Home foreclosure is typically the last resort for a property owner. While it allows you to abandon financial responsibility, it also returns the property ownership to the bank, which means that you lose your home and all the monies you have paid towards your mortgage. Not only do you lose precious family memories, but losing your biggest investment can set in motion a devastating series emotional and financial angst. Unexpected financial crises can put the American dream of owning property in serious jeopardy.
Wrongful Home Foreclosure Alternatives
If you are burdened by home foreclosure, mortgage litigation, bankruptcy and more, the right legal representation can help you create a fresh start. Your bankruptcy lawyer will gladly help you resolve those issues and set you up with the tools and mindset to make the most out of the situation. Sometimes, California real estate law only protects you when you file a lawsuit against your mortgage lender in Federal or State court, and only a bankruptcy filing or Judge's Order can legally stop foreclosure.
It is important to act quickly and find the right advice based on your specific case. Naturally, it is best to do everything in your power to avoid home foreclosure on your property. The process will have an adverse effect on your credit record and it will stay there for ten years. After that, it can take as much as six years to obtain new financing. When you know the options that are available to you, it is easier to make the right decisions. Contact an experienced home foreclosure and bankruptcy lawyer if you are struggling to pay your bills and your monthly mortgage installment.
Experienced San Diego Bankruptcy Attorneys can help:
- Halt the home foreclosure proceedings
- You stay in your home
- Reduce your mortgage payments
- To collect damages for wrongful home foreclosure.
When you are faced with home foreclosure, a San Diego bankruptcy lawyer is on your side. A home foreclosure can be confusing and traumatizing, and you may not be aware of your rights. Home foreclosure attorneys want to assist you in getting your life back on track. From negotiating with the institution to filing lawsuits or assisting you with a bankruptcy petition.
Every year, banks and mortgage servicers file wrongful home foreclosures. You do not have to fall victim to unlawful tactics, because the New Homeowners Bill of Rights makes a provision for up to $50,000 in violations, in addition to attorney fees. It is important to get professional help if you have problems with your loan broker or mortgage lender or with the loan modification process.
The process is set in motion by the first official step, which is the recording of the Notice of Default. A Notice of Default is usually issued when the homeowner stops making payments on the home loan. The Notice of Default may not be sent until thirty days after the loan provider has contacted you and assessed your financial situation.
The loan provider must communicate directly with you on the phone or in person, and must give you the opportunity to request a meeting, and give you the option to explore various means for avoiding foreclosure. When you request a meeting, you can opt to do so in person or telephonically within 14 days and should include an assessment of your financial situation.
The notice is typically triggered after the third missed payment. The homeowner may continue living in the home until the foreclosure process is completed. When you receive the Notice of Default, speak to an experienced real estate and bankruptcy attorney who can assist with your home foreclosure defense lawsuit.
If the lender failed to reach you on the phone after several attempts, they may send you a certified letter with return receipt, informing you of the various options to explore your alternatives to foreclosure. They must provide you with toll free phone numbers, official website links and other sources of relevant information that could help you avoid foreclosure.
California offers lenders two options for foreclosing on consumers, namely non-judicial foreclosure, and judicial foreclosure. Non-judicial foreclosure means that the lender does not have to file a lawsuit in order to foreclose on the property, but as a homeowner, you can fight potentially wrongful foreclosure by applying reforms from the California homeowners' Bill of Rights.
Lenders typically pursue non-judicial foreclosure in California, since money-purchase loans are non-recourse loans and pursuant to the California Anti-Deficiency Statuses. That means that foreclosing on the property is the only legal course of action a lender may take in the event of a default.
Almost all California home foreclosures pursue a non-judicial foreclosure under the power of sale. This is because home loans that are secured by a deed of trust (rather than a mortgage). A deed of trust is a home that is taken out in California and secured against the home. A loan that is secured against a property in other states, is known as a mortgage, and lenders use judicial foreclosure to foreclose against the homeowner in court.
Timing is of the essence in home foreclosure cases. The lender must contact the borrower at least thirty days before the Notice of Default is submitted. After that, a 90-day notice of default period is followed by a 21-day Notice of Sale. The entire process takes a minimum of four months, although, in today's economic climate, the process can take much longer.
Are You a Candidate for Home Foreclosure?
If you have missed a few payments on your home, and you have received notices, you may wonder whether the home foreclosure is a viable option for you. Here are the characteristics that make someone the right candidate for foreclosure:
- Refinance is not available for you.
- Loan modification is not an option.
- You do not have any other loans, such as HELOC or equity home loans.
- You have one or more money-purchase loans.
- Your home's value is in excess of 25% less than your current outstanding mortgage.
Benefits of Home Foreclosure
Hard as it may be to accept, there are some benefits of letting a home foreclosure run its course.
If your first and or second home loans are money-purchase loans, you benefit from no deficiency judgments. That means that the lender's only recourse is foreclosure. Therefore, the lender may not seek deficiency judgments against you once the home has been sold at auction.
As the homeowner, you may stay in the property rent-free during the foreclosure process. That means that you have some time to save money towards moving costs. The longer the process drags on, the more money you can save.
You will not pay any debt-forgiveness taxes on the money-purchase loan, since there is nothing to forgive. The California Anti-Deficiency Statutes prohibits the lender from pursuing any collection actions on the deficiency.
However, equity home loans and home equity lines of credit are not secured by a deed of trust or a mortgage, which means that they have to be foreclosed judicially. The fact that these lines of credit are secured by a security agreement, deficiency judgments are in effect.
Options to Avoid Home Foreclosure
Various specifics that are pertinent to your case, your mortgage details and financial situation will play a part in selecting the most appropriate remedy for your situation. There are four common options available to homeowners who want to avoid foreclosure on their properties, namely:
Chapter 13 Bankruptcy and Foreclosure - If you don't qualify for Chapter 7 due to your net monthly disposable income, you will have to file a Chapter 13 bankruptcy. Chapter 7 wipes out any unsecured debt, but you may have to repay a percentage of monies you owe over a period of three to five years under Chapter 13. Your attorney will help you draw up and submit a Payment Plan, which the creditors and the court must approve. Past due mortgage payments can be included in the payment plan, which aims to consolidate all your monthly bills into a more manageable monthly escrow payment. It's not unusual for individuals who file for Chapter 13 to avoid foreclosure. The moment you file for Chapter 13, it places an automatic stay on any collection or foreclosure actions, so the banks and other creditors cannot proceed.
Loan Modification - Employed individuals may be able to negotiate loan modifications with the banks, provided you are not too far behind on your home loan repayments. Your 20-year variable rate loan will be modified to a 30-year fixed rate loan, which means that your payments will be spread over a longer loan term, but changing to a fixed rate should result in lower monthly mortgage repayments. However, it is important to note that lenders are not obliged to offer loan modifications. Therefore, they may offer only a small reduction in payments or a short term discount, which will simply delay the inevitable home foreclosure.
Lien Stripping - When your home's value is less than the original loan, a judge may discard the second mortgage as part of a Chapter 13 bankruptcy. To qualify for lien stripping, the second mortgage must be secured by collateral that forms part of the bankruptcy filing, or it must not be a primary residence.
Short Sale - Sometimes, a short sale can help prevent home foreclosure, but your bank's cooperation is necessary, as the process usually involves complex financial and legal issues. A short sale refers to selling your home for less than the value of the original mortgage loan. Anti-deficiency protections can help prevent the lender from claiming the difference from you. Again, lenders are not obliged to agree to a short sale.
Foreclosure on First and Second Mortgages
If you have taken out a home equity loan or second mortgage, you must get professional advice before pursuing a short sale to avoid foreclosure. When you arrange a short sale, the bank may demand that you pay in the difference between what you owed on the original mortgage and the value of the sale. If your second mortgage is not protected by anti-deficiency provisions, you may be pursued for the bank's losses on your second mortgage. Bankruptcy may provide a means to discharge the second mortgage, depending on the specifics of your case.
You May Be Entitled to Sue for Wrongful Home Foreclosure
If the lender violated your rights under the California Homeowners Bill of Rights (HBOR), you may be able to sue them for wrongful home foreclosure. If successful, the court may impose hefty penalties on lenders, services and other firms who are found guilty of violating your rights or HBOR provisions. Civil penalties are another real threat for loan providers who process unverified system-generated documents.
If you have been losing sleep due to the threat of foreclosure, rest assured that both the Federal and California state statutes offer many provisions to help you keep your home. If you have already lost your home to foreclosure, some real monetary damages may be available to you.
When you're ready to fight for your rights, find a real estate and bankruptcy attorney in San Diego who is willing to provide you with the support you need. A professional attorney will listen to all your questions and provide brutally honest answers. However, it is important that you are honest about the exact extent of your financial situation, because the attorney can only provide you with the right solutions if he or she knows your exact position. If you decide that bankruptcy is the best option, an experienced bankruptcy attorney can guide you through the process.
Home foreclosure is usually the last resort, but a professional San Diego Bankruptcy Attorney can provide you with a variety of different options as well as the benefits and disadvantages of each. Our bankruptcy attorney are experienced in handling foreclosure defense litigation and other areas of fundamental real estate law and have a high success rate in obtaining positive outcomes for clients. Call 619-488-6168 now to schedule an initial case assessment consultation with one of our professional home foreclosure and bankruptcy attorneys.