banks Playing Ball with Loan Modifications

According to Rodney Kennedy, a loan modification agent in the East Bay, more homeowners are benefiting from loan modifications. "More banks are getting onboard with trying to help homeowners avoid foreclosure and stay in their homes."

I'm sure a great deal of this is because of the California Foreclosure Prevention Act, known as SB 1137. It was the first law in the nation to impose a foreclosure moratorium and encourage quality loan modifications. This legislation only applies to foreclosures on loans made between January 1, 2003 and December 31, 2007. It sunsets December 31, 2013.

The Act’s main components are:

• The lender must contact the borrower that is in default at least 30 days prior to initiating foreclosure proceedings in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure. The lender must also inform the homeowner that he or she has a right to an additional meeting that must be scheduled within 14 days, upon request. These requirements effectively increase the advance notice period for a California foreclosure sale from 110 days to 154 days.
• The lender must provide the borrower with the telephone number of a HUD certified counselor. The Act Authorizes the HUD certified counselor to represent the borrower in subsequent discussions with lenders regarding options to avoid foreclosure.
• The lender must maintain a toll-free number providing access to a live representative during business hours.
• The lender must provide any renters on the property with either a 60-day notice to quit or a new lease.
• An owner of a vacant property acquired through the foreclosure process must maintain the exterior of the property or be subject to a fine (by a local government entity) of up to $1,000 per day.

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