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League analyzing Californias homeowner aid plan
SACRAMENTO (11/10/08)--To mitigate the effects of widespread home foreclosures on California residents, Gov. Arnold Schwarzenegger has proposed requiring mortgage lenders to accept a 90-day “stay” on foreclosure proceedings, unless the foreclosures meet certain conditions. The California Credit Union League is in the process of analyzing the proposal, the league told News Now. The proposal says that mortgage lenders or servicing companies who file notices of default against mortgages on owner-occupied California homes would have to prove to state officials that the company has an aggressive modification program in place, said David Crane, the governor’s special adviser for jobs and economic growth (The Mercury News Nov. 5). Crane defined an aggressive modification program as one in which a lender works with borrowers to keep them in their homes by making payments on a modified mortgage--if doing so would bring the lending company and investors a better return than foreclosure would, he told the newspaper. Schwarzenegger’s administration wants to rewrite defaulted loans--whenever possible--so borrowers would not have to pay more than 38% of their income toward housing expenses, the paper said. Housing expenses usually include mortgage, insurance and taxes. To meet the 38% income standard, lenders could reduce the loan’s interest rate, lengthen the term of the loan to 40 years, or defer a portion of the unpaid balance until the end of the loan term, the paper said.
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