Yesterday had a lot of media talking about the 90 day foreclosure “moratorium” law that officially went into effect yesterday. But it’s a lot of political hot air, scoring points for politicians who want to help “Main Street” vice “Wall Street”. It makes for good populist fodder and sound bites for the 11 o’clock news. Here’s the bottom line. Back in February, Gov. Schwarzenegger signed the  California Foreclosure Prevention Act. Part of this law establishes a 90 day moratorium (or grace period) above the current 3 month grace period a borrower has to make good on the loan before the property can go to auction unless the lender has implemented a loan modification program.

Almost all lenders have done so. Attached to most Notice of Trustee Sales today are affidavits showing that the lender has attempted to work out the loan, thus negating the 90 day “moratorium”.

The intent of the bill was good and undoubtedly will help a few homeowners, but most of those in trouble today are far “underwater”, plus so many sub-prime loans were made to people who obviously never qualified in the first place that I doubt we’ll see much slow down in foreclosures for the foreseeable future.

But the 90 moratorium on the 11 o’clock news sounded good!