Posted by: Grant Hatchimonji
According to official estimates, more than half a million Californians
have sub-prime loans that will jump during the next two years, with
expectations that nearly all of these loans will end in default.
Faced with the possibility of further damaging the
world’s 7th largest economy, Californian Governor Arnold Schwarzenegger took a
step towards curbing the situation today by signing bill SB 1137, which passed
by a 55-18 vote.
“Foreclosure is a financial and emotional crash that takes
years to overcome,” Schwarzenegger said during a press conference before the signing
of the bill today. “This bill gives homeowners a chance to explore
restructuring options.”
The bill will aid homeowners facing foreclosure by requiring
mortgage holders to give borrowers a 30-day notice before filing any default
notice leading to foreclosure. This period will allow for homeowners to
schedule telephone or in-person meetings with their holders to discuss options
before the foreclosure period begins.
President pro tempore of the Californian State Senate Don
Perata, who helped create the bill, expressed similar sentiments. “SB 1137
makes sure people who are being foreclosed have a shot to talk to the holders,”
he said. “This allows for a conversation, and hopefully, they can work
something out.”
Senator Perata added that high foreclosure rates in California have
“shattered” the state’s economy. “When President Bush finally stated that our
country is in a recession, we had already figured that out here. We got hit
hard.”
While this bill places responsibilities on mortgage holders,
Schwarzenegger maintained that homeowners have obligations to fulfill, as well.
“Don’t run away when someone reaches out to you,” he urged homeowners. “When
someone calls you, answer the phone. If they write you a letter, go and respond,
because lenders want to avoid foreclosure just as much as you do.”
In addition to the 30-day notice policy, the bill also
mandated that tenants of buildings that are facing foreclosure be given a
60-day notice before they can be removed from the housing unit. This is twice
the time previously given to tenants in such a situation.
The bill additionally requires owners of foreclosed homes to
face fines up to $1,000 a day for not adequately maintaining them (during
foreclosure). This would, presumably, help prevent houses and neighborhoods in California from becoming
“eyesores,” as Senator Perata described them.
A video of the event and more information can be found on Gov. Schwarzenegger's Web site: http://gov.ca.gov/index.php?/press-release/10119/