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THE CALIFORNIA SUB-PRIME MORTGAGE AGREEMENT
In Fresno on November 20, 2007, California Governor Arnold Schwarzenegger announced a groundbreaking plan to help address rising levels of defaults and foreclosures on home mortgages.
An agreement was reached with four lenders representing 25 percent of the sub-prime loan market in California to publicly announce their commitment to principles that will help preserve homeownership for tens of thousands of home owners at risk of default due to hybrid ARM sub-prime mortgages resetting to higher interest rates.
The agreement consists of three basic principles pursuant to which mortgage lenders will:
- Reach out proactively to borrowers well before their loans reset;
- Streamline the processes by which they determine whether borrowers may reasonably be expected to be able to make the reset payment; and
- For people who are in their homes and making timely payments now at the starter rate, but who lenders determine cannot make the reset payment, keep them at that starter rate for a sustainable period of time.
Governor Schwarzenegger thanks and congratulates the lenders that have publicly committed to these principles and encourages all other lenders and servicers to join in doing the same in order to help address the issue of home foreclosures in California.
For more information, view the media release from the office of Governor Schwarzenegger.