California SB 1275 Attempts to Block Foreclosure for Homeowners Able for Modifications

Earlier this year the California Senate passed a bill that allows people that would be eligible for a mortgage modification from their lender from being foreclosed on. The bill would be in effect until January 1, 2013 and the intention is to help people in their homes.

The Los Angeles Times has come out in support of the bill.

One symptom of the dysfunction has been the number of homeowners who’ve been foreclosed on while the bank was in the midst of modifying their loan. A recent survey of housing counselors by the Center for Responsible Lending found that 60% had clients who lost their homes while they were negotiating modifications with their lenders.

The proposal would require lenders to make a good-faith effort to notify defaulting borrowers about the availability of any loan modification programs. If a borrower applied for a modification but didn’t qualify, the lender would have to send a letter explaining the decision and giving an opportunity to appeal before filing a notice that the mortgage was in default. – Source

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