Summer is going, going...gone.

In my last blog, I wrote about THE CALIFORNIA FORECLOSURE PREVENTION ACT. Today I am here to discuss the impact of this law. Almost all of my clients are buyers looking for a good deal on home. The combination of state and federal tax incentives with distressed/foreclosed properties available made it a good time. I use the past tense because I am finding foreclosures more difficult to find. What has happened is THE CALIFORNIA FORECLOSURE PREVENTION ACT (CFPA) has prevented banks from foreclosing on properties. So instead of these properties coming to market we are seeing more short sales. I have discussed the problematic nature of these in a previous blog entitled "Short Sales." Short Sales don't get sold. Banks and sellers can't agree on a sales price and realtors don't even know if they are going to get paid or how much.

We are currently in the middle of summer. This is when many people like to purchase a house especially those with kids. The kids can be in the district and be ready for the school year when it starts in late August or September. Well guess what? There are no foreclosures left and few people have the ability or patience to close on a short sale.

The CFPA took effect on June 15th and basically adds another 3 months before a bank can foreclose. So I figure if a bank was going to foreclose on a home on June 15, they won't be able to do it until September 15. The impact of this goes back to my previous point: there will be few foreclosed homes available to purchase at one of the most popular times of the year. Is this good for California? Is this good for recovery? Is this good for homeowners? Will troubled homeowners really be able to come up with 6 months of payments instead of 3? Will summer buyers be less motivated in the fall and winter? These are great questions that I don't think the legislators of CFPA thought about. Maybe a better acronym for this law would be CRPA: THE CALIFORNIA RECOVERY PREVENTION ACT.