New Foreclosure Laws

A rash of new federal and state laws have been proposed to deal with the mounting number of foreclosures. One that did just pass in California is SB 1137 and takes effect immediately, which is rare. This shows the urgency the lawmakers give to this situation.

The  1st part is directed towards homeowners who are behind in their payments. At least 30 days prior to filing a notice of default, the lender must try to contact the borrower by phone “in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” The lender must provide the borrower with the contact info to find a HUD-certified housing counseling agency. If the lender is unable to reach them by phone, they can send them a certified letter. There are some exemptions to this, for example if someone has filed bankruptcy, abandoned the home, or if they are taking steps to delay the foreclosure without due cause.

The 2nd part of the law is in regards to tenants. The lender must notify the occupants of the upcoming foreclosure, and the new owner must then give the tenant 60 days notice to vacate after purchasing the property at trustee sale.

The 3rd part requires the new owner to maintain the property after a trustee sale. This includes maintaining the exterior, taking steps to prevent trespassers/squatters, and looking after pools to prevent attracting mosquitoes.

The law does provide for fines of up to $1,000 PER DAY if these items are not handled correctly. So this is something that lenders will be taking seriously.

**Information provided by Referral Realty**
For questions, please contact me directly:

jchen@referralrealty.com

 

 

 

 

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