F. A. Q.

How Fast Can A Foreclosure Happen? What does a Notice of Default mean? What Options Do I Have To Avoid Foreclosure? What exactly is a Forbearance Agreement? If My Lender Has Started A Foreclosure, Can I Still Sell My Property? Will A Short Sale Stop A Foreclosure? Can I Just Deed My Property To Someone And Avoid Foreclosure? If My Lender Forecloses, Can They Come After Me For The Loss?  What will a foreclosure do to my credit? I’ve Heard Of Foreclosure ‘Rescue’ Scams, What Should I Look For? Should I speak with my lender when they call? 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 normally records a Notice of Default, the initial step in the foreclosure process, about 2-3 months after the loan becomes 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.  ( Click Here to See Timeline)     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.  Once the Notice of Default has been recorded, it is important to act timely to avoid losing the property and having a foreclosure on your record.   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. What Options Do I Have To Avoid Foreclosure? The best way to avoid 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 Options 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’s possible they can avoid getting your property back through foreclosure.       There are several things you can do to avoid Foreclosure. Among the options the lender might be receptive to are:     Getting the property SOLD, so you can save your equity.   Refinance if there is sufficient equity in the property If you don’t have any equity, they will consider a Short Sale; accepting a discounted payoff as full payment on the loan. A Forbearance Agreement; A repayment agreement with the Lender that allows you time to catch up your delinquent amount.  It is usually best to let your lender know, right away, that you intend to solve the problem so they won’t have to reclaim the property in Foreclosure.     What exactly is a Forbearance Agreement? Yes, you can look at a Forbearance Agreement as an option to avoid Foreclosure.       Simply put a FORBEARANCE AGREEMENT is an agreement between the mortgage company and a borrower in which the borrower promises to stay current on the mortgage loan going forward and strictly adheres to a repayment schedule on any delinquent amount plus 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.           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.             Foreclosure is avoidable, so if the only option open to you is to sell, it’s better to put up the For Sale sign sooner rather than later so you can experience all the Benefits of Selling and avoiding the stress and the hassle of foreclosure.           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.           Remember, the Lender does not want your property, and would rather resolve the situation before the Foreclosure is complete.           Can I Just Deed My Property To Someone And Avoid Foreclosure?         Deeding your property to a 3rd party does not eliminate your obligations related to the loan.  Unless the mortgage is paid off when you deed the property, you will remain as the party the bank holds 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 3rd party you also give up all control of the property.  In most all cases, it’s a bad idea to simply deed your property to a 3rd party.             Do not deed your property to someone without paying off the loan first unless you have consulted with an attorney.  Beware of anyone asking you to sign over your Deed – See our FRAUD ALERT!     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 acquiring the property through foreclosure.     What will a foreclosure do to my credit?         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.  It is well worth the time and effort to solve the problem before the Foreclosure is complete.         I Have Heard Of Foreclosure ‘Rescue’ Scams, What Should I Look For?         Unfortunately there are quite a few people that might try and take advantage of your temporary misfortune.  People that will try and convince you that they can provide a quick and easy solution to your mortgage problem.  Remember, if it sounds too good to be true, it usually is!  These scams are designed to drain your property’s equity or leave the ‘Rescuer’ owing the house outright- and you and your family evicted from your home!           Here are three of the most common examples of the Foreclosure Rescue Scams you might encounter: The 1st scenario is a bait-and-switch where the homeowner does not realize they’re surrendering ownership of the house in exchange for the  ‘Rescue’.  Many homeowners later insist that they believed they were only signing documents for a new loan to bring the mortgage current and state that they had made it quite clear they had no intention of selling or giving up their home to anyone. It’s important to note here that a substantial number of these cases involve fraud and forgeries of deeds.  Worse, in many cases the original homeowner is left holding the mortgage on the home they no longer own! The 2nd variety of the scam is sometimes called the “Bailout”, this scenario includes various schemes in which the homeowner surrenders title to the house under the belief that they are entering into a deal where they will be able to remain as a renter and buy the property back over the next few years.  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 the control. The terms of these deals are almost always so onerous that the buyback becomes impossible, the homeowner permanently loses possession and the ‘Rescuers’ walk off with all or most of the home’s equity. Here’s the big kicker – the homeowner who signed over the deed is still responsible for the loan.  The Investor almost never make the mortgage payments and the homeowner still eventually gets hit with the Foreclosure after the Investor has collected months of rent from the homeowner or another renter. The 3rd might be called, Phantom Help – where the rescuer charges an upfront consulting fee to work with your lender to find a solution.  They normally make the same calls you could make yourself for FREE, promising more robust representation that never materializes.  In either event the homeowner is left without enough assistance to actually save the home and with little or no time left to prevent the foreclosure. Remember, your lender will work with you directly if you contact them wanting to make payment arrangements to keep your property.  Click here for more info about Rescue Scams and what to look out for.       In most every scenario it’s 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 2945-2945.11 for details.   Consumer Advocates around the country are begging states for new laws to help fight the rising tide of complaints about Foreclosure ‘Rescue’ Scams, but in the meantime, we’ve compiled a special Consumer Awareness Report to help homeowners protect themselves and avoid being taken advantage of in their search to find someone ethical to help find a solution for their dilemma.  Click here to have this report sent out to you immediately.      Should I speak with my lender when they call?         YES!!!  Never avoid calls or letters from your mortgage company, particularly if a foreclosure is pending. The mortgage company knows the best way for them to limit losses on a delinquent mortgage is to work with the homeowner.  They would rather look for options to avoid foreclosure.  Continue to keep the lines of communication open, so that you can discuss those options with your lender.           When speaking with your mortgage company, be open and honest about your circumstances. 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 you spoke with and the details of that conversation.         Remember, Your Mortgage Company Does Not Want To Take Your Property!  But be very wary of anyone advising you NOT to contact your Mortgage Company!  This is one of the doubly devious deceptive tactics that Foreclosure ‘Rescue’ Scammers use quite frequently…Requesting the Homeowner to cease all contact and let the ‘Rescuer’ handle all negotiations.  This tactic simultaneously cuts off possible access to other successful options the Homeowner could have utilized to stop his Foreclosure while running out the clock.       Remember, if you need help, guidance, information on other resources, want to schedule a consultation or if you’re interested in selling your house to save your equity . . . Call our Foreclosure Resolution Team or email me directly.