When homeowners face foreclosure due to myriad reasons like loss of job, disability/injury, ill health, unexpected expenses, marriage or even relocation, they inevitably have to battle the reality of a foreclosure. It is necessary for you to be aware of your primary and secondary options to stop foreclosure in California.
Also called as Early Delinquency Intervention, this process involves an expert intervention right at the early stages of your financial crisis such that you could make the most of the options the lenders might have for you.
One of the first things you have to do as a part of EDI is to submit three-stepped, standardized, accurate and documented information: A Statement of the problem, in which you identify what exactly your problem is while you prioritize your problems (starting with the most serious ones); secondly, you have to submit a personal financial assessment form which takes a snapshot of your financial health and allows the lender to make better judgments about your paying abilities before chalking out a plan for you; and finally, you will be made to take stock of your equity on your home (your need to own your home and the lengths you should go to secure your home depends on this). Needless to say, being honest, accurate and up-to-date is very crucial here.
Primary Options for Stopping Foreclosures in California
Based on the steps taken above, your lender will be better placed to provide one of the many options available for you. Some of them have been listed out for you here.
Re-instatement of your loan: An obvious and easy way to bring your payments current is to pay the dues and bring your mortgage current. Bringing your payments to current would include paying up the due mortgage, late fees and any other fees the lender might charge you. The time available for you to do this in the state of California is usually 5 business days from the time your home can be put up for sale by a trustee.
Deed-in Lieu of foreclosure: Using this option, you may want to hand-over the deed back to the lender. By taking this approach you save your lender time and you get to stop foreclosure which harms your credit report.
Forbearance Agreement: Your lender typically allows you certain amount of time – 3-6 months in California – during which you make lower mortgage payments or no payments at all. The missed payments will add up with the payments that are due during the later part of your loan term.
If you are unable to make any payments whatsoever, lenders will foreclosure and snatch your home away from you. The exact time it takes to get to this stage is state specific in the U.S. In California, however, it takes about 4 months from the time the Notice of Default has been issued to you. Also, note that the lender is not allowed to float a deficiency judgment – which is a motion a lenders make when they lose money due to the property getting sold for a much lesser value on the market than its worth.