Arnold Flexes Some Breathing Room

In an attempt to give everyone a bit of additional breathing space, Governor Schwarzenegger recently signed a bill to impose another 90-day moratorium on foreclosures in California. This may benefit some financial institutions that will be closing their respective quarterly books in two weeks, to include (but not limited to) Wells Fargo (WFC - Analyst Report), Bank of America (BAC - Analyst Report), US Bancorp (USB - Analyst Report), City National (CYN - Snapshot Report).

Apart from some lenders outside of California that have installed voluntary foreclosure freezes, foreclosures are on the rise. Losses appear to have approximate $125,000 per home early this year.

Unfortunately at this point of time the Administrations new plan announced last week does not actually stop any foreclosures. This plan, while allowing for mortgage modifications, the reduced payments are only temporary and will reset in 5 years, which does not truly deleverage the consumer.

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