Did you just receive a Notice of Default (“NOD”)? Then it’s time to review your foreclosure defense options and design a strategy for buying time and saving your home.
A mortgage lender can collect the balance of the debt you owe by selling your home at a public auction, without ever taking you to court. California’s “non-judicial” foreclosure statutory process is permitted based on a “power of sale” clause to which you agreed when you borrowed money to buy or refinance your home. Foreclosure is an industry; people’s homes are auctioned off every day and they can be evicted very soon after. Be prepared to be inundated with calls and letters from foreclosure predators, shady realtors and unscrupulous law firms.
Consulting with a reputable foreclosure attorney should be your first move, but this list of 10 tips can improve your chances of saving your home or buying time.
- Create a road map to your earliest possible auction date (While the minimum countdown to the auction is 121 days from the NOD, there are a multitude of laws and tactics that can extend that timeline if you know what to do);
- Determine the home’s value range and calculate your income “sweet spot” (whether you pursue loan modification, Chapter 13 bankruptcy, a lawsuit or a sale, the home’s value and the amount and provability of your income are variables that can change the game);
- Ascertain the pros and cons of filing Chapter 7 bankruptcy early (Chapter 7 can serve to free up money in your budget to make it easier to save your home or ensure you have no back-end liability if you eventually lose or short sale the home. However, timing is important and as well as the “sweet spots” of ideal income and home value);
- Communicate with your loan servicer in writing and avoid phone calls (it’s a sad state of affairs in the mortgage industry, but the acts and words of loan servicers generally cannot be trusted. Its ONLY about their profit, not your problems. Mortgage industry abuse is well documented in the lawsuits, consent orders and government settlements…don’t buy into the happy talk);
- Formally request a list of available loss mitigation options (Loan servicers are the hired collectors empowered to “modify” your loan to maximize the profit, not to help you. People with equity are much less likely to obtain a modification because of the financial incentive to get rid of a “risky” borrower and re-invest);
- Demand the note, deed of trust, re-instatement quote and loan history (You signed a “note” promising to repay debt and a “deed of trust” securing the debt to your home. Contract law determines your rights and the lender is not obligated to change the terms of the deal. You need to know the details of those agreements);
- Process your loss mitigation applications flawlessly and meet all deadlines (If you want a modification or short sale, you need to make it as easy as possible for the loan servicer to say yes by meeting deadlines and providing the info they need to pick the winners and losers. If you are self-employed its crucial that your books are tight. Put the time in and don’t let a lack of diligence and persistence be the reason you get denied);
- Expect bureaucratic incompetence, document everything; build a lawsuit (You can be flawless in your processing, but don’t be surprised if the loan servicer is highly incompetent, bureaucratic and deceptive. Assume it, count on it, use it to your advantage by documenting everything. Build a hypothetical lawsuit throughout your journey);
- Understand the pros, cons and limitations of RESPA and the CA Homeowner Bill of Rights (Since you breached the contract, the lender has the advantage in the eyes of the law. However, the both federal and state law can be used as a tool to maximize your chances for fair consideration for a loss mitigation program. These laws empower you to delay the auction and get vital information. Master them…or hire an attorney adept at applying these tools);
- Calculate the payments required to fund a Ch. 13 bankruptcy plan. (Before 2008, loan mods were extremely rare. If you fell behind, you either lost the house or you used Chapter 13 bankruptcy to buy time and\or dig out of the hole. Chapter 13 is a powerful last resort that allows you to “strip” unsecured junior mortgages and repay back payments over 5 year. Chapter 13 is not a loan mod so the monthly obligations require higher income. Do not go it alone, consult a lawyer adept at applying this tool).
This is no substitute for a tailored review of your situation. Counting down to the auction, I will drill down into each topic and explain their importance. If you have an emergency situation, contact me directly by cell phone at (714) 374-3500.
-Attorney Joe Roberts