California State Assemblyman Ted Lieu, a Democrat from Torrance, has asked two state regulatory agencies to temporarily halt foreclosures for 60 days and launch an investigation into the practices of mortgage servicers even though California is a non-judicial foreclosure state.
California accounts for 15% to 20% of all outstanding residential loans in the U.S.
Lieu recently sent letters to the commissioners of the state's Department of Financial Institutions, and Department of Corporations, asking that they adopt the temporary moratorium in California "so they can investigate whether the lenders in California are failing to follow the law."
Lieu authored a California law that prohibits lenders from recording notices of default on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with that law.
"California does have laws that also require certifications by the lender before a foreclosure can proceed," Lieu said in the letters.
In California, when a homeowner does not cure a default, a notice of sale is recorded and published, and the property is then auctioned off to the highest bidder.
