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Monday, March 2, 2009

New Foreclosure Laws Take Effect September 6, 2008!

By John Krol

Foreclosure Defense, Foreclosure News, Foreclosure Process, Mortgage Issues, Mortgage Servicer Abuses On September 6, 2008, most foreclosures in California will need to be conducted under the new requirements of California Civil Code 2923.5. This new code provision applies to loans made from January 1, 2003, to December 31, 2007, inclusive, that are secured by residential real property and are for owner-occupied residences.

Essentially, this law is aimed to stop the widespread foreclosures across the State of California by requiring Lenders to attempt workouts and modifications of existing mortgages. Failure of a lender to make such attempts could result in that lender's inability to foreclose.

Prior to this new law, the non-judicial foreclosure process in California was relatively simple. Once the debtor went into default, the lender recorded and noticed a "notice of default," waited 90 days, recorded and noticed a "notice of sale," waited 3 weeks, and then sold the property at auction. The foreclosure process was technically less than 4 months long without any court intervention.

Under the new law going into effect on September 6, 2008, a lender can not even get to the very first step of recording a notice of default until 30 days transpire from when it either first contacts the debtor(by phone or in person, and a message on the answering machine will not suffice) to explore options to avoid foreclosure, or, 30 days after it satisfies the "due diligence" requirements.

Moreover, once these requirements are met, the notice of default will still not be effective, unless the notice of default also includes "a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower, tried with due diligence to contact the borrower as required by this section, or the borrower has surrendered the property to the mortgagee, trustee, beneficiary, or authorized agent."

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