Stopping foreclosure
Homeowners who have failed, for one reason or another, to maintain the payment obligations of their loans, and are found in default on their loans, have a number of options available to them to stop the foreclosure process.
Bring the loan current
The best possible resolution for homeowners in default, is to reinstate the loan by bringing payments current, and paying all past due amounts.
Sell the property
A traditional sale of the property, in which the asking price covers the costs of the entire loan in default, would stop the foreclosure and eliminate the obligation of the homeowner to make monthly payments, by providing a payment in the full amount of the loan. Another option, should a conventional sale fail, is a short sale; this is the sale of the house, under agreed upon terms with all lien holders, to sell the property and settle the debts for less than the amount owed. Short sales can be difficult for properties with significant negative equity.
Refinance the property
Refinancing a property with more reasonable monthly payments and interests rates could potentially permit the homeowner to remain in the home, by paying off the current default obligation with the newly refinanced obligation.
Work with the lender
- Loan modification: Modifies the terms of the original loan to enable the homeowner to stay in the home. May adjust interest rate, principal balance, length of loan, or other terms.
- Forbearance: An agreement not to collect past due amounts for some period of time. Can be useful when the borrower fell behind due to temporary illness, or job loss, and can afford payments going forward; but can not afford to repay the past due amounts.
- Repayment Plan: Similar to a forbearance, except the past due amounts are repaid in small amounts over a period of time, rather than being delayed to a future date.
- Deed-in-lieu: Sometimes referred to as jingle mail (the sound of keys being mailed back to the lender), a deed-in-lieu is a method of simply handing ownership of the property back to the lender. Many lenders will not accept this deed, as they will then have to pay to remove other liens on the property; whereas those liens may be wiped out if they choose to foreclose.
Sue the lender
While it is often a good idea to have an attorney review loan documents for problems, and to help negotiate better loan modification terms; lawsuits are expensive and likely beyond the reach of most homeowners, unless working together in a class action suit.
Bankruptcy
Bankruptcy really only delays foreclosure. While Congress is considering allowing judges to modify loan terms, they currently cannot. As such, if the owner fundamentally can't afford to make payments, the judge will likely have to grant the lender a motion allowing them to continue the foreclosure. This option should therefore be used carefully, as it impacts your credit for 10 years, versus 7 years for a foreclosure alone.
For More Information:
Federal Home Loan Mortgage Corporation (Freddie Mac)Federal National Mortgage Association (Fannie Mae)
Know Your Options by Fannie Mae
Making Home Affordable
Comments
We did recieve notice that forclosure was in process and they are asking for past due payments, late fees,advances and forclosure fees and costs. My question is are we to pay all of the costs up front in order to save our home? We included our home in chapter 7 which was discharged 4/7/09. Should we let the house go or would it be better for us to try and keep it?
Hi,
Have you applied for a loan modification? Have you looked at your income to figure out if you would qualify for a loan mod.
Depending on your income you may qualify for a loan modification.
I would try to do that first, then if that doesnt work do a short sale before letting your home foreclose.
In some short sales you may be able to get money from the lender.
JoAnna Jensen
Volo law
Hi Kathy,
It sounds like you have included the house in the bankruptcy so the lender is simply foreclosing on the property to officially take title. It also sounds like they took their time filing the paperwork to foreclose on the home which has given you the chance to live there for a few extra months. You would really need to consult with your bankruptcy attorney on this one. If you decide to pay the loan current and essentially reconfirm the debt and then end up back in foreclosure you will undoubtedly NOT be protected by the previous bankruptcy. You ask if it is better to let it foreclose or try to keep it and that is really a very subjective question. Do you want to stay in the house? Can you afford it? You have already gone through the bankruptcy and wiped out all of your debt and are ready for a fresh start so are you ready to take on this debt again?
Check with your BK attorney to make sure there aren't any other issues that would stem from you reconfirming this debt or even if this is possible to do after it was included in the BK.
Kathy
The chapter 7 had nothing to do with the debt on the home since the home debt is secured.
If you want to try to keep your home and your income is right for a modified payment you need to start the modification process now. When you received the notice your home was in foreclosure (notice of default) it started a 3 month waiting perion and after that expires the lender can post a sale date for 21 days later.
Depending on your investor and income you may be eligible for a loan modification that would fold all your arrearages into the modified loan. You don't have much time to act now though so you need to move forward with it. If you need help email me.
I received a notice of the trustee sale for my property. I wanted to see if there are any procedural things I can file to get a short delay?
Hi Richard,
You can contact the trustee to request a postponement but there is nothing that you can "officially" file to postpone a sale. Filing a BK would create a temporary stay. We are in unprecedented times in terms of the number of postponements so it is likely but not guaranteed that you will be able to get the sale postponed at least once.
I started a loan modification with my mortgage company in jan 2010. It took them 4 months to get the workable solutions paperwork to me but were able to start recieving my Modified payments sent to another branch of Citi Mortage. After 4 months I received the packet and filled out the proper documents I continued to make my monthley Modified payments and in July 2010 I received a notice of foreclosure. I contacted Citi mortgae and they said that I have not paid a mortg payment in nine months and were in default. After 2 months on the phone back and forth they found my money in an escrow account so they sent me another packet to start the modification process all over again. I sent it back to them on 12/02/10 by fax and sent the origanls back to them in overnite mail. On 12/09/10 I was contacted by another realtor company telling me my house has been sold to Freedie Mac. Please Help me keep my home
Hi Robert,
It sounds like you may have been in a trial modification that did not get permanent modification approval. Although it sounds like the property has already gone to trustee sale the good news is that the property is owned by Freddie Mac so there actually COULD still be some hope for a workout program. You can reach out to Freddie Mac directly at homesteps.com or you can go to MakingHomeAffordable.gov to find a free HUD approved counselor. Although sales are rarely rescinded you can certainly try and reaching out to these folks. This is the best place to start.
I am looking for an attorney to help me out with a loan that is currently in default. I tried applying for a modification on my own but the bank was fairly uncooperative. The property is located in San Mateo County, California. It was originally my primary residence but is currently rented as I returned to graduate school in the Washington DC area. My wife has a full time job which can help out with the loan. The tenants are aware of the foreclosure status. The loan is an option arm and a super jumbo with a balance well over $1 million. The loan was originally made by Washington Mutual (it is now owned by Chase) The house is under water. So it cannot be sold.
If there is an interested attorney, I suspect that there are likely good grounds for a predatory lending lawsuit or a lawsuit based on some other problem with the paper work. Since the property is rented, the funds collected from rent can be used to finance a lawsuit. I have other sources of income for paying my living expenses.
Hi Ken,
I work for an attorney in the East Bay, we specialize in helping home owners with loan modifications like this.
we may be able to help. We send demands for documents and get their attention right away.
Typically this type of loan should have never been done.
I am happy to help if you still need it.
JoAnna Jensen
Volo Law
925 699 5041
Payments were modified thru the servicer and paid on time during the trial period. The trial period was extended (for reason no decision was made by the servicer to move towards a permanent mod) and payments continued for an addt'l 6 months. Countless calls to the lender regarding the status of a permanent mod went unanswered. In month 10 the loan was presumably sold (or just serviced) by another lender who refused to accept a payment of any amount. The foreclosure process continued with a recorded Trustee Sale Notice. We're told (while going through another loan mod qualification process) that the foreclosure has been postponed but nothing documenting this was offered or obtainable (yet.) How can one know if there was a postponement filed?
Hi Bill,
This is exactly what we track at ForeclosureRadar. The trustee does not need to refile a new Notice of Trustee Sale when the sale is postponed they must simply announce the new sale date at the time of the previously set sale date. You can contact the trustee directly and if you have the trustee sale number you can usually access a pre-recorded update on the current status. Check the Notice of Trustee Sale for the trustee phone number and TS#.
You don't have to file for BK to stop a sale in a Trustee State
You can legally challenge your Trustee's ability to foreclose. It only works in Trustee Sale states. (California is a trustee sale state.) However, it can easily triple the amount of time that a trustee can take to complete the foreclosure process. It doesn’t work from the lender side at all, it purely focuses on the trustee side of a foreclosure sale.
The trustee will eventually be able to finish the Trustee Sale but this has been used to delay the sale up to 41 months.
A client may qualify if:
The Trustee Sale Date is 30 days or less from now
You have filed Bankruptcy, been denied for a loan mod or a temporary restraining order was lifted
You need more time to facilitate a short sale, regular sale or loan modification
If you are renting from a landlord or losing your home that you want to stay in
A Trustee Sale Legality Challenge is only a TEMPORARY solution to keep the foreclosure sale date at bay.
We can use it to only delay the sale – not cancel the foreclosure. It is a complex tactic that focuses on stalling the sale by focusing on the trustee sale legality. You can delay the sale for 6 months plus by using this method. This is NOT an inexpensive route however, but it’s cheaper than paying the mortgage and prevents a sale without doing credit damage like a bankruptcy filing. It has delayed sales for up to 41 months. We can use this as “insurance” for a “lock out” of truste sale while pursuing other solutions.
Comparing Trustee NOS Challenge to Bankruptcy as Method of Facilitating Delay
Amount of Delay
Chapter 7 Bankruptcy
Banks are very aware that many homeowners are filing Chapter 7 Bankruptcy to delay their foreclosure. When filed, a Ch 7 will put an automatic Stay on all of your debts. That means that no creditors can proceed with debt collection. Therefore, immediately after the bank is notified of the filing they send their legal team to court to file a motion to lift the stay. Most banks are doing this so fast that the stay only keeps the homeowner in their house a few months. As soon as the stay is lifted, your house is back on the auction block and you now have a bankruptcy on your record.
Chapter 13
Similar to Chapter 7, when a Chapter 13 is filed it will stop creditors from collecting debts immediately. The difference is that Chapter 13s are the reorganization of debts. This will buy the homeowner a few more months, but the banks will still file a motion to lift the stay. Homeowners who are this delinquent are at a disadvantage in court against a valid creditor who has not been paid in an excessive amount of time. Again, as soon as the stay is lifted your house is back on the auction block and you now have a bankruptcy on your record.
Trustee Sale Challenge – 6 – 40 Month Delay
6 months 15 days is the fastest any homeowner has lost their house in this program with the longest being 3 years and 4 months. You will not have a bankruptcy on your record and can still work out a modification or short sale while in the program. It’s not cheap, but it’s way cheaper than the alternative of having the home sold out from underneath us before a sale or a non-deficiency agreement with the lenders was completed (for a short sale).
Credit Damage Incurred
Bankruptcy
Filing any type of bankruptcy will have very strong consequences. Homeowners who file just to prolong the sale of their house disqualify from filing again for 7 years (in a Ch. 7). Therefore, you are vulnerable for that entire period. What happens if there is some medical emergency that incurs tremendous bills? You will not be able to protect yourself against getting your wages garnished. No matter what the debt or situation, you are no longer allowed to protect yourself because you used your ‘free pass’ on your foreclosure, which could have been handled much differently.
Also, many companies pull credit and might not hire a candidate with a Bankruptcy on their record. In today’s job market, can anyone afford such a big disadvantage?
Trustee Sale Challenge
While in the program, you are likely to be getting revolving mortgage lates until a solution has taken place, whether it is foreclosure, short sale, fair market sale, modification or reinstatement.
Financial Benefits
Chapter 7
Chapter 7 Bankruptcy wipes the slate clean for people who qualify (qualifying for a BK is now tougher than ever). When approved, most debts can be released. This is a good choice for homeowners with a lot of unsecured debt (credit cards, personal loans…). Your mortgage is secured by your home, meaning that even after bankruptcy is filed they can still take your property. So the financial benefits only include removing unsecured debt.
Chapter 13
Chapter 13 is reorganization of debts. The judge is going to work with yourself and your creditors to plan out an acceptable repayment plan to all of them. Often the property will be removed from the BK as the delinquency is extreme and it is a secured loan. This is not a great option for homeowners looking to buy time.
Trustee Sale Challenge
While you are employing a Trustee Sale Challenge to verify the legality of your foreclosure proceedings, you live in your house for a fraction of what your mortgage or rent would be. During this time you can save money to buy another place in the future. You can get into a debt settlement program and remove all of your unsecured debts without filing bankruptcy. It is your savings to do with what you please. This won’t stop an eventual sale though, just delay it for months.
Just to make it perfectly clear:
We can ONLY buy time by utilizing a trustee notice of sale challenge to push off the sale date significantly into the future. Some other method must be used to actually resolve the foreclosure! This is a good form of insurance to make sure the trustee doesn’t sell the property out from underneath us while we are pursuing our final objectives.
We work all of the above solutions in conjunction with credit cleanup further down the line after our client’s lives have stabilized. We have systems in place to help accomplish life stabilization too – mainly due to the fact we’ve been down the foreclosure route ourselves so we know how we fixed it long term. We also now know what we really needed to know 20 years ago when we were going through all this ourselves.
Vic Pillai
Lighthouse Consulting Group
1800 529 2959 ext 1003
www.lhcginc.com
i need to investigate the date of sale if there is an existing sale for a property
search by addres??
HI Juan,
With a subscription to ForeclosureRadar you can search by address. To register for an account you can go to foreclosureradar.com and click on the sign up button or you can use the follow URL: https://www.foreclosureradar.com/register
Once you have signed up you can login by going to ForeclosureRadar.com and click on the Member Login tab in the upper right hand corner.
Hi Juan, You can find out if a property has a sale date using foreclosure radar, you need to be a member to have access to that information. If you don't have access you can e-mail me and a can find out for you carlosag0067@hotmail.com
We filed chap.13 are bk payments went from $400.00 and change to $700.00 and change. Our house payments went up as well from taxes and insurance. We cannot afford our payments the bank filled for automatic relief of stay and tacked on higher payments over the next six mons. Contacted a mod. Com. Who is advising us to pull the house out of bk so they can modify the loan. His claim is the house payment is at 50% per our income and it is supposed be no more than 30%. I want to know if this is advisable. Also will this guarantee a lower payment?
Consult with your BK attorney before you do anything. If you pull the property out of BK you do not have a guarantee that they will modify your loan. Oftentimes mods are a short term (5years +/-) interest rate reduction to get you to the 30% ratio. Keep in mind that if you do not show enough income and if your payment is still greater than 30% after they lower your interest rate you may not qualify for a modification.
Do your research before you modify your BK.
Im in the same situation as many of you and was wondering If I should show up to these court dates that the hoa's attorney's are trying to get closer to a trustee sale on me I wasn't realy served they served my tennant, but I looked online and saw that Ive missed a few court dates, If I go can I prolong the process? the amounts owed may be incorrrect too? Thanks for any advice to help me slow down the process. Oh, Its in california. I wan't to actually move back in and start a payment plan and do a loan mod while i still can or maybe a short sale.
Hi Konakid,
On the Notice of Trustee Sale the trustee is only obligated to post the notice on the property, record it with the county recorder and publish it in the newspaper. The only difference between a HOA foreclosure and a foreclosure on a deed of trust in CA is that you have a 90 day right of redemption following a non-judicial foreclosure by a HOA. If you believe that you are going to keep the house and try to modify you may want to contact the HOA and make arrangements to pay the past due HOA dues and avoid a HOA foreclosure completely.
Hi There is a lot you can do to dispute this.
They have to serve you. If they didnt post this information in the newspaper they did not fulfull service.
Additionally we have legal rights, FCRA, FDCPA TILA and RESPA you will be amased at what they do wrong.
I work for an attorney so I have that extra knowledge but i have been working with my lender for quite a while. Luckily I have received two permanent modifications which i am not going to take.
I am sending in a rescision today and i am going to sue.
I noticed the lender did several material violations in my loan one being major. I sent in a QWR having the lender send me a complete history of my loan. I recalculated my history and found that the lender not only added deferred interest but also added deferred principal causing my loan balance to be considerbly higher by $20,000 more I was not in default and they sent me a default. This is enough to send in a rescionsion.
It is things like this that we have to do to advocate for ourselves.
The lender will not fix this for us.
You have a right to send in a QWR and a dispute per TILA and ask for
a complete accounting of your loan history from origination to now make sure you send the QWR to the correct address. . This way you can see if any charges were added that should not have been added you will be amazed.
Additionally you may see, if your in default, that the lender automatically added charges to your account that are not allowed.
We should all do this annually any way.
JoAnna Jensen
Volo Law
the judge hasn't approved the trustee sale yet even after a few court cases and they tried this two year's ago and after about 5 court cases the judge threw it out cuz they couldn't find or properly serve me? but the process has started all over again. It was a linited civil cuz the amount was under 25,000 but are trying to raise it to an Unlimited Civil cuz its above that and are moving the court date closer cuz they heard i was coming back soon, however Im not yet. Can I move the court date out a few months or should I get an attorney to help buy me some time to hold this thing out to a farther out date. So we can see if there numbers are correct? I never recieved the legal break down and was never aware of these court dates cuz my tennants were throwing my mail out.
Is this for real? I hear those don't work and are a waste of money? Anyone, have any thoughts...
Just received summons for foreclosure, no sale date yet. I lost my job and was unemployed for several monthsand fell far behind. Now have a job but much lower salary. The bank would almost definitely get their money back if house is sold, not likely to be a short sale, I have at least 25% equity. I'm afraid they have NO reason to work out a modification with me. Do you see anything hopeful in this scenario as I would like to have a chance at realistic modification and to remain here?
I purchased my investment property in 2005 for $2.1 million dollars. Recently, (over the past 18 months) I’ve had a tremendously high vacancy rate due to the poor economy and it began taking a toll on all my reserves just to maintain the property. I tried to negotiate with my lender (Bank of America) for a modification. I went round and round with the bank, submitting documents and so on and in the end, Bank of America denied me for a modification. I couldn’t understand why they wouldn’t modify my loan when it was clear that the economy hamstringed my ability to service the debt. The only thing that Bank of America could tell me was that the investor was the one who declined the modification. I asked who the investor was and they would not tell me. It was then that I began to look closer at my original loan and I saw on the Deed of Trust that MERS was listed as the Beneficiary. With all the information about MERS in the news I decided to talk to an attorney. My attorney had an auditing company called Lighthouse Consulting Group review my documents for both a forensic analysis of my original loan documents as well as a Mortgage Securitization Audit. It turned out that my loan was securitized in a trust called “Structured Asset Mortgage Investments II Trust 2005- 8. It was in this trust; there is a pooling and serving agreement, which governs the rules of the REMIC Trust. In my loans pooling and servicing agreement, it said specifically that any loan modified would require a buy-back from the servicer. Now, it was about this time that I began to default on my loan and was looking at ultimately losing my investment property. I was already 6 months in default at this point. The individual I talked to that is an attorney and real estate broker immediately ordered a forensic audit for predatory lending. Commercial properties do not have TILA and RESPA violations. The attorney also ordered a securitization audit to verify if the lender that filed the NOD was actually in proper standing. Both audits reveled several issues about my loan. First, the forensic audit proved that my lender had wrongfully calculated my payment it was overstated by $350 per month. Secondly, the loan itself was an adjustable loan based off the Libor Index, which was dropping, but the loan always adjusted up. This was a major development in a very positive way for me. Then, I had the securitization audit show that my loan was never securitized properly and the note and deed were not even with the same party. My attorney drafted a complaint, outlining everything I have mentioned. As soon as the lender was served, they contacted my attorney and settled without going to court. The settlement I got was a principal balance reduction of $400,000; my interest rate was reduced to 4.5% fixed for 30 years.
Happy ending! from when you first started talking to an attorney and the bank settled how long did it take.
Our situation sounds very much the same... even the same players. If I may... May I ask the term with your attorney and his/her name and phone numbers?
Thx
Hi JStern! I would really like to know who your attorney is, I am in simialr situation and struggling to find a honest attorney who can get results.
Job Well Done, finally a happy ending ;-) . Could you pass on name and number of esq. Thanks your story made my day.
Several ways to stop a foreclosure.
U can try a loan modification. This is tricky. If I had a nickel for every homeowner that thought the bank would simply NOT foreclose on their home because they started a loan mod....I could have retired as already. People don't buy this crap.
The banks usually tell you NOT to make your payments during a loan mod, then stretch out the loan mod process super long...sure so you can miss your payments 1, 2 , then 3 months and boing....the 4th month you have a NOD Notice of Default filed on you and the foreclosure process begins. Next thing you know, you thought they were doing your loan mod and then some guy is knocking on your door posting a notice and telling you your home was sold at auction and they can either evict you or if u agree to move quickly, like 2 wks, then they'll do a cash for keys settlement with you.
The way to postpone the foreclosure IF your home is upside down and you owe MORE than what your home is worth is a short sale.
But you MUST and I assert you MUST deal with an experienced short sale agent.
I'm a realtor and specialize in short sales. I've negotiated over 400 short sales and have had 1 actually get sold at auction.
Simply starting a short sale, does NOT postpone the auction.
You MUST have an offer and a fully completed and executed package on the seller's side submitted to your lender by your short sale agent.
And the agent MUST have contacts with the higher ups in escalations departments to postpone the sale and be super diligent.
You DON't need to do an expensive bankruptcy folks...at least not in CA. I do not speak for other states. All you'll be doing is making another attorney happy and that much richer.
A short sale costs you ZERO...zip...nada. No title, escrow, commission, repairs, termite, warranty NOTHING. Your lender pays for all of this, NOT YOU.
The short sale works if done propertly and buys time for the homeowner to remain in the house mortgage free for several months and gets them money to relocate..sometimes up to $30,000!
The bank FORGIVES your debt and the amount you owe and cannot legally pursue you for any deficiency and the deficit amount is NOT taxable income at all. It is a cancellation of debt. If anyone has any questions, please feel free to contact me at :
Sheyenne Schultz
Real Estate Network Group
2601 Airport Drive #120
Torrance, Ca 90505
310-429-4170 shy@shysells.com
www.shysells.com
Need to SELL or BUY? Just call SHY!
Member of US.GOV Bank Negotiators
Platinum VIP status Club in the nation.
The best way to avoid foreclosure is to prevent the filing of a Notice of Default. Lenders do not want to foreclose but will file a Notice of Default to protect their interests, if necessary. If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender.
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http://www.howtofilebankruptcy.com/chapter-7-bankruptcy.asp
can I pay and bring my loan current AFTER the foreclosure sale? If so, how long do I have after foreclosure sale to do this?
HI Jon,
It depends on the state where the foreclosure took place. Some states have a redemption period after the foreclosure. If you are in CA there is no redemption period.
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