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 foreclosure 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.
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, however, in our experience we have not seen many instances 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.
CAN I SIMPLY 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. WHAT WILL A FORECLOSURE DO TO MY CREDIT?
A completed Foreclosure is damaging to your credit status. 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.
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.
A borrower has 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. Consult your attorney and tax advisor for specific details.
CAN I TRY A FOREBEARANCE 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. 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.
IF MY LENDER HAS STARTED A FORECLOSURE, CAN I STILL SELL MY PROPERTY?
Yes.
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.
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. |