The New Mortgage Law in California

In California, latest statistics obtained indicate an increasing number of foreclosures on properties. To buck this alarming trend, California law makes it mandatory upon financial institutions to provide loan modification notices to delinquent mortgage owners thirty days before filing of Notices for Delinquency on their properties. By passing Sec. 2923.6 of the state's Civil Code last July 2008, the government mandated that mortgage lenders accept amendments of existing loan provisions in foreclosureable properties. The coverage of the law affects loans entered between January 1, 2003 and December 31, 2007. Options for this avenue of agreement include holding the interest rates or even the reduction of the rate. Also allowed are reductions on the principal amount or extension of loan terms.

This move has been hailed by experts as the better alternative than an actual bailout plan. This effectively curbs the expenditure of taxpayer funds while effectively managing the increasing problems of foreclosures. It also promotes the hand in hand solution finding by and between borrowers and lenders for mutual benefit. This program is projected to arrest the growing number of foreclosures both in the short term and the long term. Though for the long term is still a ways off, this attacks the issues at the most basic levels by providing alternatives to existing loan agreements rather than imposing new loans on hapless mortgage owners.

The next step now is to undertake an all out campaign to promote the mechanics and benefits of this all important legislation. But this law is not a means for a homeowner to be delinquent before seeking the re negotiation of their loan. More benefits are provided to those mortgagors who are current in the payment of their amortizations. Furthermore, the market provides for a whole slew of expert advisors in the realm of loan modifications. These consultants come from loss mitigation companies who have the access to legal advice for available remedies in loan modification discussions. They offer their services to ensure that the mortgagor's rights are amply protected. But as any service goes, a reasonable fee is also charged.

A word of caution must also be extended to homeowners seeking to engage this area of expertise. Since there are many unscrupulous individuals who seek to capitalize on hapless homeowners woes, it is best that one reviews the qualifications of the advisor and the reputation of the company the supposed expert represents. The turbulent situation on home mortgage refinancing, with the application of the new law and the prevalent market conditions, has provided a breeding ground for larceny and fraud.