Our Job is to Help You Keep Your Home
What is a Foreclosure?
Foreclosure is a method by which a lender can seek to get their money when a borrower has not been paying.
How Foreclosure Works in California
Non-JudicialIn California a lender has a choice, to sue you, the borrower, for the money or foreclose the deed of trust out of court. In most cases the lender will choose foreclosure as it is faster, so fast that the property can go from default to foreclosure in as little as 115 days. This process consists of three stages.
NOD StageThe lender files a notice of default in the appropriate county. This can happen as soon as 15 days after the loan is delinquent but generally takes a great deal longer. This is the stage of the foreclosure process that offers the greatest opportunity for some type of workout. You need to work out a solution during this time frame.
Notice of Trustee SaleAt day 90, the trustee files a trustee sale scheduled 25 days or more in the future. 5 days prior to the sale, the right to reinstate expires. This means it is almost too late to remedy the situation.
REOThis is where your property is either acquired by a bidder or given to the highest priority lender.
Keep the Property or Sell It?
If your monthly house payment (including property taxes and insurance) does not exceed 40% of your gross monthly income, it should be possible for you to keep the property. If the payment is greater than 40% of your gross monthly income, consider selling or transferring the property to avoid negative impacts on our credit. Your objectives in order of importance should be:
Keeping the property if possible.
Don't give away equity if you can keep it or liquidate and put it in your pocket.
Minimize damage to your credit. You will need it later on.
To Cure a Default
Many foreclosure proceedings are reinstated during the 3-month default period. Lenders want their loans to be current, not to have to complete a foreclosure. Your goal should be a Stay of Foreclosure which is possible when there is enough equity in your property to cover all obligations and the cost of sales. This must be done in the early stages of the foreclosure process (NOD or sooner). Here are some options to fix the situation.
Lender Workout - If you can make up the defaulted amount over a period of months, you should contact your lender to discuss payment options.
Refinancing - You can use the equity in your home to refinance, obtain a 2nd Trust Deed or generate an equity line of credit to bring your loan current.
Pre Foreclosure Sale - also known as the Short Sale, where a lender agrees to accept something less than the full amount of the payoff in order to avert foreclosure proceedings. Most lenders have figured out that it is cheaper to pursue some sort of work out rather than letting a property come back as an asset.
Sell to an Investor - some lenders will accept a Quick Deed' where you sign over your home to an investor. The investor then brings the mortgage current while leasing the property back to you.
Bankruptcy - this should be considered as a last resort as it will have lasting impact on your credit reports. If the NOD has just been filed, you have sufficient time to explore other options. If the foreclosure sale is going to be held very shortly, bankruptcy is a very common way to delay the sale.
Whatever you do, move fast. The goal here is to buy time to put the foreclosure on hold while you repair your financial situation or find a qualified buyer.