| How Fast Can A Foreclosure Happen?
In California a foreclosure can be completed in less
than six months from the time the loan becomes delinquent. The mortgage
company can record a Notice of Default, the first step in the foreclosure
process as soon as the loan is two months delinquent. Typically, the first
indication a homeowner gets that a foreclosure has commenced is notification
of the Notice of Default.
Once the Notice of Default has been recorded, the foreclosure can be completed
in less than four months.
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| How Can I Stop The Foreclosure?
The best way to stop the foreclosure is to bring the
loan current. To do that you would need to pay all delinquent amounts
as well as the costs and fees incurred by the mortgage company to file
and process the foreclosure.
Many borrowers are not able to bring the loan current and are forced to
look at other alternatives to avoid foreclosure. Even if you are well
into the foreclosure process, most lenders are willing to grant you additional
time to remedy the situation if they believe it is reasonably likely they
can avoid acquiring your property through foreclosure.
Among the alternatives the lender might be receptive to:
- Get the property sold so you can save your equity.
- If you don’t have equity, cooperate in a Short Sale and accept a
discounted payoff as "full payment" on the loan.
- A forbearance agreement in which you agree to both stay current on
the loan going forward and to a schedule of repayment on delinquent
amounts.
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| What Options Do I Have To Avoid Foreclosure?
There are several things you can do to avoid Foreclosure.
It is usually best to let your lender know, right away, that you intend
to solve the problem so they won’t have to get the property in Foreclosure.
Here are some of your options:
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| If My Lender Forecloses, Can They Come
After Me For The Loss? In order for your lender
to recover losses incurred on your mortgage as a result of Foreclosure,
the lender would need to do a Judicial Foreclosure. While, theoretically
a lender could pursue a deficiency judgment through a Judicial Foreclosure
on some mortgages, it almost never happens in California.
The lender is normally left with the proceeds generated at the Trustee’s
Sale or from a sale after acquiring the property at the Trustee’s
Sale. This is another reason why lenders would prefer to work with
the homeowner to solve the problem and avoid getting the property through
foreclosure.
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| Can I Just Deed My Property To Someone
And Avoid Foreclosure? Deeding your property
to a third party does not eliminate your obligations related to the loan.
Unless the mortgage is paid off when you deed the property, you will almost
certainly remain as the party primarily responsible for the repayment
of the loan. If the lender eventually forecloses, it will be on
your credit record.
If you deed your property to a third party you also give up control of
the property. It is nearly always a bad idea to simply deed your
property to a third party.
Do not deed your property to someone without paying off the loan
unless you have consulted with an attorney.
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| What will a foreclosure do to my
credit? By almost any measure a completed Foreclosure
is the most damaging event your credit status can encounter – worse
than bankruptcy. A Foreclosure on your credit record will negatively
impact your ability to borrow money for years.
For most people, it is well worth the time and effort to solve the problem
before the Foreclosure is done.
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| What does a Notice of Default mean?
If a Notice of Default has been recorded against your
property it means your lender has started the formal Foreclosure process.
In California, a borrower must be two months delinquent before a lender
can commence a Foreclosure action by recording a Notice of Default.
A borrower has over three months from the recording of the Notice of Default
to work something out with their lender and avoid the completion of the
Foreclosure.
Once the Notice of Default has been recorded, it is important to act to
avoid losing the property and having a foreclosure on your record.
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| Can I try a Forbearance Agreement to avoid
foreclosure? Yes, you can and you should look
at a Forbearance Agreement as an option to avoid Foreclosure.
FORBEARANCE AGREEMENT – An agreement between a mortgage company
and a borrower in which the borrower promises to stay current on the mortgage
going forward and agrees to a repayment plan for delinquent payments and
costs and fees associated with the foreclosure action. A Forbearance
Agreement is a tool that allows the borrower to keep the property.
The lender will expect you to show that the delinquency was due to circumstances
out of your control (injury, illness, job loss) and that the financial
difficulties have been corrected.
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| I Have Heard Of Foreclosure Scams,
What Should I Look For? Unfortunately there are
quite a few people that might try and take advantage of your temporary
misfortune. These people will try and convince you that they can
provide a quick and easy solution to your mortgage problem. As a
general rule, if it seems too good to be true, it usually is.
Here are a few examples of the scams you could encounter:
- You need to sell your property fast or you will be ruined.
If you have equity, these guys want it by providing fast cash they solve
your problem and they get your equity. On occasion they offer
a small amount of money to you – which is normally a signal they
are getting lots of your equity.
- Sign the deed to the property to us and we will take care of everything.
Sometimes called the “Bailout” scam, the investor tells
the homeowner that he will be allowed to stay in the home and pay “rent”
to the investor until a long term solution can be worked out.
Once the owner signs the deed to the property over to the investor,
big trouble usually follows. If the investor has the deed, the
investor has control.
Here is the big kicker – the homeowner who signed over the deed
is still responsible for the loan. The investor nearly never makes
the mortgage payments and the homeowner gets hit with the Foreclosure.
- For a consulting fee I will work with your lender to find a solution.
It is almost always illegal in the state of California for anyone, besides
an attorney, to collect a fee as payment for making arrangements with
your lender.
See California Civil Code Sections 2945-2945.11for details.
Your lender will work with you directly if you want to make arrangements
to make up past payments and keep your property. This would normally
involve a Forbearance Agreement.
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| Will A Short Sale Stop A Foreclosure?
While the Short Sale itself does not stop the Foreclosure,
lenders normally work with a homeowner and delay the Foreclosure if necessary,
if they receive a legitimate Short Sale proposal. The key here is
to submit a complete, well organized, Short Sale proposal.
The lender does not want your property, and would rather resolve the situation
before the Foreclosure is complete.
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| If My Lender Has Started A Foreclosure,
Can I Still Sell My Property? Absolutely, In
fact, your lender would rather you sell the property than allow the Foreclosure
to continue.
Your lender does not want to take your property through Foreclosure.
Even if you have no equity in the property, the lender wants to find a
solution.
This is precisely why lenders agree to a Short Sale and accept a discounted
payoff to fully satisfy the loan. In a Short Sale, the lender in
nearly all cases pays all the closing costs – including title fees,
escrow fees and the real estate commission.
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| Should I speak with my lender
when they call? It is best that you not avoid
calls or letters from your mortgage company, particularly if a foreclosure
is pending. Your mortgage company does not want to take your property
through foreclosure. The mortgage company would rather look for options
to avoid foreclosure.
When speaking with your mortgage company, be honest about your circumstances
and listen for them to possibly suggest options. The mortgage company
knows the best way for them to limit losses on a delinquent mortgage is
to work with the homeowner.
Be sure to keep notes of all conversations you have with the mortgage
company including dates and times of calls, the name of the representative
with whom you spoke and the details of the conversation.
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