California Adopts Moratorium On Home Foreclosures

Today's the start of California's 90-day foreclosure moratorium.

Lots of questions this morning on the real meaning of California's new 90-day foreclosure moratorium beginning today - which got plenty of attention on national TV yesterday.

What's most important to remember: this does NOT stop foreclosures effective today.

It begins a process in which lenders must apply to the state for an exemption from the 90-day moratorium. Lenders must show the state they have an aggressive loan modification program in place to receive the exemption.

If the state approves it they are exempt from the moratorium - unless it's later discovered that they are falling down on the job of modifying loans.

Bottom line: Lenders that do NOT have aggressive loan modification programs in place will have to wait 90 days longer than usual to foreclose.

Essentially, an aggressive modification gets the amount owed down to 38 percent or less of a borrower's income. One of the worries, though, as this goes into effect: most of the new waves of borrower trouble is related to losing jobs. One wonders if any lender can get a loan modified to 38 percent of monthly income if most of the income is unemployment benefits.