California Enacts Law Aimed at Preventing Foreclosures
On February 20, California Governor Arnold Swarzenegger signed the California Foreclosure Prevention Act (the Act) into law, which requires a person that files a notice of default to wait six months (versus three months) before filing a notice of sale. The waiting period is extended only if (i) the loan is secured by residential real property and was recorded between January 1, 2003 and January 1, 2008, (ii) the loan is the first mortgage or deed of trust that secures the property, (iii) the property was borrower-occupied and was the borrower’s principal residence at the time of default, and (iv) the notice of default has been filed. The Act exempts mortgage loans serviced by a mortgage loan servicer who has obtained an order of exemption after implementing a comprehensive loan modification program meeting the requirements set forth in the Act. Regulations clarifying the requirements applicable to obtaining an order of exemption are forthcoming, and the Act becomes effective 14 days after the issuance of these regulations.