California Foreclosure Prevention Act

The California Foreclosure Prevention Act (CFPA) was established to add an additional 90 days from the point of a Notice of Default has been filed, till the actual Trustees sale date in a non-judicial foreclosure.
 
This law allows a new timeframe of at least six months from the time the homeowner becomes deliquent, till a Notice of Trustee’s sale can be set.

The CFPA does not operate on the basis of borrower eligibility. Instead, the CFPA is directed at the mortgage loan servicers. In general, a borrower is eligible for an additional 90 days in the foreclosure process if:

• The borrower’s lender/servicer has not obtained an order of exemption from the state;
• The borrower obtained the loan between January 1, 2003 and January 1, 2008;
• The loan in default is the first mortgage or deed of trust on the property;
• The borrower occupies the property as his or her principal residence;
  The borrower has not surrendered the property to the mortgage loan servicer;
• The borrower has not contracted with a business advising people who have decided to leave their homes regarding how to extend the foreclosure process, and
• The borrower has not filed for bankruptcy.

This law was made to encourage banks to work better with homeowners on possible modifications during this extended period of time. Lenders now need to prove they have attempted to modify a loan that is in default, before they can go ahead and begin the foreclosure proceedings. 
 
If a lender does not find a solution to that homeowners mortgage struggles, they will still have at least 90 days before the bank can physically take their house. This 90 day period should give many homeowners a chance to figure out other options themselves.
However, Californias Prevention Act has a number of requirements and therefore many foreclosures will not qualify for this program:
 
Many people don’t know but there has been over 365,000 foreclosures or so in California since since early 2007, and there are many more scheduled to come.

From CA Gov:

On February 20, 2009, Governor Schwarzenegger signed ABX2 7 and SBX2 7, which establish the California Foreclosure Prevention Act.  The California Foreclosure Prevention Act modifies the foreclosure process to provide additional time for borrowers to work out loan modifications while providing an exemption for mortgage loan servicers that have implemented a comprehensive loan modification program. Civil Code Section 2923.52 requires an additional 90 day period beyond the period already provided before a Notice of Sale can be given in order to allow all parties to pursue a loan modification to prevent foreclosure of loans meeting certain criteria identified in that section.

A mortgage loan servicer who has implemented a comprehensive loan modification program may file an application for exemption from the provisions of Civil Code Section 2923.52. Approval of this application provides the mortgage loan servicer an exemption from the additional 90-day period before filing the Notice of Sale when foreclosing on real property as designated by this Section.

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