7 Lenders get immunity from state foreclosure prevention act

7 lenders get immunity from state foreclosure prevention act

By Jim Wasserman jwasserman@sacbee.com

http://www.sacbee.com/business/story/1962447.html

Bank of America Home Loans, CitiMortgage and Carrington Mortgage Services are among the first seven lenders and loan servicers granted immunity from the state's foreclosure prevention act launched this week in California.
The new law makes lenders prove to the state that they have a comprehensive loan-modification program that helps borrowers stay in their homes. Those that can't prove it to the state's satisfaction must wait an extra 90 days before foreclosing on borrowers.
More institutions that received quick exemptions from 90-day delays: EMC Mortgage, Select Portfolio Servicing and Kondaur Capital Corp., the state Department of Corporations reported on its Web site. The law, which took effect Monday, prompted 41 applications this week from lenders and loan servicers aiming to prove their modification programs meet the state's test. Many more are expected next week.
"There are potentially hundreds of companies that should or would be involved in this," said Corporations spokesman Mark Leyes.
State agencies reported Friday that 38 institutions received temporary 30-day immunity while the state reviews their applications. Among them were some of the Sacramento region's leading lenders, including Wells Fargo, GMAC and JPMorgan Chase.
The state Department of Financial Institutions temporarily approved seven applicants, including several credit unions. The state Department of Real Estate also temporarily approved two.
The law aims to slow and prevent foreclosures in a state that has endured more than 365,000 foreclosures in the past two years. More than 37,000 have occurred in the capital region.
Gov. Arnold Schwarzenegger suggested the lender-reporting concept late last year and signed legislation implementing it in February. Friday, Schwarzenegger spokeswoman Camille Anderson said the administration is "very encouraged by the progress made this week."
Bank of America Home Loans spokesman Rick Simon said Friday the Charlotte bank's adherence to federal Making Home Affordable guidelines provided it the exemption from 90-day delays in foreclosing in California.
"From the start the state has indicated that the major lenders participating in Making Home Affordable go beyond the requirements of state law for an exemption," he said.
Leyes agreed. "If they are in full compliance with Making Home Affordable there isn't really any reason they wouldn't comply with us."
Making Home Affordable is the Obama administration plan begun in March. It offers lenders incentives to cut interest rates or turn loans into 40-year terms to get payments in a range from 31 percent to 38 percent of a borrower's gross monthly income.