Skip to main content

Search form

California Foreclosures: New Data Support Policy Reforms to Encourage Effective Loan Modifications and Prevent Avoidable Foreclosures

June 25, 2012
Mortgage Lending

Read the press release >>

Although the national foreclosure crisis is now in its fifth year, it is far from over—particularly for California. The Center for Responsible Lending estimates that there are still nearly 700,000 California homeowners who are at least 30 days delinquent or in the foreclosure process. While not all of these impending foreclosures can or should be prevented, new CRL analysis sheds light on the impact of loan modifications on preventing avoidable foreclosures and how many and which Californians are at risk.

California's legislature stands on the brink of extending key servicing protections of the recently-enacted National Mortgage Settlement to all California mortgage loan servicers. Members of the Joint Legislative Conference Committee on California's Foreclosure Crisis will soon vote on a key piece of Attorney General Kamala Harris' Homeowner Bill of Rights. This legislation will restrict dual tracking, prohibit filing of false documents, and require servicers to provide borrowers with a designated point of contact. Most importantly, the legislation will include a robust enforcement mechanism that will provide servicers with a strong incentive to comply with the law's new requirements and provide borrowers with a remedy if they do not.

The findings of this policy brief underscore the need for the legislation, which aims to create a fairer, more transparent foreclosure process that will keep more Californians in their homes and paying their mortgages.


  • Loan Modifications Work: Eighty (80) percent of California borrowers receiving a permanent loan modification in 2010 remain current on their loans and have avoided foreclosure; only 2 percent of these borrowers subsequently lost their homes to foreclosure.

  • Large Numbers of Borrowers Still At Risk: Nearly 700,000 homeowners, or 11 percent of all loans in California, are at risk of foreclosure. Southern California regions continue to lead the state in both foreclosure rates and foreclosure volume.

  • People of Color Most Likely to Be at Risk: The delinquency rate for both Latinos and African-Americans exceeds 10 percent, and rates for Asians and whites are high as well, at 7 percent.

Read the rest of the brief