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Norwalk Loan Modification Lawyers on California Foreclosure Moratorium

March 20, 2009

If you bought a home in California between 2003 and 2008, you may have gotten some good news on Feb. 20. That was the day when Gov. Arnold Schwarzenegger signed a bill putting a 90-day moratorium on some, but not all, foreclosures of California homes purchased between Jan. 1, 2003 and Jan. 1, 2008. It goes into effect in late May.

The bill is already under fire from consumer groups for being too weak, according to the San Francisco Chronicle. They criticize its exceptions for loan servicers who have a mortgage loan modification program in place that meets certain standards. Among other things, the program must allow deferral of at least some principal, lower interest rates for five years or extend the terms of the loan. Furthermore, the bill requires borrowers to adjust payments to about 38% of the borrower's income, which is higher than the 31% put forth in President Obama's foreclosure prevention plan unveiled Feb. 18. And as a consumer advocate told the newspaper, merely having a program does not guarantee that homeowners will successfully renegotiate their loans.

As Stanton mortgage loan modification attorneys, we think they're right to be skeptical. Because we specialize in helping homeowners deal with overwhelming debts, we have seen firsthand that banks are not willing to renegotiate many mortgages, sometimes even when it's in their own best financial interests to do so. That's why the president's foreclosure program tries to reward banks for serious attempts to renegotiate loans (the carrot) -- and why Congress is considering giving bankruptcy judges the power to "cram down," or change the principal on, loans (the stick). As the article describes it, the state bill allows lenders an exception for merely having loan modification procedures in place, with no requirement that they actually use it.

Nonetheless, the housing market's downturn means homeowners are in a better position than ever to negotiate for home loan modifications. Howard Law LLP has an active practice representing homeowners who need legal and negotiation expertise to change the terms of their loans to something more livable. Our Southern California mortgage loan modification lawyers have helped many homeowners change the length of their mortgages, their interest rates, the forms of their loans and sometimes even the principal owed. If you know you need this kind of help and you'd like to learn more at a free, confidential consultation, contact us online today or call us toll-free at 1-800-872-5925.