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A decade after the mortgage crisis swept California, home prices are rising, far fewer borrowers are under water, and the state’s economy and government’s finances are strong. Two little-discussed anti-foreclosure laws deserve much credit for slowing the initial devastation and for helping to stabilize the housing market and the economy.
The rapid response of Sacramento lawmakers to the mortgage crisis merits national consideration, too. The state’s policy was more effective than federal housing-relief programs enacted nationally.
The federal response merely created the possibility for distressed homeowners to apply for relief, without imposing ample incentive – or regulation – to induce lenders to make deals with homeowners. California’s approach put the burden on lenders, with new rules that made it harder to start the foreclosure process in the first place, and financial penalties for not maintaining foreclosed properties.
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