California governor Arnold Schwarzenegger signed a bill into law today that requires lenders to contact owners 30 days before issuing a notice of default, authorizes local governments to charge lenders up to $1000 per day for not maintaining foreclosed homes, and gives foreclosed owners 60 days to move out of their foreclosed properties.
According to all standard loan contracts, first notices of default are sent out when a borrower is greater than 30 days late on their payments, so this law gives them an extra 30 days. The previous time a foreclosed homeowner had was 30 days to vacate, so they have an extra 30 days there too. Previously, it would be about 6 months from first missing a mortgage payment to foreclosure-forced move out. Now it looks like it will be about 8 months. As for the lender fines, this is an attempt to protect areas with mass foreclosure from becoming ghost towns, ravaged by vandals, drugs, etc. Unrelated to this bill, some have floated ideas that would-be ghost full of foreclosed vacant homes could be used for the homeless. But this is a slippery slope from a legislative standpoint.