Frequently Asked Questions - Homeowner

In California the property taxes are a super lien, which means that the lender is junior to the tax collector. A lender will pay past-due taxes to secure their lien position. Once the property goes to foreclosure the lender will have to pay all past due property taxes. If foreclosure is eminent, there is no reason for you to pay the property taxes. That said, if you live in a state that allows deficiency judgments, this amount would be added to the deficiency, so it may be cheaper to pay them before penalties and late fees are added.

In most cases the HOA is not a pre-lien like property taxes. This means that when you stop paying the HOA dues and they file a lien, it is typically junior to your Deed of Trust. If the lender forecloses then the HOA lien is wiped out. After the foreclosure, the lender/investor is only responsible for the HOA dues from the date of the foreclosure sale. The HOA can pursue the prior owner for payment of the past due amounts. Many of these associations are suffering financial hardship due to the number of foreclosures and they are getting more aggressive about pursuing collection.

In California, if the second was a purchase money loan (the loan was funded and recorded the same day you purchased the property and every penny of the loan was used for the purchase) then this second could not pursue collection on this loan under the purchase money rule.
If it was not a purchase money loan then the seconds secured interest in the property would be wiped out by the foreclosure of the first. While no longer be secured by the property the lender can still pursue collection of the loan. It essentially becomes an unsecured loan, like a credit card. A bankruptcy could wipe out this debt or you could contact the lender to settle the account. If you ignore this and work on rebuilding your credit, it could easily resurface once you are on the road to recovery. Many of these loans are sold to collection agencies that can be aggressive and difficult to settle with. It is better to address this sooner than later.

It is probably in your best interest to have a lawyer review the documents. It is not easy to tell if the documents have not been properly signed or recorded. You need to search for Assignments if your loan has been sold or transferred and Substitutions of Trustee if the foreclosing Trustee is different from the Trustee name that appears on your Deed of Trust. Once you have these documents (or see that they have not been recorded) you need to research the name of the signor to see if they have the authority to sign these documents. The robo-signing scandal was discovered in 2008. At this point the lenders have extensively researched this matter and it is unlikely that this activity is taking place on current foreclosures.
Typically the eviction court will not look at your loan documents. They are only there to verify that the lender now owns the property and that they have given you the appropriate notice to vacate the premises.

When a property sells at trustee sale there are only two possible outcomes. The property is either sold to a third party investor or it is now bank owned. If a third party investor purchases the property, they will likely make contact within 2 to 3 weeks to determine who is living in the home and whether or not you intend to move soon.

If the property went back to the bank it may take a couple of days or longer for a bank representative to contact the occupants. The bank representative will also try to determine who is living in the property and if you intend to move.

It is usually in the best interest of the occupants to talk to the bank/investor. This is typically when a cash-for-keys offer can be negotiated. Keep in mind that the lender/investor is under no obligation to offer a cash-for-keys incentive where they pay you to leave quickly and leave the property clean.

They could simply serve the appropriate notice. In California this would be a 3-day notice for an owner and a renter on a month-to-month rental agreement would be given a 90-day notice. If there is a long term lease in place, signed prior to the filing of the Notice of Default, then the investor/lender is required to allow you to stay until the end of the lease term under the Protecting Tenants in Foreclosure Act, subject to certain exceptions (for example it has to be a real lease, at fair market rents, and you have to make the payments).

Many landlords understand credit challenges, especially those that have lost their homes due to the collapse of the housing industry. Be prepared to tell your story and provide documentation to back this up. Having an eviction (unlawful detainer) on your record can be more damaging than a foreclosure, so carefully consider accepting cash-4-keys to move rather than fighting the eviction after foreclosure.

Although it is technically possible for you to buy your property back after trustee sale, you need to be aware that prior debts could re-attach to the property thus eliminating any benefit the foreclosure would have with regard to wiping out junior liens.

If you have cash or access to a private-money lender, you can purchase immediately. Under current FHA guidelines you can qualify for a loan in three years provided you meet the other underwriting guidelines including verifiable income and credit score.

A lender is not legally obligated to modify the terms of the loan. The presence of an application for a modification or a pending short sale does not prevent the lender from foreclosing. Oftentimes the the lender will "dual track" a file which means that the foreclosure will be in process at the same time they are reviewing the modification application. If you have an active sale date make sure you are also communicating with the Trustee to postpone or cancel the sale.

You can 1) pay your loan current (reinstatement), 2) payoff the loan (refinance), 3) enter into a payment plan, forbearance agreement, or loan modification with the current lender, 5) seek lender approval for a short sale, or 6) ask the lender to take the property back (deed-in-lieu of foreclosure). Also, if you feel you have some legal grounds you could sue your lender. Note that the lender is not obligated to accept any of these options except reinstatement or payoff, the others all are at the lenders option.

A bank cannot lock you out of the property prior to the foreclosure, but under the terms of the Deed of Trust they can likely secure the property and make any necessary repairs. If the lender inspects the property and sees that it is vacant and the doors and windows have been left open they can take reasonable measures to secure the property. Once they do this they typically leave a notice taped to the door. If the owner contacts them the bank should turn over the keys.

An HOA can foreclose for past due amounts. If the property goes back to the HOA at trustee sale they would have the legal right to evict the occupants and sell or rent the property. HOA liens are typically junior to any Deeds of Trust so the HOA would be responsible for the payoff of any senior liens or loans or they could risk losing their ownership when if the senior Deed of Trust later foreclosed. Note that in California the homeowner does have a 90 day period during which they can redeem their ownership by paying the outstanding dues.

This depends on the state. Some states do allow for a redemption period following a foreclosure. In California there is NO Redemption period for non-judicial foreclosures. The ONE exception to this rule in California is for non-judicial homeowner association lien foreclosures. If your HOA forecloses on your property you have a 90-day redemption period.

There are many organizations that claim to provide foreclosure-delaying services. Although these strategies can be effective in delaying the foreclosure process they will not likely result in the elimination of any debt secured by the property. There is usually nothing they can do that you cannot likely do yourself, for example calling the bank and requesting a postponement or filing bankruptcy. Finally many of these services are scams and some states like California have passed laws limiting the claims they can make and the fees they can charge.

The lender has the right to sell or transfer the servicing of the loan and can substitute the trustee at any time. Prior to filing a Notice of Default and starting the foreclosure process they should make sure the paperwork is in order and record any necessary Assignments or Substitutions of Trustee.

This is becoming a popular practice for delaying a foreclosure. Although it MAY be useful as a delaying tactic it will likely not result in eliminating the debt. The idea was that these loans were sold so quickly and the document tracking was so poor that the original note was lost, and that without it the lender would have no proof of the loan. The truth is that a lender can simply file an Affidavit of Lost Original and it would be up to the homeowner to prove that the loan was paid off in order to stop the foreclosure.

In a normal market most lenders would start the foreclosure process after three missed payments. In California the non-judicial foreclosure process takes a minimum of 111 days. We are in unprecedented times in terms of the delays in the foreclosure process. Some lenders are taking over two years to foreclose. Smaller local banks, private beneficiaries, and credit unions may foreclose much faster than the larger banks. It is impossible to know exactly how long you have before the foreclosure will take place. It is reasonable that you would have at least seven months before a sale date is set. You can read more about why lenders are delaying the foreclosure process by going to http://www.foreclosuretruth.com/blog/sean/foreclosure-roulette/