Five Brothers


California borrowers are seeing more foreclosure relief.  Yesterday, Gov. Arnold Schwarzenegger signed Senate Bill 1137 into law, forcing lenders to make contact with troubled borrowers and attempt a work out solution before initiating the foreclosure process.

Backed by Senate President pro Tem Don Perata (D-Oakland) , SB 1137 will also provide tenants twice the amount of time to find new residence, should the foreclosure process ensue.  Their idea behind this specific point: to prevent blight in California neighborhoods and require foreclosed borrowers to maintain the upkeep of their former properties.

"Foreclosures not only devastate families they hurt neighborhoods and depress our economy and our budget," Schwarzenegger said. "...We are giving Californians one more tool to help them stay in their homes - without government subsidies.  And I am confident that with this legislation we will help even more Californians keep the American Dream of homeownership alive." 

In May, the online database provider RealtyTrac reported that California saw an 11 percent increase from the previous month and an 81 percent increase from May 2007 in its foreclosure rate, with one in every 183 California households receiving a foreclosure filing during the month.  Coming in at a rate of 2.6 times the national average, the Golden State came ranked second amongst all other states.  Still, California took No. 1 with 71,930 properties reporting foreclosure filings.

SB 1137 is just another way California is working to stem the state's foreclosure problem.  According to the governor's announcement, last week California's Department of Corporations reported loan modifications increasing in the months of April and May over January.

The California Bankers Association applaued Schwarzenegger, saying the legislation represents a collaborative, bipartisan effort.

"All interested parties were able to successfully reach compromise on a comprehensive measure providing meaningful reform to assist borrowers facing foreclosure.  The new law strikes an important balance of enacting relief for borrowers without limited access to credit or causing market disruptions that could worsen the nation's credit crunch," said Rodney K. Brown, president of the CEO of the CBA.  "We thank Senate President pro Tempore Dan Perata for his leadership and attention to this matter  and for engaging our industry in this effort to find solutions that assist homeowners."

Author:  Jacqueline Gilbert
Date:  07.09.08