New foreclosure law California SB 1137—Was it a case of too little, too late?
The thousands of Los Angeles and Orange County homeowners still on the brink of defaulting on their loans likely think so. California’s record-breaking, seemingly endless spike in foreclosures has left many frustrated with SB 1137, a supposed piece of “foreclosure relief” aimed at helping borrowers in their darkest hour. But was the much-hyped law a failed, quick fix?
Chances are, if you’re reading this you already know what SB 1137 is. If not, basically the new foreclosure law required lenders to notify homeowners at least 30 days before filing a Notice of Default, buying a little more time to avoid foreclosure. (Read the full text of SB 1137.)
The bill took effect in September 2008, instigating a statewide default notice decline of some 58% from August. Foreclosures then fell by almost 37% in October. The trend further stalled in November, when default notices went up by 24% above the previous month.
In many cases, SB 1137’s “30 days” is nowhere enough time to save a home in jeopardy, whether by loan renegotiation, refinancing or otherwise. And it’s no secret that state foreclosures remain at an all-time high, despite the bill’s July 2008 introduction. Yes, SB 1137 cooled California foreclosures down in September and October of last year. But “the other 10 months of the year were brutal for the state,” says Default Research’s Serdar Bankaci.
Sean O’Toole, a foreclosure researcher, agrees. He claims the state’s new foreclosure law “helped a handful of homeowners, but in terms of reducing foreclosure volumes, all it did was add a delay, and a shorter delay than I expected.”
Sincerely,
Mark Shandrow
REO Broker-Associate
Keller Williams Realty
markshandrow.com
Photo Credit: Flickr
