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Posts Tagged ‘California Constitution’

Understanding efforts to prevent California foreclosures from increasing drastically out in the Golden State means, first of all, understanding how the foreclosure rate out in California increased so dramatically over the last couple of years. Much of the tale has to do with irrational exuberance, of course, but some of it also has to do with certain peculiarities in the California real estate market.

To begin with, anybody who understands real estate will say that California real estate tends to be more expensive than just about any other real estate in the country with a few exceptions such as Honolulu, Boston and Marin County. The false assumption that many made about real estate in California was that it would continue to climb in price forever, though that has now been proven false.

Unfortunately, a great many speculators and buyers of real estate in California thought just such a thing, never mind that every economic boom is eventually followed by an economic contraction, correction or bust. This one, when it finally came (and it took quite a while) was particularly severe and more vigorous than is normally the case.

California also had a few structural defects in its real estate market that made it attractive in one way but that same attractiveness also was thought to be a detriment to the state and its ability to generate revenues in several other ways. In 1978, the people of the state pushed through a change to the California Constitution that limited property tax increases to certain predefined levels.

For those buyers out there looking at California real estate, Prop 13 helped make Golden State property markets attractive for quite a while. With relatively reasonable (for California) property taxes, a great many more buyers than might have been expected jumped into the markets over time. Naturally, when all recession hit it was bound to be more severe than it might normally have been.

Because of all these issues, California is being forced to dig itself out of a partly self-created hole that has only been deepened by the rate of CA foreclosures. One way it’s doing so is through the “California Foreclosure Prevention Act, ” which is a law aimed at trying to slow down the speed and the rate of residential foreclosures in the Golden State.

This is mainly done through what the state calls a 90 day “holding” period, which is added on to the normal time line that most standard foreclosures must adhere to. It is requiring that lenders wait an extra 90 days after they’ve sent a notice of default to be recorded before they can move to record and publish a Notice of Trustee’s Sale. There are certain criteria that must be met, by the way.

The rate of CA foreclosures, while already marked, show some signs of either improving (meaning, decreasing) or drastically increasing, depending on which way one looks at the issue. At present, the Golden State is more interested in slapping a huge battle dressing on the problem so that it can stabilize the rate. Here’s to hoping it’s successful.

Comprehending efforts to prevent CA foreclosures from increasing drastically means, understanding how the foreclosure rate out in California increased so dramatically over the last couple of years. We’ve got the best inside scoop on ca foreclosure properties.

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