Many homeowners are unaware of the options that they may have when they are delinquent on their home loan. They hear about loan modifications and think that this will automatically save their home and is the only option they have. Many homeowners simply let the bank foreclose and simply walk away from their home. You should always know all your rights before making any decisions!!
Depending upon where you are at in the foreclosure stage, your lender may have a financial interest in you leaving your home quietly and quickly. Often lenders who see homeowners that are over 9 months delinquent or who have tried to do a loan modification and failed decide that they are simply going to move forward with foreclosure. They take into account many factors, but keeping a good person in their home they have lived in for 30 years is not one of them. It all comes down to the profit and loss, the almighty dollar!
Even in non-judicial foreclosure, which, here in California is a trustee sale of property, the bank has to incur substantial costs and time delays to foreclose. The lender looks at the costs and is often willing to pay cash to get a deed in lieu of foreclosure. This simply means that you agree to turn over the home to the bank and walk away at a certain time. This saves the lender the costs of paying the trustee to send notices, schedule the sale, attend the sale, transfer a trust deed, and then go to court to evict the homeowner. Even if your lender has taken title at a trustee sale and are entitled to immediate possession, they cannot simply go in and change the locks to force you out. If you occupy and are still in possession of the house, they have to serve you with a notice to quit and then go to court to get a court order to get you out. The lenders will often pay what is called “cash for keys” to avoid hiring attorneys and going to court to force you out.
Often the right negotiations and key pieces of leverage can get homeowners thousands of dollars from the lender that can help them start a new life.
We handle these types of cases and can assist you in obtaining the best possible remedy for your situation.
The information contained above is informational only and only discussed California law, you should consult an attorney in your state to evaluate all your legal options.
Chris Barsness, Esq.
May 19, 2009- As part of the Obama Helping Families Save Their Homes Act of 2009, Congress provided guidance to loan holders, servicers, and homeowners in dealing with potential foreclosure or a foreclosure moratorium.
The legislation provides that Congress feels that lenders and servicers of mortgages should not start foreclosure proceedings or foreclosure sales on a homeowner’s primary residence until the foreclosure provisions of the recent plans have been fully implemented.
Congress also states that they feel that the homeowner should also keep a home that may be in foreclosure in good repair, not allow damage to occur to the property, and should respond to the servicer or holder of their loan to requests during this foreclosure moratorium.
Homeowners should beware because this is not a federal foreclosure moratorium, but only sets out the general feelings of the US Congress and duties they think should be imposed. Your lender or servicing company can and will still move forward with foreclosure, so you must act to save your home. These are just guidelines and recommendations. Do not assume this foreclosure moratorium discussion bans lenders from foreclosure, trustee sales, or evicting you from your home!
May 19, 2009- Congress passed the Helping Families Save Their Homes Act of 2009 sending the legislation to President Obama for signature. This program expands the previously announced Obama Making Homes Affordable and Homeowner Affordability and Stability plans. Although the provisions that would give bankruptcy judges the power to cram down mortgage in bankruptcy proceedings was absent, the legislation adds more incentives to lenders to keep people in their homes with reasonable payments through mortgage modifications.
The act expands the number of homeowners who will be eligible for loan modifications. These programs can extend mortgages to 40 years, reduce interest rates, and reduce the principal on both first and second mortgages for a person’s primary house. If a home that has a modified loan under this program is sold within the first 5 years after the modification, the mortgage holder (lender) gets anywhere from 10 to 90 percent of any equity accumulation from the net sales proceeds.
Since the plan gives the loan servicer (who is usually the only person you can negotiate with when it comes to your loan) a safe harbor when entering into certain loan modifications, workouts, or other loss mitigation plans, this should help push servicing companies to worry less about liability in modifying loans and more about helping homeowners.
The legislation also extends the increased Federal Deposit Insurance Act (FDIC) coverage limit from $100,000 to $250,000 from the end of 2010 to the end of 2015.
Industry source, RealtyTrac, announced that a record number of foreclosures went forward in April. A total of 342,000 homes received notices of default, auction notices or underwent bank repossessions in the month of April.
California easily outpaced every other state with with 96,560 filings, which is not a surprise to me. In our practice defending homeowners, the banks have accelerated the pace with which they are deciding to simply take over properties, even if they are underwater. Despite these bleak numbers, record numbers of loan modifications are still going through. The guidelines of the Obama Making Homes Affordable Plan have pretty much been implemented by most banks and they are processing applications quicker than in the past. The banks also seem to be more willing to work with people at most stages of delinquency, even those that are current on payments.
The trouble is that most homeowners wait until they are approaching a trustee sale date that is weeks away and it is virtually too late to help them. We have fought in court and stopped trustee sales literally hours before the sale, but that is not always the case. Usually lenders need several weeks prior to a trustee sale to review documents and voluntarily agree to postpone the sale.
Don’t hesitate, there are programs available for many homeowners, but waiting too long can result in your lender writing it off for foreclosure sale.
If your home is about to or was just sold at a trustee sale, the lenders may be willing to pay you to turn over your home in a timely fashion and avoid the lender having to proceed with an unlawful detainer (eviction) proceeding in court. There are options available.