As predicted by critics of California’s government foreclosure prevention program, seven major mortgage lenders in California have just been exempted from the foreclosure moratorium imposed across the state, and more are expected to become exempted.

The first three big lenders to get exemption were Bank of America Home Loans, Carrington Mortgage Services and CitiMortgage.

The law passed by the state in February and implemented in June requires lenders to notify defaulting homeowners and give them at least 90 days to restore their loans to normal status or work out a loan modification or loan refinancing before foreclosing on them.

But the law also provided a way by which lenders can get exempted from the foreclosure moratorium – establish a comprehensive a loan modification program. Since many have already established their loan modification programs, many are already exempted.

The web site of the state’s Department of Corporations has already listed 38 lenders which received temporary immunity from the foreclosure moratorium as their programs are being reviewed.

The other lenders which got exemptions early were EMC Mortgage, Kondaur Capital Corp. and Select Portfolio Servicing.

Among the big lenders who were given 30-day temporary reprieves were Bank of America NA, JPMorgan Chase Bank, Wells Fargo Bank NA, Wells Fargo Home Mortgage, Wells Fargo Financial and America’s Servicing Company.

Some critics said that the government foreclosure prevention law will not be helpful because the three major lenders, which will surely get exemption, are also owners of Wachovia, Washington Mutual and Countrywide Financial, considered the three largest banks that provided toxic home loans.

Other banks that got temporary immunity were GMAC Mortgage, American Home Mortgage Servicing, HSBC Mortgage Services and U.S. Bank National Association.

Meanwhile, the Department of Financial Institutions gave temporary approval for the loan modification programs of seven applicants and the Department of Real Estate approved two applicants temporarily.

Rick Simon, spokesperson for Bank of America Home Loans, said his bank easily got the 90-day exemption because the bank has been a leader in implementing loan modifications under the federal government foreclosure prevention program.

Mark Leyes, spokesperson for the Department of Corporations, said his agency expects hundreds of companies to get involved in the government foreclosure prevention program.
In the past couple of years, California has posted over 365,000 foreclosures listings, with around 37,000 occurring in the Sacramento region.

Despite criticisms of the law passed recently to help facilitate the federal government foreclosure prevention program, California officials expect the moratorium and the loan modification programs of lenders to help more troubled homeowners.