Released: October 24, 2008

California law puts brakes on home defaults

Source: William Heisel, Marc Lifsher& Maura Reynolds, L.A.Times (Free Registration)

The number of people losing their homes in California hit a record high of nearly 80,000 in the last three months, but a new state law appears to be dramatically slowing the foreclosure process—at least for now.

Loan default notices, the first step toward foreclosure, fell to 94,240 for the three months that ended Sept. 30. That’s down sharply from the record 121,673 for the previous quarter, according to research firm MDA DataQuick.

The big drop came in September, when a new state law took effect that blocks lenders from initiating foreclosure proceedings until 30 days after contacting the borrower or making “due diligence” efforts to do so.

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