How to prevent foreclosure - Get a second mortgage/line of credit

One way to prevent foreclosure in California is by obtaining a second mortgage or line of credit.

A lender may offer a new (second) mortgage to pay the back payments, penalties, and other fees on the mortgage that is in default (headed for foreclosure).  This is called a "hard money loan".  As a result, the borrower will be required to make payments on one additional mortgage. 

Unfortunately these "hard money loans" often have interest rates that are equivalent to credit card interest rates, and with fees that can be up to ten times higher than traditional loans.

Prevent foreclosure, but at what cost?

Hard money loans are problematic because homeowners facing the prospect of foreclosure usually cannot afford to make payments on an additional high-cost loan if they are already have difficulty with their current loan(s).

These lenders consume greater and greater amounts of the available equity when the homeowner falls behind on payments and are forced to refinance the debt, paying more fees each time. 

As a way to avoid foreclosure this may not be the best option open to you, but you do need to be aware these options exist so you can make sound monetary judgement and prevent foreclosure.