PLEASE READ THIS NOTE

Senate Bill 94 (Calderon)

Ways to Stop Foreclosure

The first step in stopping a foreclosure is to contact your lender to try and obtain a reasonable loan workout or repayment plan. The quicker you get the ball rolling, the better the chance you have of striking a deal with your lender, so you can save your home and your credit.

More than 50% of foreclosures would be avoided if people contacted their lender. Therefore,  be proactive and aggressively pursue all options you have, because you do have quite a few tools you can utilize to mitigate as much loss to you, your credit and your family.

If your are short on time and you cannot do it on your own, then please seek help from a Non-Profit HUD approved Housing Counselor www.hud.gov/localoffices or a legit for profit company, LIKE US, that can handle the calls, paperwork and the whole process for you. Please be aware that there are many companies out there that may not have your business in their best interest, please make sure to research who you are deciding to work with. AVOID FORECLOSURE RESCUE SCAMS!

VERY IMPORTANT INFORMATION TO ACHIEVE A SUCCESSFUL MHA LOAN MODIFICATION

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This is a REAL example of your road ahead... and what you might face without our help:

For Agreements entered before October 11 2009 please visit the CA Departement of Real Estate website  http://www.dre.ca.gov/mlb_adv_fees_list.html and verify that the Company you are working with is WAS APPROVED to do LOAN MODIFICATIONS and has a "NO OBJECTION"  Letter for the use of "The Advance Fee Agreement".

You can also find out which Individuals, Attorneys and Brokers have problems with the DRE by viewing the 

desist and refrain orders and/or accusations for illegal and unlawful loan modification activities.

PLEASE BE AWARE OF LOAN MODIFICATION SCAMS AND CHECK WITH; 

THE BETTER BUSINESS BUREAU, LOCAL CHAMBER OF COMMERCE AND DEPARTMENT OF REAL ESTATE.

VERIFY IF YOU ARE WORKING WITH A LEGITIMATE COMPANY.

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There are quite a few ways that the homeowner can stop a foreclosure. Here is a list of some of them with brief explanations:

Types of Loan Workout - A loan workout is when you negotiate with your lender any kind of plan that will benefit both you and the lender when you are delinquent or in default. This is a broad term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, forbearance plan, etc.

1. Loan Modification - This is when the lender modifies your current mortgage in order to work with you and make your mortgage more affordable. In the past this was only used when a borrower was delinquent but, now it is being used before someone is delinquent. This will be the hottest term and way to help people avoid foreclosure.

2. Reinstatement of Your Loan - You would pay the total amount past due in one lump sum by a specified date.

3. Repayment Plan - An agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular mortgage payment. At the end of the repayment period you will have gradually paid back the amount of your mortgage that was delinquent.

4. Forbearance - This is used most of the time, when a Notice of Default has been filed. You are allowed to delay or reduce payments for a short period of time, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions.

IF BORROWER(S) DO NOT WANT TO KEEP THEIR HOME:

There are quite a few ways do it. Here is a list of some of them with brief explanations:

1. Assumption of Your Loan (If your lender accepts this option) - This option may permit a qualified buyer to take over your mortgage and pay the payments, even if the mortgage is not-assumable.

2. Short Sale - This is used when all negotiations for a loan workout have failed and you are upside down on your mortgage, meaning you owe more than it is  worth. The lender basically agrees to cooperate in the sale and take a loss. You place the home for sale and any offers are then presented to the bank. Unlike a traditional sale when the homeowner decides what offer to take. The bank controls the negotiations and the homeowner has no say in the process. It is a last ditch effort to save someone's credit from a foreclosure filing.

3. Foreclosure Bail Out Loan - This is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage loan and it is common for interest rates to approach 10-15%. The points can be as high as 5 and the terms are usually short in the 5 year range, where a balloon payment will be due for the remaining balance. In order to qualify you must have sufficient equity. Hard money lenders are looking for 65% maximum (in California) loan to value and a decent equity cushion. You also have to have the ability to repay as in a traditional mortgage.

4. Deed-in-lieu - This is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principle advantage to the borrower is that it immediately releases them from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. The advantages to a lender include a reduction in the time and cost of repossession, and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered for a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower. This option carries a requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure, unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.
Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.