California Regulator Makes Available Foreclosure Prevention Act Draft Regulations, Report Form for Comment

On April 21, the California Department of Corporations (the Department) made available draft regulations and a reporting form in connection with the California Foreclosure Prevention Act (the Act). The Act grants an additional 90 days (in addition to the period already provided) before a mortgage servicer can file a “Notice of Sale” to allow borrowers to work out a loan modification. Further, the Act imposes a reporting requirement on servicers regarding loan modification data. The Act exempts mortgage loan servicers that have implemented a “comprehensive loan modification program” from providing the additional 90 day extension. An entity seeking this exemption is temporarily exempted upon submitting an application (which has not yet been made available) to the Department. On February 20, 2009, Governor Arnold Schwarzenegger signed the Act (SB 7). Comments on the draft regulations and reporting form are due by May 9, 2009. The anticipated effective date of the Act is June 15, 2009