New legislation has just been passed in California which prevents banks from pursuing foreclosure while a borrower is negotiating a loan modification. This “dual tracking” is no longer allowed. California is the first state to pass this legislation. Many times, a foreclosure sale is scheduled on a home and won’t be postponed until the day before the sale. To date, the lender has had to approve a foreclosure postponement each month or the property goes to sale.
Borrowers are already stressed by the grueling loan modification process. Having to worry about a foreclosure sale on top of it has been too much. This legislation will protect owner-occupied residential properties with 1-4 units. Additionally, it will only apply to modifications on “first lien” mortgages.
The law also requires banks to provide borrowers a single representative to work with. If the bank violates the law, it provides borrowers economic compensation and civil damages up to $50,000. This law is definitely a step in the right direction.
Our firm is dedicated to helping clients file bankruptcy, obtain loan modifications, and helping clients get a fresh start. For more information on what First Source Law can do for you, please fill out our free evaluations for bankruptcy and loan modifications.
This post was written by Gina Berg