California passed a law on Jan 1, 2013 which required banks to make some adjustments in how people who are behind on house payments are treated.
Most of these guidelines in the “Homeowners Bill of Rights” are common sense changes, simply putting into place natural “rules” for fair treatment of their customers.
The immediate 7% resulting drop in foreclosure rates in Feb. 2013 may prove that the law is doing a good job of changing the mortgage landscape for past-due borrowers. The main provision is the restriction of “dual tracking,”. Thismeans advancing a foreclosure process even as the homeowner is working on securing a loan modification.
Although it seems obvious and fair to hold off on a foreclosure until a loan mod or short sale is either approved or denied, that hasn’t always been the case. Now it’s the law for CA banks to provide time to renegotiate their mortgages if they’ve already started the process.
In addition to the dual tracking restriction, banks by law must also verify documents before acting on them. A little more red tape, maybe, but verification protects homeowners and banks alike — as we learned from the mortgage crisis of 2008 and beyond. Call me crazy, but verification is something businesses should get in the habit of doing anyway — even without a law telling us to.
Other features of the law require investors/new owners of foreclosures to allow tenants 90 days before starting an eviction process; requirements to curb “blight” due to vacant homes and code violations; and the increase from one to three years to prosecute mortgage companies’ foreclosure crimes, due to the complexity of a typical violation.
In California, if homeowners are late making payments, the hammer won’t fall quite as quickly. The extra wiggle room buys them time to start a short sale and/or to get some help from a real estate professional before it’s too late.
What does it change?
This law relieves stress, for sure, but time will tell if the foreclosure rates will continue to drop or if they will rise again at a later point. Therefore, whether or not foreclosure rates slow down, homeowners appreciate the new requirements on banks to behave in a way that makes sense.
[By the way, other states with similar foreclosure problems (Minnesota and Nevada) have attempted to follow suit. Minnesota’s was shot down but Nevada’s is still in the works. I’ll keep you posted.]
Here’s the irony, IMHO: Lots of private citizens still follow the “handshake rule” in San Antonio. Most of us don’t need a Homeowners Bill of Rights law to tell us how to treat our customers and clients. You just treat people the way you want them to treat you. Pretty simple stuff. And that rule fits on half a page; no politicians needed, no lobbyists’ money…just common sense. Don’t you love it?
If you are stressed out by unfair treatment by your mortgage company, we may be able to help. If you are making payments and still receiving threatening letters, or if you just want out of your underwater house payments once and for all, we can help.
We are able to make an offer on your house for cash, and eliminate the need to deal with the banks at all. Markette Properties also makes it easy to negotiate a short sale. We take care of the paperwork, phone calls, etc. on your behalf and provide you with a single point of contact through the process.
Please give us a call if you are falling behind on house payments. The sooner you act, the more options you have, whether you own a home in California or Texas.
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Do you want to sell your house fast in Texas for top dollar with the least hassle? Give us a call! (210) 853-2788 or click the button below.
Photo credit Flickr CC: Altus