The California state-run mortgage relief program, initiated by Gov. Gavin Newsom, had over 400 financial institutions agree to not charge late fees, report late payments, or demand balloon payments. Homeowners reported non-compliance with these rules, facing unexpected repayment demands. Legal aid attorneys confirmed the prevalence of these issues. The California Department of Financial Protection and Innovation received complaints regarding balloon payments, credit reporting, and insurance. The agency acknowledged isolated compliance failures but refrained from imposing penalties since the program was voluntary. July 7 marked the end of the FHA foreclosure moratorium, adding to existing challenges for homeowners.
California's state-run mortgage relief program involved over 400 financial institutions agreeing to not charge late fees, not report late payments, and not demand balloon payments. However, homeowners have reported that some banks are not compliant with these rules, facing demands for repayment even though they were promised relief. Legal aid attorneys and regulators confirmed these issues, with specific cases illustrating the adverse effects on homeowners, including threats of foreclosure and credit score drops after late payment reports.
In particular, Lisa Mason from Altadena described her experience with Select Portfolio Servicing (SPS), which paused her payments without consent and later demanded full repayment by a strict deadline. This demand not only threatened her with foreclosure but also led to a significant drop in her credit score because the company reported her as late in payments, leaving her feeling helpless amidst the chaos of the relief program.
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