New Law Reduces Los Angeles Foreclosures by 50%

by cassy82 | November 7, 2008 at 11:02 am

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If you are wondering whether or not mortgage lenders have been helping homeowners stay in their homes and avoid foreclosure, you might get your answer from the most recent foreclosure data for Los Angeles. Foreclosure rate dropped for the month of October after a state law was passed last July requiring lenders to notify their borrowers and wait 30 days before filing for foreclosure.

Obviously, the new law has given troubled borrowers more breathing space. At least, they can try exploring options with their lenders in order to prevent foreclosure. But just like other laws, there seem to be some loopholes. For instance, the state law does not require the lender to show evidence of the foreclosure alternatives being considered. All they are required to show is proof that they have contacted the lender and informed them of their mortgage default.

For most critics, the state law merely delays the entire foreclosure process and does not really provide a solution for these homeowners facing foreclosure. Because of this, analysts are actually expecting for the city’s foreclosure rate to rise once again for the month of November.

Sadly, the distressed homeowners will only be gaining a couple of weeks’ respite from the idea of being homeless. In the same way, the local housing market will just enjoy a momentary dip in the inventory of affordable homes.

What Los Angeles really needs is a state law that will provide homeowners facing foreclosure with real assistance in the form of foreclosure counseling. In addition, lenders should also be required to negotiate loan modification with their borrowers in order to finally make a dent on the housing crisis.

If not, Los Angeles and California will find itself with more foreclosure homes piling up and more families left homeless because of this housing mess.

By Cassiano Travareli