CA Gov. Arnold Schwarzenegger approved a bill appended to the state’s budget package last week that institutes a 90-day foreclosure moratorium throughout the Golden State. The moratorium applies to first mortgages recorded between January 1, 2003 and January 1, 2008.
State regulators, however, can deem loan servicers and lenders exempt from the new law if they have a mortgage modification program already in place that includes principal deferral, interest rate reductions for five years or more, or extended loan terms. The lender’s loan restructuring program also has to ensure new monthly payments are no more than 38 percent of the borrower’s income. The state’s stipulated debt-to-income ratio is significantly lower than the 31 percent target called for in the Obama Administration’s Homeowner Affordability and Stability Plan.
TheCalifornia Bankers Association and the California Mortgage Bankers Association, have written strong oppositions to the bill, arguing the moratorium will negatively impact home sales and further delay recovery.
