Elk Grove Foreclosure Update: Moratorium Unlikely To Offer Much Help

The state imposed moratorium on foreclosure that went into effect yesterday is unlikely to have much impact according to some foreclosure experts.

The law, which was passed as part of the state’s budget deal in February, mandates that lenders must put off foreclosures for 90 days in situations where no loan modification has been attempted.

The law only applies to lenders that don’t already a loan modification program in place. Most major lenders have some loan modification program in place. In those cases, foreclosures can proceed.

“It is a law you can drive a truck through,” said Sean O’Toole of Foreclosure.radar.com, a service that tracks California foreclosures. “All you have to do is put in loan modification program.”

Chris George, a member of the California Mortgage Banker Association said most lenders are in compliance. “The vast majority of them are already in compliance with some regulation or requirement,” he said.

In related news, Foreclosureradar.com also reported that foreclosure sales in California rose by 31.9 % in May after jumping by 35% in April as compared to one year ago. Most tellingly they also reported that 83% of homes that went to foreclosure sales had an average opening bid at 58.6% to loan value indicating continued weakness in home values.