Governor Schwarzenegger signed into law a 90-day moratorium on home foreclosures. That’s great news for families struggling to keep their homes, but does it do enough?
A close examination of the law shows there are some significant loop holes for mortgage companies. They don’t have to comply with the moratorium if they are offering modifications to home owners that meet certain criteria. . According to some analysts, all that a lender needs to do is offer a deferment of some of the principal due until the end of the loan and a minimal interest rate decrease to qualify under the new act. Once such a modification is offered, the lender can continue to foreclose regardless of this law.
Trusting lenders to “do the right thing” hasn’t worked very well to date. Better to put the control in the hands of a neutral Bankruptcy Judge and allow a fair modification. Tomorrow should be the vote on the “Helping Families Save Their Homes in Bankruptcy Act of 2009” by the House. Keep your fingers crossed for passage, and fax you Representative.