FORECLOSURE - So, you received NOTICE OF DEFAULT
You missed a payment - now what
You received the NOTICE OF DEFAULT because you most probably are behind at least 90 days.
In the State of California, we have what we call non-judicial foreclosures. Unlike Florida and other States, the court has no impact on the day to day proceedings of a home about to be foreclosed. The courts only get involved once you get sued for Unlawful Detainer [this is when you've already lost your home] or if you decide to sue your lender for fraud, unlawful foreclosure etc.
Usually, you should not receive the Notice of Default until you've missed the THIRD payment. If you received it before then, something is fishy here. If the Beneficiary [the lender] cannot resolve the defaulted payment amount with the Trustor [you, the borrower] through Forbearance or loss mitigation measures, the Beneficiary will instruct the Trustee to begin Foreclosure proceedings.
So, here's the timeline in California once you receive the Notice of Default. .
Within 10 business days
Mail Notice of Default to borrower address
Within 1 month
Mail Notice of Default
After 3 months
Set Trustee Sale date
25 days before Trustee Sale date
Send notice of sale to I.R.S.(when necessary)
Within 10 days from 1st publication of Trustee Sale
Send beneficiary request for property directions
14 days before Trustee Sale date
Record Notice of Trustee Sale
7 days before sale date
If court action, 7day rule may apply
5 business days before sale date
Expiration of borrower's right to re-instate the loan - THIS IS VERY IMPORTANT . If you did receive a Notice of Trustee Sale, you can no longer ask for a loan modification or go through Loss Mitigation 5 days before the trustee sale date.
Property is sold to highest third party bidder or reverts to Beneficiary at public auction
Once this happens, you will get sued. You will be served with an Unlawful Detainer. This goes very quickly. This will be covered under another topic.
So what do you do?
You've missed several payments so obviously, you are already distressed financially. BANKRUPTCY does not stop foreclosures. It merely is a delaying factor to hold the foreclosure until you can come up with some money to pay off the arrearages. Remember, filing bankruptcy will have an impact on your credit reports for 7 to ten years. SEEK LEGAL ADVICE.
Loan Modification We've had clients in the past who were able to obtain a trial loan modification. Some of them received a permanent modification, some ended up losing their home because after their 3 month trial loan mod, when they received the permanent monthly payment, they could not afford it. You have to be very careful choosing a company that will do your loan modification for you. AVOID SCAMS. There are many websites to learn from. TAKE YOUR TIME - read and learn.
You also have to provide a hardship letter - loss in income, health issues etc. You need to be qualified. Take note that income requirements are based on gross income that will need to be verified. Loan mods are supposed to have target payments of 31% of your monthly gross income which is allotted to the principal, interest, taxes and insurance on the home. Total debt payments need to be under 55% of your monthly gross income.
Repayment Plan. Contact your lender. Be prepared to submit documents and fill out their loan workout documentation for the lender to review. Be ready to pay a hefty "down payment." This is beneficial for those with a financial setback but not for those who are experiencing a reduction in income.
Call your lender and be prepared to submit documents they request. They normally will ask for a loan workout documentation. Get your tax returns, bank statements, Profit and Loss, pay stubs etc. ready. They will need this. Be prepared to provide a "down payment." If you do not want to lose your home, do whatever you can to try to get these funds.
Sell your Home. Short sales are possible. Is your income 40% Does your monthly mortgage payment exceed 40% of your income? If yes, consider selling the property. Are you under? - meaning that you owe more than your house is worth? Talk to an honest realtor.
Get money from relatives, friends. This sounds desperate because, well, in fact, it is, It is YOUR HOME. If you have equity in your home, your home is not "under" [owing more than what the home is worth], borrow the money to pay the defaulted amount. Once the default amount is paid, they will rescind the Notice of Default and no foreclosure proceedings should occur. BUT, you will need to start making your monthly mortgage payments timely, otherwise, the whole process starts over again.
In the end...... Consult with an attorney who specializes in real estate,unlawful detainers and foreclosures. As a paralegal, I cannot give legal advice and the above should not be construed in anyway as legal advice.
DO AVOID law firms that handle everything from personal injury, family law and the like. There are many law firms who specialize in real estate only.
Rest assured, you've only received the Notice of Default. You have not lost title to your home yet. DO NOT IGNORE this form! It will not go away. The sooner you handle this and start your research, the better off you will be.
Helpful links re FORECLOSURE
- Stop Foreclosure Fast - Mortgage Assistance - Foreclosure Help
Stop foreclosure with our 14 years of foreclosure help. Stop now get foreclosure help to stop foreclosure fast. Mortgage Assistance since 1997 - Call us today.
- NeighborWorks America: Working Together for Strong Communities
NeighborWorks is a national network of more than 240 community development and affordable housing organizations. NeighborWorks America, created in 1978 by Congress as the Neighborhood Reinvestment Corporation, provides training, grants, and technical
- Foreclosure isn't the only option! Homeownership Preservation Foundation
The Homeownership Preservation Foundation (HPF) is an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure.
- FRB: Mortgage Foreclosure Resources
The Federal Reserve Board of Governors in Washington DC.