GREAT News in California!

For all those of you living in California and facing foreclosure, or having just lost a home through foreclosure, there is some truly wonderful news hanging out there on the immediate horizon! There are three bills working their way through the California legislature that will, if passed, provide a great deal of relief for homeowners in these straits.

First, a bill scheduled to be voted on today, which the governor has indicated he will sign, will bring the California tax code into line with the federal one regarding the taxability of loan amounts forgiven in short sale, as well as any other taxable results from foreclosure, deed in lieu, or loan modifications reducing the amount of debt owed. In short, if you fall into any of these categories, your avoided debt from any of these situations will no longer be considered taxable income by the state of California. It would be retroactive to tax year 2009. As with any tax issues, talk with your tax advisor to get specifics as they apply to your particular situation and circumstances.

Second, under proposed SB1275, lenders would be forced to offer loan mods to anyone in trouble with their mortgage before the lender could begin the foreclosure process via recordation of a Notice of Default. If the application is filed by the homeowner, the lender would first have to process it before foreclosure proceedings could commence. Further, if the mod were denied by the lender, the lender would have to state why the denial in writing. This bill is in the senate committee stages of consideration, and has a way to go before it could become law.

Third, AB1588, now in early stages of Assembly consideration, would, if it became law, create a mediation program for lenders and borrowers. The process would basically allow borrowers in danger of foreclosure to request a mediation with their lender and the lender would have to agree to the mediation, the goal being an attempt at a loan mod. As it is early in the process, details are not yet available.

For more info as these and other forms of relief develop, keep following this site.