The Orange County foreclosure process was made more complex, due to a new state law requiring lenders to provide more information to potential loan defaulters. On July 8th, 2008, California Governor Arnold Schwarzenegger enacted California Foreclosure Law SB 1137 - with additional foreclosure notification requirements activated sixty days later. This law required lenders to educate homeowners on more of their rights during foreclosure.

Traditionally, the Notice of Default (NOD), is the first phase of foreclosure, usually filed after borrowers miss three monthly payments. The new law requires lenders to make contact with homeowners to assess their financial conditions and consider options to avoid foreclosure, before issuing a NOD. Once contact has been made, the financial institution can issue a NOD thirty days later.

Furthermore, borrowers must be informed of their rights to request another meeting - which would occur within 14 days of the request. This law places more responsibility on lenders to assist homeowners in keeping their homes.

Due to increased paperwork and time investment by the financial institution, the number of NODs has declined from 162 NODs on one day, before the law was enacted; to only 18 NODs, after the NOD became law.

Some believe the law's effect on the number of foreclosures may be minimal over time - simply lengthening the foreclosure process. Lawmakers hope that increased education will lead to fewer foreclosures.

Certainly, as Orange County unemployment increases, the continued underlying economic problems suggest that the O.C. real estate market will remain stagnant even after the new law's passage.

Adam Brett
RE/MAX NOC
Fullerton, CA

www.RealtorAdam.com
800.977.ADAM