No Foreclosure for Military Members!
California has adopted new legislation that prohibits a lender from foreclosing on active duty military members. Mortgage and Trust Deeds cannot be summarily foreclosed on for property owned by a service member, if the property was owned at the commencement of the service period. Now the lender must go to court to get approval before foreclosing.
What does this mean to service members? If you are behind on your mortgage or upside down (owe more than the house is worth) and your are in military service, you have help. Normally, the lenders are impossible to bargin with. The loan modifacation process takes months and hundreds of phone calls and reams of paperwork. Even if approved the modication last only a few months and effects the interest not the loan amount. But if you are in the military, you can bargin with the lender because they cannot sell the house at a foreclosure sale. They need to make a deal with you or go to court and justify the sale.
The CA code says:
(c) No sale, foreclosure, or seizure of property for nonpayment of any sum due under any obligation . . .[secured by a mortgage or Trust Deed] for any other breach of the terms thereof, whether under a power of sale . . . shall be valid if made during the period of military service or within three months thereafter. . . .
The legislation adopted last year, just took effect and clearly prohibits the standard method for foreclosures in California. The 90 day Notice of Default, Notice of Sale and sale on the courthouse steps is out for Military members. Now the lender must either get an agreement with the owner (callled a short sale ) or file a lawsuit for Judicial foreclosure and obtain a court order allowing the sale. In court the service member can make argument about the hardships they are facing. There is no mention of what effect deployment would have on this court hearing but it is likely that the courts would grant relief until the member was in State.
Who is covered? Clearly active duty member of any of the armed forces are covered plus National Guard and Reserves while they are active.
What property is covered? Clearly, all real property purchased by the member before they became a service member. Re-fi's, seconds and lines of credit taken out during service are not directly covered and would be resolved on a case-by-case basis. Whether properties purchased during service would be affected by this legislation is not clear.