Coming Up With Ways To Prevent California Foreclosures From Increasing Drastically

Looking at efforts to keep California foreclosures under control and from increasing

greatly in California will mean first of all looking at how these foreclosures began to increase over the last two or three years. Naturally, much of it can be chalked up to the penchant for speculation along with certain structural defects in California's real estate markets as well.

To begin with, it's pretty much been an accepted fact that California real estate is always pricier than the real estate in most other parts of the country with several notable exceptions (Honolulu, Hawaii and certain parts of New York City and Boston, Massachusetts market to name a few). Whether this high prices were really sustainable forever, is now being shown to be a falsehood.

Sadly, large numbers of real estate owners and investors bought into that myth, despite plenty of warnings that every economic boom is inevitably followed by a downturn or a bust. The current downturn, after it finally showed, was noticeably acute and more vigorous than it might have been had so much not taken so long to build up. When the top blew off, in other words, it blew off strongly.

There were also a few problems with the state's real estate market that helped it in one way but also tended to be a drag in another way, especially when it came to collecting property tax revenues from it. That's because of California's famous Proposition 13 and its prohibition against raising property taxes more than a certain specifically delineated amount over time.

For anybody who was out looking at property in California, it's certainly the case that Proposition 13 tended to make Golden State real estate look attractive because of its damper on property tax raises. With taxes relatively reasonable, at least for California, a large number of buyers jumped into the markets over the decades. When the recession hit, though, the markets were bound to be affected more intensely than might usually have been the case.

Now, the state is being forced to deal with a rate of CA foreclosures that it might not otherwise have had to deal with if all things were equal. In 2009, California enacted an amendment to the California Civil Code known as the "California Foreclosure Prevention Act." It's basically an attempt to slow the building rate of residential foreclosures through a series of measures.

What the act does is impose an additional 90 day waiting period to the standard foreclosure time line. It requires that lenders wait the extra three months before they impose a notice of default and before they can move to publish the notice of trustee sale that normally occurs out in California. Of course, there are certain criteria homeowners must meet before qualifying, but many currently are, fortunately.

The rate of CA foreclosures, while already marked, show some signs of either improving (meaning, decreasing) or drastically increasing, depending on which way one looks at the issue. At present, the Golden State is more interested in slapping a huge battle dressing on the problem so that it can stabilize the rate. Here's to hoping it's successful.

by: Jerry Springstein

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