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The California Foreclosure Prevention Act (CFPA) was advertised as a bold and revolutionary measure to encourage lenders to help borrowers. Has the Act provided the help borrowers hoped for and still need?
The answer depends on what your expectations were. The Act is just one more measure the government, state and federal, is using to reduce the number of foreclosures. It encourages mortgage servicers to provide a loan modification program; it does not specify who should receive the loan modifications, or what loan modifications should be offered. Foreclosures have continued to rise in California, but more banks and lenders have a loan modification program borrowers can apply for.
In part because of this Act the list of mortgage loan servicers that provide loan modification programs has grown to include most national and local banks. You can check if your lender has received an exemption from the state department by visiting www.corp.ca.gov. If your lender is not on this list you automatically qualify for a 90-day extension on your foreclosure. If your lender is on the list you know there is a comprehensive loan modification program you can qualify for.
Remember that in most occasions a loan modification is in the interest of both you and your lender. The housing market now is a buyer’s market and lenders are finding it difficult to sell foreclosed properties. However, a loan modification can give homeowners a way to save their homes and lenders a chance of saving their investment.
However, sometimes lenders will claim to have a loan modification program, but will not comply with it, or make it impossible for borrowers to get a suitable loan modification. If this is your case contact California’s Department of Corporations at 1-866-ASK-CORP and report your complaint of noncompliance with the California Foreclosure Prevention Act. The Department of Corporations will tell you which state department is responsible.
This does not mean every borrower will, or even should, receive a loan modification. Some mortgages are beyond help, and probably should never have been granted. If you do not have any income, do not expect to find a job any time soon, and otherwise cannot afford reasonable mortgage payments you will probably not qualify for a loan modification. However, even in these cases the Act requires lender to provide alternatives to foreclosure that protect you from some of the negative effects of foreclosure, and allow you to cancel your mortgage more gracefully.
Anyway, whether you feel you are eligible for a loan modification or not, contact a federal or state approved housing counselor and ask for advice. Please find below a list of approved housing counselors in California as of June 2010. For an up-to-date list of housing counselors visit www.hud.gov.
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