Why is California loan modification so popular? The loan mortgage crisis that sparked this whole economic implosion is to blame for most of our problems. The real estate industry, particularly of California, has collapsed because of people’s greed. Lenders kept on lending to anyone without considering the risk factors and real estate kept on selling and developing more areas. As a result, the debt that remains unpaid grew and grew. The economy was running on the illusory wealth created by debt. But soon of course all of this bad debt caught up with the system and soon the banks crashed because there was no more cash sustaining its functions. And as everyone knows, perhaps the major industry of California is the real estate industry. And since that went kaput, the government is trying to create new ways in order to revive it in hopes that reviving that industry will eventually help revive the entire economy that crashed because of it in the first place.
As such, a new California civil code has been created last year. This is called civil code 2923.6. Basically, what this California code does is that it requires the banks and the private lenders of housing loans in California to accept the applications for loan modification in almost every situation where foreclosure is immanent. Thus, if you have a mortgaged house in California which you have bought between first of January 2003 and the last day of December 2007, then you are likely eligible for this program. For those who do not quite know what loan modification is, it is basically a permanent change in the terms of the loan. These changes such as reduction in interest rates as well as in time extensions and such are all aimed at helping the borrower to pay his or her mortgage despite his or her financial problems.
There is also a federal program created by president Obama, the famous Obama bailout program that creates incentives for all lenders in the nation whenever they successfully approve a modification of loan application. However, this State move by the California government proves to be a much more effective solution to the problem that really tries to resuscitate the economy by tending to the root of the problem. It is aimed at the long term goal of improving the economy and though it may be small, analysts are seeing real incremental improvements to the state’s economy.
Every Californian should be aware of this new law. Of course, this law does not condone abuse of mortgage payments. It only makes it more affordable for borrowers who are facing foreclosure. For those who really want their application to pull through, a good advice is to consult a loss mitigation expert.
One must also note that one does not have to have been late in his or her mortgage payments in order to have a California loan modification. Even such people who are still on time with their payments can still talk to their lender about a modification if they can see that they are in danger financially.