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California Housing Crisis Still in Peril with Foreclosure Moratorium

October 5th, 2010

The housing crisis has certainly been the worst in high cost regions like California.  Mortgage rates in California dropped to all-time lows just last week, yet the foreclosure rate continues to rise.  A mortgage refinance in California is easier said than done as lending guidelines have tightened and most borrowers find themselves underwater with their property value being less than their mortgage.

California Housing Crisis

The California Housing Crisis Continues

Local homeowners hope that the house values will continue to rebound in 2013.

There are many questions that have been raised since Chase, Bank of America and Ally GMAC Mortgage said they would suspend certain foreclosure proceedings while they investigate legal paperwork in 23 states where lenders must foreclose against borrowers in court.  These are called judicial foreclosure states and California is not one of them. In California, lenders can foreclose in court but they almost always choose to do non-judicial foreclosures.  The three major banks temporarily halted certain foreclosure proceedings after it was revealed in depositions and testimony that some of the documents they filed in foreclosure cases were done in haste and might have had errors.

Will the Foreclosure Moratorium Hinder Economy?

According to Ladera Ranch realtor, Dan Ambrose, ” The short sale alternative has certainly helped many Southern California homeowners out of a pinch.” But Ambrose says, “There is still a lot of misinformation floating around out their but real mortgage relief is available. ” The fact that rates for 30-year mortgage refinancing have stayed below 3.5% for most of the year have helped stimulate an otherwise sluggish market.

The Associated Press reported last week that a Bank of America official said in a legal proceeding that she signed up to 8,000 foreclosure documents a month and typically didn’t read them.  In another case of what has been dubbed robo-signing, a GMAC foreclosure specialist said in a deposition that he had signed about 10,000 documents a month including affidavits of indebtedness.  “Some of the affidavits might not have been signed in the physical presence of a notary and some might have been signed without whoever signed them having personal knowledge of their contents,” says Gina Proia, a spokeswoman for GMAC, which is owned by Ally Financial  “This is really about the internal process, not about an individual. The process was changed a couple months ago,” she adds. GMAC has halted evictions and post-foreclosure home sales while it reviews affidavits in the 23 states, but it is continuing with other foreclosure proceedings.  “We don’t believe this procedural error led to any inappropriate foreclosures,” Proia says. Chase declined to comment. BofA did not return calls.

California Real Estate

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