It's no surprise that in
the current economic climate that
That piece of legislation essentially increased the time non-judicial foreclosure timeframe from four months to five months.
In 2009, California's Foreclosure Prevention Act almost doubled the time for foreclosure by imposing an additional 90 day moratorium on foreclosures. The theory is that after the Notice of Default is filed, the normal 90 day reinstatement period will double to 180 days to give the borrower and lender time to work out a loan modification.
The Act only applies to first loans, so Home Equity Lines of Credit (HELOC) and other junior liens are exempt.
The downside I see from this moratorium is that potential for "shadow inventory" created by all the loans in default where the borrower has no intention of continuing on the loan due to the loss of equity in the property. It will take much longer now for those properties to be re-enter the market, which could prolong the price uncertainty for these homes. Only time will tell.