Since the implementation of this law on January 1st, there has been a lot of press and a few misconceptions. Here are a few facts about the California Homeowners Bill of Rights. Here is another link to six examples how this can benefit California homeowners.
- One of the most-common misconceptions held by underwater homeowners is that the new California Homeowner Bill of Rights keeps a lender from foreclosing on a home regardless of whether the borrower is pursuing a loan modification or a short sale.
- However, the bill of rights is supposed to restrict lenders from “dual tracking” – repossessing a home while a homeowner is awaiting a decision on a home loan modification application.
- When a borrower sends in a complete loan modification application, the foreclosure process should instantly come to a halt. If the lender rejects the application, the borrower has a 30-day period to appeal the decision. The home cannot be foreclosed during that time either.
- In a short sale, however, the foreclosure process is halted only after all the lien holders on a home agree to the short sale and the prospective buyer gets financing. All of that can take months. The bottom line, according to one broker: “A foreclosure could easily occur during the attempt to bring about a short sale.”
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