Governor Schwarzenegger Proposes 90 Day California Mortgage Moratorium

In Sacramento, California, the San Francisco Chronicle reports:

Gov. Arnold Schwarzenegger proposed a new plan Wednesday to induce lenders to modify home loans to help struggling borrowers avoid foreclosure. […] Schwarzenegger suggests imposing a 90-day stay for the foreclosure process for owner-occupied homes that have received notices of default. Lenders could be exempted from the stay by proving they have an “aggressive modification program” to keep borrowers in their homes.

The loan modifications would be modeled on the approach used by the Federal Deposit Insurance Corp. to help borrowers of the failed IndyMac Bank.

[State officials] said the proposal would increase loan modifications by removing loan servicers’ fears that they could be sued by the investors who actually own the mortgages, and by getting the majority of companies involved in working out loans, so no one company need fear it is the only one taking such actions.

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