In California, lenders may foreclosure upon delinquent mortgages by non-judicial foreclosure trustee sales. To institute foreclosure proceedings against delinquent California borrowers, lenders must first record a notice of default after the loan is in default for 6 months. The trustee can conduct a foreclosure sale 60 days thereafter. You have the right to fight the foreclosure if you believe the lender has illegally foreclosed or has violated any mortgage and lending laws. The best way to avoid foreclosure is to contact your lender as soon as you know you are in financial trouble and are about to default on your mortgage. Even if you receive a notice of default, you still have time to fight the foreclosure and find other options to save your home. You should consult with a real estate foreclosure defense attorney for assistance and legal guidance.
Options to Save your Home
The following are options to save your home from going to foreclosure:
- Mortgage modification. Your lender modifies your existing mortgage by either lowering your interest rate or extending your loan term. Sometimes the lender will add the arrearages to the back end of the loan, or reduce the principal.
- Refinance. You obtain a new loan at a lower interest rate for a fixed period and pay off the old mortgage. This way you have lower payments that you can afford.
- Reinstatement. You bring your loan current by paying any past-due amounts and any fees and costs.
- Deed in lieu of Foreclosure. Check with your lender first because not all lenders accept a deed in lieu of foreclosure. A deed in lieu is when give your home back to the lender by signing over the deed and walking away not owing the lender any more money.
- Short Sale. You sell your home with your lender’s approval for an amount less than what you owe the lender on your loan balance. The lender agrees to accept the sale proceeds, and you can walk away not owing your lender any more money.
- Forbearance. Forbearance is a short term agreement that allows you to get caught up on your mortgage payments. Your lender may also agree to reduce the principal. Once you are caught up, you continue paying your current mortgage payments.
- Filing Bankruptcy. A bankruptcy stops a foreclosure proceeding. You may be able to keep your home with a Chapter 13 bankruptcy if you enter into a court approved payment plan. However, if you default again on your mortgage, your lender could foreclosure. Bankruptcy is always used a last resort.
Lenders Want to Help
Lenders want to help California borrowers keep their homes. They are willing to work with you to find a solution that works for both of you. Lenders have too much foreclosure inventory right now, and not enough staff to handle the foreclosure paperwork. Foreclosure is expensive for lenders. An average foreclosure can cost them $50,000. You should always let your lender know your intentions, and don’t ignore notices or correspondence. Doing nothing could result in foreclosure.
Legal Help
It is always recommended that you seek the help of a foreclosure defense attorney if you are in default on your California mortgage, and you want to save your home from foreclosure. The attorney is an expert in California foreclosure laws, and can help you negotiate a solution with your lender, and represent you in a legal proceeding to save your home.
