In signing the state's budget package, California Gov. Arnold Schwarzenegger approved a tacked-on bill that implements a 90-day foreclosure moratorium. The bill was introduced by Sen. Ellen Corbett, D-San Leaondro, and the moratorium applies to first mortgages recorded between Jan. 1, 2003, and Jan. 1, 2008.
Servicers with loan modification programs that include some combination of a principal deferral, an interest-rate reduction lasting five years or more, and/or a term extension may be exempted from the moratorium by bank regulators, the San Francisco Chronicle reports.
‘It was a step backward from where things were going from an industry standpoint and a federal standpoint,’ Kevin Stein, associate director of the California Reinvestment Coalition, told the Chronicle, adding that the bill does not enforce use of modifications. Corbett herself admitted to the paper that she would have liked a stronger bill.
California's banking groups, including the California Bankers Association and the California Mortgage Bankers Association, have written in opposition to the bill, arguing the moratorium will negatively impact home sales and delay recovery.
SOURCE: San Francisco Chronicle