For those facing foreclosure in California there is hope. According to RealtyTrac, California has some of the highest rates of foreclosure in the country, but cities in the state are seeing substantial declines in the number of foreclosures. The California legislature changed the laws in July and provided more protections for struggling homeowners.
California hit hard by housing crisis
California was hit hard by the foreclosure crisis and the state is still struggling with very high rates even though the rates have declined. For example, in Los Angeles, the rate of foreclosures decreased by 29 percent. Even though this sounds like good news, individual homeowners still have serious problems with foreclosure and may end up filing for bankruptcy.
Governor says legislation was needed to help suffering people
In July Governor Jerry Brown held a large ceremony to sign the bill where he said "People have lost their homes, they have lost their jobs. Families have broken down because of the insensitivity, the greed and the blindness of very powerful people who made millions of dollars personally, and billions of dollars for their respective entities." The legislation particularly focused on aggressive or deceptive bank practices.
Recently, some of the largest banks in the country entered into a settlement with attorneys general from several states which resulted in reforms to the mortgage process and the foreclosure process. The Attorney General from California, Kamala D. Harris played a role in the negotiations. Many of the reforms included in the settlement were also included in the California legislation. Harris says that the new legislation will give due process back to homeowners and that many of the foreclosures have been unnecessary and hopefully the legislation will stop that.
The law will not go into effect until next year. One of the specific provisions makes sure that lenders do not pursue foreclosure while they are negotiating lowering payments with the borrowers.
Recourse for struggling homeowners
Even with the new laws that help protect struggling homeowners it will still take time for people to recover and some may end up having to file for bankruptcy. A bankruptcy attorney can help those struggling with their finances address their debts and help homeowners decide what steps should be taken next. In certain circumstances, bankruptcy may help a homeowner avoid foreclosure.
Bankruptcy allows some debts to be forgiven or lowered and it can protect assets, such as a home, from creditors. Bankruptcy also provides an automatic protection upon filing a petition where creditors are prohibited from taking any collection actions until the bankruptcy process is concluded.