Search CA Foreclosure Knowledge-base:

California Foreclosure Help

Many homeowners in California are facing the looming possibility of foreclosure.  While a short sale is usually the best solution, it is a difficult decision for us because we do not want to give up our homes.  Thus we find ourselves looking for ways to delay foreclosure - such as loan modification - in the hopes we can use this time to find a more permanent solution.

Many homeowners have applied for loan modification in California only to be rejected after fully complying with all the lenders’ requirements.  For many, failure to secure loan modification creates the fear they'll lose their home in a matter of weeks or days.  This can be the case in some instances, but in the majority of cases, it does not have to be. 

The mortgage foreclosure process in California may be delayed if you know what to do and how to proceed in every situation along the way.  There are many ways to use the housing laws to stop or to delay foreclosure extending this way their timeline for foreclosure in California.

CA Foreclosure Help Tip #1 - Don't Move Out of Your Home

First, don't move out of your home. If you abandon your property, you will be giving up your rights that would protect you under the Foreclosure Housing Act.  Instead, you need to learn more about your options so you can put together a workable plan to get the best outcome for your family.  That may include saving your home, or it may include saving your credit and getting as much free time in the home as possible so you can save your money and get a fresh start.

CA Foreclosure Help Tip #2 - Avoid the Scam Artists

Secondly, some foreclosure 'help' has been hijacked by predatory scam artists. There are people who prey on homeowners facing foreclosure.  You also need to be careful with counseling agencies.  Even though many want to help, others are there just to take advantage of your situation to generate their profits.  Some may create unrealistic plans for avoiding foreclosure and keeping your home that will hurt your credit and chances of coming out of this process uninjured.  The key point is that you need to be realistic and make the best out of what is happening in your situation.

California Foreclosure Help Tip #3 - Work with Your Mortgage Servicer

If you were denied approval for the federal Homeloan Affordable Modification Plan (HAMP), one thing you can do to delay foreclosure is to work with your mortgage servicer (who administers the loan and collects payments for the investor of the loan) to see if a repayment plan or loan modification can be worked out to avoid foreclosure. 

You can also request that the bank discontinue its reporting to the credit agencies.  If you believe the loan servicer is being unreasonable, a loan audit firm can be hired which may allow you to create a legal challenge to a pending foreclosure.  The audit can be performed for about $500, but the legal negotiation and/or lawsuit will cost more.

California Foreclosure Help Tip #4 - Consider Short Sale

If affordability is an issue, then a short sale is an excellent way to delay foreclosure.  It may also help you obtain a more realistic loan modification offer.  You see, the loan servicer is looking at the money, and their thinking generally works like this:

  • Loan modification often prevents them from collecting late fees/penalties and may not have a meaningful effect on affordability.  Loan modification will not be approved if it reduces revenue.  (That’s why many homeowners are having difficulty with the loan modification process.)
  • A short sale offer changes this because the loan servicer is forced to compare the losses from a short sale to the losses from foreclosure.  (This makes loan modification look more attractive.)
  • If the loan servicer could have otherwise made a more generous loan modification offer (that would resolve an affordability issue), then they will have the opportunity to make it during the short sale review process.

While short sales do not sound attractive to homeowners wanting to keep their homes, in reality they are a sound and realistic approach to addressing affordability issues because it changes the way loan servicers think about loan modification.