Foreclosure FAQ’s

Foreclosure Questions and Answers

Q. What happens if I think I am going to miss a mortgage payment?

A. It is always a good idea to communicate any missed payment with your lender.
The least appreciate silence, so all communication is documented. Lenders are quite aware of the hardships going on so they will likely be considerate to the fact that you have let them know. Please keep a good communication log for your records as well.

Q. When is my mortgage payment late?

A. A mortgage payment is typically due on the 1st and late on the 16th of every month. While most lenders will charge you a late fee on or after the 16th, it generally is not reported late to any credit bureau until the 1st of the next month.

Q. What should I do if I get behind on my payments?

A. Get help as early as possible. Contact your mortgage servicer and inform them of the situation. You can find this number in your loan statement and on the monthly billing statement. The sooner you initiate contact the better. Each situation is different depending on temporary issues or longer term. Contact your servicers Loss Mitigation Department. Ask if you can participate in a “work out” resolution or obtain a loan modification. Swallow your pride and let them know your situation.

Q. If I am offered a modification should I accept it?

A. Not necessarily. Every ones situation is different. Accepting an offer could help a short term hardship or you could have a long term hardship that the lenders remedy has a high chance of not working out. In this case, a short sale might be your best possibility. We would suggest you speaking with a professional prior to accepting any offer.

Q. What is a “work out” resolution?

A. To summarize, a work out resolution involves resuming payments and arranging to pay the pas-due amount over a short period of time. Occasionally, lenders will allow a loan modification which might owe your interest rate or extend the final due date of your loan, making your monthly payments lower. While this sounds great, it deserves serious caution before agreeing to anything like this. In many cases it could take years to bring your house back to “par” with current market values. Please see an example of our loan calculator.

Q. How do I know if I qualify for any federal program?

A. Besides contacting your loan servicing company, call the Housing and Urban Development Department at 1-800-333-4636 or by logging into Housing and Urban Development Web site at http://www.hud.gov/offices/hsg/sfh/hcc/fc/

Q. When I receive letters from the bank, what should I do?

A. Do not ignore any letters sent from your bank. Hiding your head in the sand is will not do any good. Contact your servicers Loss Mitigation Department and let them know your situation and you are having trouble. While it may not cure the problem, it will generally help give you some valuable time to work on your situation.

Q. If I am having trouble making my payment, should I move out?

A. Absolutely Not. Lenders do not want to see a vacant property. In the event you do a short sale, you will want to be living in the property as well.

Q. I am getting calls from companies wanting to do my loan modification. Should I do this?

A. There are some very reputable companies that will perform a loan modification or refinance on your behalf or you can choose to do this yourself, but it does take time and be ready to call early in the morning and be on hold for quite a while on each call. If you do decide to hire this out, we recommend you do not give much money up front, but rather pay upon services rendered. NEVER, send any negotiating company money under the disguise this is going to your servicing company. There have been multiple accounts of scam artists using this tactic as a ploy for money.

Q. How long does a foreclosure take? In California, a lender must appoint its trustee, the person or entity that has the legal right to sell the home in a trustee sale and handle the appropriate paperwork. By California law, the trustee must record a Notice to Perform in the county recorder’s office. This is the legal notice that the home is to be sold no sooner than 90 days from the recording date of the notice.

California Non-Judicial Foreclosure time line

Day 1 Record “Notice of Default”
Within 10 Days Within 10 days of recording the Notice of Default, copies of the recorded document (NOD) are mailed to the Trustor(s) and anyone requesting Special Notice.
Within 1 Month Notice of Default is mailed to parties, pursuant to California Civil Code 2924(c)
*After 3 Months
*California has extended this time period to 6 months, but not all lenders need to adhere to this extension. At the end of 3-month, prepublication period, the Lender can then instruct the Trustee to set a sale date.

25 Days Prior to Sale Date Notice to the IRS must be given, if required
At Least 20 Days Prior to Sale Date Publish Notice of Sale, post Notice of Sale, mail Notice of Sale
Within 10 Days from first publication of Notice of Sale Send beneficiary request for property directions
14 Days Prior to Sale Record Notice of Trustee’s Sale
5 Business Days Before Sale Date Right to Reinstate expires
Sale Date Property is sold to highest bidder

This information is a general time line of the non-judicial time line in California. If you are in fear of a foreclosure proceeding, we encourage you to seek the advice of a real estate Real Estate attorney. In most cases, there are usually other options available and a foreclosure should be your last option. Don’t wait until you are behind in your payments, or your home is in default to seek council or get advice from a real estate professional or real estate attorney. Most likely, you will feel relief when you have a sound course of action. Once again, but worth repeating, foreclosure should be your last resort!

Q. If the property is sold in a foreclosure sale, how long can I live in it?

A. Not long. Be prepared to leave the home once the foreclosure sale has taken place and been confirmed. Usually approximately 30 to 60 days after the trustee sale. If you are living in the home, an eviction notice will be placed on your front door letting you know the date you will be evicted by a sheriff. At this point, your belongings will be placed outside your home and then removed. You can call community service hot lines for alternative housing. As you can see, once the sale has been made, your options are not good so avoidance is your best option.

Q. I hear a lot about federal loan modification and refinancing programs are these working?

A. It mainly depends on your personal situation. We refer to this as snow flakes since no two are the same. The government programs are encouraging loan modification, refinance or short sale as an alternative to foreclosure. A foreclosure is horrible for the community, lenders & the home owner. A foreclosure costs the lenders upwards of $50,000 in the foreclosure process so they have much to gain working with you for alternative solutions. Our word of advice is see what possibilities are offered and discuss this with a professional working with these.

Q. My home is worth a lot less than what I owe, will a loan modification reduce my principal.

A. In most cases NO. Federal programs are generally structured to help reduce the monthly payment either by initial rate reduction or lengthening the term of the loan. For a fantastic explanation to the details and to see the federal qualifications, log onto http://makinghomeaffordable.gov/

Q. Is a foreclosure common?

A. Foreclosure is a challenge faced every year by thousands of Californians from all walks of life. You are not alone, but you need to take action to save your dream and investment.

Q. What about just refinancing my loan without the government assistance programs?

A. Being able to refinance your loan depends on several factors. If you are already behind on your mortgage, your credit rating will be adversely affected. This would most likely prevent you from a new mortgage at a reasonable interest rate. Also, you may not be able to afford the fees and points that most lenders charge, especially if you have little or no equity in your home. If you do want to refinance, call around for the best rate and terms possible, but be aware of fraudulent and predatory lending practices. Refinance opportunities also exist with FHA Secure through the federal government authorized lenders.

Q. Where can I file a complaint if I feel I have been a victim of predatory lending?

A. Unfortunately there are people looking to take advantage of people and this did happen in lending. Complaints regarding predatory lending can be filed with the California Department of Real Estate at http://www.dre.ca.gov/cons

Main Points to Remember

• Act now and don’t ignore the problem!
• When you realize you have a problem, contact your lender (Loss Mitigation Department) to discuss the situation.
• Open all mail sent to you from your loan servicer.
• Contact the HUD approved department counselor.
• Understand California’s foreclosure laws and timelines.
• Understand foreclosure prevention options and alternatives.
• Bewared of scams.
• Research and work with professionals experienced in solutions and programs available.
• Don’t move out of your home prematurely.
• Do no sign any document that you don’t understand.