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Originally Posted On: https://premierpropertybuyers.com/stop-foreclosure-in-southern-california/
Nobody wants to go through the foreclosure process and learn how to stop foreclosure in California. The process — and the aftermath — can be devastating to homeowners, who not only lose their homes but also risk further financial difficulties. Alas, foreclosure in California is a common occurrence, with around 30,000 foreclosures every quarter — and those numbers have been on the rise in recent years. Though the California foreclosure rate peaked in 2010, it remains a very real threat to many homeowners during these economically uncertain times.
It can be uncomfortable to know that you’re facing the foreclosure process. However, even though you may be behind — or at risk of falling behind — in your mortgage payments, there are ways you can avoid foreclosure. On this page, we’ll run through everything you need to know about the California foreclosure process, including what it involves, the consequences, and the many options available to you that can help to stop foreclosure.
Understanding Foreclosure in California
Foreclosure is when the mortgage lender takes possession of a property in the event that the mortgagor is unable to make payments on their mortgage loan. A single missed payment is unlikely to trigger a foreclosure sale, but if there are multiple missed payments, then a notice of default will be served. Most people who fail to make a payment on their mortgage loan do so because of personal finance issues, such as loss of employment or costly medical bills. It can also occur when people who have a variable rate mortgage suddenly find that their monthly repayments are much higher than they used to be.
The California foreclosure process begins when the mortgagor misses a payment. In most cases, the lender will reach out to discuss the issue with you. If the payment isn’t made within 90 days, or there’s no repayment plan, then the mortgage will be “in default.”
At day 120, the lender can issue a Notice of Default to the lender. From that point, the mortgagor will have three months to fix the mortgage loan; that is, either by repaying what is owed or via the creation of a repayment plan. If that doesn’t happen by day 180, the bank can set a date for the sale of the home. Mortgagors have twenty days from the Notice of Trustee Sale date (Day 180) to prevent a foreclosure sale. By day 200, the property can go to auction and be sold to the highest bidder.
Consequences of Foreclosure in California
The most obvious consequence of foreclosure is that you will lose your home. If you’re unable to make mortgage payments or come up with a repayment plan, then the bank will, eventually, set a foreclosure sale date, at which point the property will be sold to the highest bidder. There are other consequences to going through the foreclosure process, too. It will likely have a negative impact on your credit score, making it more difficult to get future loans at good rates. A poor credit score can also impact your ability to rent a home and, in some cases, get a job.
Loan Modification Programs to Prevent Foreclosure
Missing a payment doesn’t necessarily mean that you’ll go through the foreclosure process. Most lenders would prefer to keep mortgagors in their homes. One of the ways they do this is through loan modification. Loan modifications are agreements made between the homeowner and the lender that change the terms of the mortgage agreement to make them more manageable for the mortgagor. For example, this may involve changing the interest rate, extending the length of the loan, or building the missed payments into future payments.
Eligibility Requirements for Loan Modification Programs
Your lender will likely be open to loan modification, but you’ll have to meet some requirements. First, you must be at risk of defaulting on the loan; that means you’ve missed at least one mortgage payment, or you’re about to.
They’ll also want to see evidence of significant financial hardship. That is, why you’ve been unable to make the payment in the first place. This could be illness, the death of a loved one, or divorce. Loan modifications are only eligible for primary residences, too, not second homes.
Popular Loan Modification Programs in California
Some lenders have their own loan modification programs to help avoid foreclosure, so it’s recommended to check with your lender first. In California, there’s Keep Your Home California, which offers funding to help homeowners stay in their homes. There are also federal programs that California homeowners can utilize. Some of these programs include:
- Home Affordable Modification Program.
- FHA Home Affordable Modification Program (available for FHA-insured mortgages).
- VA Loan Modification Programs (available to veterans with VA-backed mortgages).
- USDA Loan Modification Programs (available for USDA-backed mortgages).
Benefits of loan modification for homeowners facing foreclosure
The most obvious advantage of loan modification is that it can prevent the foreclosure process, allowing homeowners to stay in their homes. It can also help to lower monthly mortgage payments, which makes it less likely that you’ll run into difficulties in the future. They’re also less likely to have a negative impact on your credit score. While there are plenty of benefits to a loan modification, they’re not for everyone. It’s best to speak to a foreclosure attorney before undertaking the process. However, if it is right for you, then this can be a highly practical way to prevent judicial foreclosure.
Tips for a Successful Loan Modification Application
Just because you’re eligible for a loan modification, that doesn’t mean that you’ll automatically be successful. There’s an application process, and not all will be successful. While the specific requirements will be different for each mortgage lender, in general, you’ll find that you can increase your chances of success by taking the following tips on board:
- Explain in detail why you’ve missed payments.
- Present your financial landscape (income, expenses, Federal Tax Returns).
- Ready yourself for an in-person interview.
- Stay in touch with your advisor and deliver documents/information on request.
You should also be wary of loan modification scams, which are increasingly common.
Short Sales vs. Foreclosure: Weighing Your Options
A short sale is a way to prevent the foreclosure process. It involves selling your home for less than what is owed on the mortgage. It still involves losing your home, but it can help avoid many of the problems that can result from a foreclosure sale. For instance, it’ll have significantly less impact on the property owner’s credit score. All the money generated from the sale goes directly to the lender.
This is a process that is commonly found when using a real estate agent to help sell a house that has received a notice of default and the house is considered to be in pre-foreclosure. Short sales typically require a fairly decent amount of time, require good communication with the mortgage servicer and homeowners should know that they should contact their lender immediately if they are considering exploring this option.
The Differences Between Short Sales and Foreclosures
The outcome of both short sales and foreclosures is the same; the mortgagor loses their property. But the process, and the after-effects, are different. Foreclosures are initiated by lenders. Short sales are initiated by the homeowner. You’ll still need permission from the lender before you go through the short sales process, however. Short sales are not a magic solution to a person’s financial difficulties, and the process doesn’t always work. But in general, you can think of it as a way to stop foreclosure, one that, done correctly, minimizes some of the negative fallout of losing a home.
Benefits of choosing a short sale as an alternative to foreclosure in California
Homeowners choose a short sale over foreclosure for exactly that reason; it allows them to avoid the California foreclosure process, which is typically deeply unpleasant and has long-lasting consequences. There are other benefits to choosing a short sale, too.
For one thing, it keeps you in control. It also won’t appear on your public record, you’re unlikely to owe anything to the bank after the sale has gone through, and you’ll be able to purchase a new home sooner than you would if you went through foreclosure. It’s also just generally a less stressful experience and offers greater peace of mind.
Selling Your Home in California to a Real Estate Investor to Avoid Foreclosure
The benefits of selling to a real estate investor or cash house buyer to Stop Foreclosure
A smart and practical way to avoid judicial foreclosures is to sell to a real estate investor or cash house buyer. The main advantage of taking this approach is that you can complete the sale process quickly, much quicker than if you sold the property on the open market. Companies such as Premier Property Buyers buy homes in all conditions, so you won’t need to get your home into “sale mode.” You can sell the property as-is, and begin thinking about the future.
The Process of Stopping Foreclosure in California When Selling to an Investor
In its most basic form, the process of selling to a house cash buyer is as follows: you provide your property details, they come to inspect the property, and then they’ll offer you a cash offer. If you accept, then the money will be on its way to you as soon as possible. If you’re trying to stop foreclosure, then this can be a highly effective way to do it, since you’ll be selling the property yourself. It can be difficult to sell a house in today’s market — by selling to a cash house buyer, you’ll have peace of mind that your property will be off your hands quickly and that you’ll have money in your pocket.
Nobody wants to go through the foreclosure process. If you’re struggling to make mortgage payments, then a cash offer is a tried and tested method for removing the stress of trying to make payments. It’s a quick solution to protect yourself from your negative property situation.
Bankruptcy To Stop Foreclosure In California
The Implications of Filing for Bankruptcy to Stop or Delay Foreclosure in California
If you’ve spoken to enough people about foreclosure, then you’ve probably heard that filing for bankruptcy can prevent or stop foreclosure. But this isn’t really true. In most cases, it simply delays the foreclosure process. Filing for bankruptcy can also have a greater negative impact on your credit score than foreclosure, too. However, if you believe that you can catch up with your missed payments in the near future, then it can be a good way to keep your house.
Types of bankruptcy that can help homeowners
There are two types of bankruptcy that can help homeowners keep their properties: Chapter 7 and Chapter 13. Under Chapter 7, you’ll still need to make mortgage payments, but there’ll be more flexibility. Under Chapter 13, the courts will come up with a strict repayment plan. In other words, you’re still paying debts.
Potential Consequences of Using Bankruptcy to Stop Foreclosure
Bankruptcy can help avoid foreclosure, but there can be large consequences to taking this step. If you’re unable to pay your mortgage payments, then you’ll still lose your home. Plus, you could end up with both bankruptcy and foreclosure on your credit score, which can make it impossible to get any credit. Additionally, using bankruptcy to avoid the foreclosure auction last minute can be costly and may not improve your financial circumstances.
Last-Minute Solutions to Stop Foreclosure
Various options homeowners can explore to halt foreclosure at the last minute
Facing immediate foreclosure? There are things you can do to stop it, even if it’s last minute. Some common options include declaring bankruptcy, making a last-minute loan modification application, paying off the loan in cash, or selling your property to a local “we buy houses” company.
How to negotiate with the lender
You may also negotiate with the lender to see if they will agree to cease the foreclosure process. Finding a workout solution that benefits the lender and which you can abide by, may halt the process. It’s important to be upfront and honest and to demonstrate a real willingness to pay what you owe.
Seeking emergency financial assistance
- Research federal, state, and local assistance programs designed to help homeowners in distress
- Consider applying to the Homeowners Assistance Fund if eligible
- Consult with nonprofit credit counseling agencies for advice on managing debt and avoiding foreclosure
- Check for any local community programs that provide emergency housing assistance
Depending on your circumstances, there may be emergency financial assistance available to you. For instance, the Homeowners Assistance Fund can help families who have been financially hit due to the coronavirus pandemic. There are also many government programs that can provide free, confidential advice relating to your situation.
Tips on acting quickly and efficiently
The longer you wait, the more difficult it’ll be to undo the foreclosure process. You can improve your chances by taking action as soon as possible. This includes researching options and trying various solutions. Just because one solution does not work, that doesn’t mean that the next one won’t be effective.
- Begin researching options and taking action as soon as you suspect you might face foreclosure
- Don’t get discouraged if one solution doesn’t work; try all possible alternatives
- Keep all documentation organized and readily available
- Reach out to professionals, such as housing counselors or real estate attorneys, for guidance
Stopping Foreclosure in California
More and more people are struggling to keep up with their mortgage payments, and consequently, there’s an increasing number of homeowners facing the risk of judicial foreclosure. This stressful, unpleasant experience can result in the loss of a home and have long-lasting implications for the homeowners’ financial landscape.
However, while foreclosure is sometimes inevitable, there are usually steps property owners can take to prevent a foreclosure sale of their home. From short sales and loan modifications to emergency financial assistance and selling to an investor, homeowners can ensure that foreclosure is a last resort.
The bottom line: Take action and explore your options
Foreclosure doesn’t usually happen overnight. The warning signs are there long before the lender issues a notice of default. If you think that you may struggle to make mortgage payments in the coming months, then take action today. As we’ve seen in this article, there are many options available to you that can help you to avoid the main pitfalls of a foreclosure sale. The trick is to take action before the foreclosure process begins.
Sell Your House to Premier Property Buyers Today
If the burden of a property is weighing you down, if your home is becoming more of a liability than a sanctuary, then it’s time to contact Premier Property Buyers. We specialize in helping California homeowners like you avoid the overwhelming process of foreclosure by purchasing your home swiftly and securely.
Our dedicated team is not just ready, but eager to help you take the next crucial step towards regaining financial stability and peace of mind. Our uniquely simplified three-step process has been carefully designed to minimize stress and maximize ease:
- Start by sharing the details about your property with us.
- Let us personally visit your property and present you with a no-obligation, all-cash offer.
- If the offer aligns with your needs, we close the deal, and the money is yours on the same day.
To start the journey towards financial freedom and a fresh start, take the first step now. Call us at (949) 356-6763 or fill out the form on our contact page. You have nothing to lose but the looming threat of foreclosure. We’re here to help you turn the page and start a new chapter in your life.
