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Defaults Are High but Foreclosures Stay Low in California

April 29, 2009

Mortgage defaults are at a record high in California, but actual foreclosures are relatively low, the Los Angeles Times reported April 23. The Times reported numbers from MDM DataQuick, which said notices of default in California (the first step in a foreclosure) were up 80 percent in the first three months of 2009, as compared to the last three months of 2008. However, during those same periods, foreclosures dropped six percent for the first three months of 2009. Foreclosures dropped by 7.6 percent over the same period last year, the Times said, but defaults increased by 19 percent.

Experts in the article pointed to multiple reasons why these defaults are not proceeding shortly into foreclosure. Some of it has to do with legal action -- a California state law has delayed lenders' action on many defaults, while private lenders, Fannie Mae and Freddie Mac had temporarily suspended foreclosure actions during the early part of the year. (The latter two agencies began foreclosures again in April.) And lenders are so busy dealing with existing foreclosures that they may not have the time or personnel to take action on newly defaulted loans. Meanwhile, the bad economy and high unemployment may have contributed to the rise in defaults, the newspaper said.

Also a possible contributor is the fact that many lenders refuse to talk to homeowners about their financial problems until after the homeowner is in default, the article noted. One Southern California homeowner said her lender ignored her calls until she stopped making payments -- and was suddenly offered multiple options. This is a sad story that we hear all the time through our work as Buena Park mortgage loan modification lawyers. Again and again, we hear from clients who have been ignored by their lenders until they were forced into default -- or outright told by the bank to stop paying. This might get the bank's attention, but it also means unnecessary damage to the homeowner's credit -- and sometimes a risk of foreclosure.

Howard Law LLP offers an alternative. Our Hawaiian Gardens loan modification attorneys negotiate with lenders for substantial changes to our clients' loans -- no matter where in the default process our clients are. Because we are attorneys, we have both the negotiating expertise and the legal knowledge to effectively bargain with lenders. In fact, banks may pay more attention to our clients simply because they think the involvement of an attorney means a possible lawsuit -- and nobody likes to be sued. If appropriate, our Cypress loan modification lawyers can even use evidence of predatory lending or rights violations by the bank as leverage to get clients a meaningful loan modification that keeps them in their homes and out of financial trouble.

If you're frustrated after months of fruitless attempts to talk to your lender about a loan modification, Anaheim-based Howard Law would like to help. To set up a free, confidential consultation, please contact us online or call us toll-free at 1-800=872-5925.