Stop Foreclosure In California

If you take out a mortgage, you agree that your house can be used as a way to repay the loan if you can’t. If you don’t make your payments on time, the creditor could take your house back and sell it to get some of their money back. The foreclosure rules set out the process that a creditor must follow, as well as the rights and protections that the homeowner has. At the end of the foreclosure process, your home is repossessed and you must move out.

California follows a non-judicial foreclosure process, meaning lenders do not need court approval to seize a home when payments are missed. The process typically begins after three missed mortgage payments, triggering a Notice of Default (NOD). If no action is taken, the lender will issue a Notice of Trustee’s Sale and auction the property, usually within 200 days from the first missed payment.

Issues Homeowners Face During Foreclosure

Lack of Awareness – Many homeowners are unaware of their legal rights and foreclosure prevention programs.
Time Constraints – Once foreclosure starts, homeowners have limited time to act before losing their property.
Credit Score Damage – A foreclosure stays on your credit report for seven years, making it harder to get loans in the future.
Scams & Fraud – Homeowners desperate to avoid foreclosure may fall victim to foreclosure rescue scams.

You need to seek help and even speak with cash home buyers as an option. You should never face foreclosure alone. If you don’t want to give up your house, you especially need professionals to help you deal with your financial troubles, as they can help you negotiate with your lenders.

Your top priority should be calling a foreclosure avoidance counselor. The US Department of Housing and Urban Development should approve the counselor. You can better understand the foreclosure laws in your state as well as discuss foreclosure alternatives with their help. Your lenders may also be willing to negotiate with you if you’re represented by an attorney. Beware of those who pose as foreclosure avoidance counselors but are actually just offering foreclosure rescue scams. These services are typically free of charge.

Negotiating a new payment plan with the mortgage lender can be helped by professionals. There are several options available to make your mortgage more affordable including lowering your monthly payments or extending the payment period. Do not try to deal with foreclosure alone as there is a lot of technical work involved that you may not understand.

This is the official notice (it can be a letter) that the lender sends to the borrower in nonjudicial foreclosure letting him know that the lender plans to foreclose because he hasn’t made his payments. The lender may tell the borrower how much he can pay to stop foreclosure, as well as when the payment is due. The Notice of Default must be filed with the county clerk in some states.

The first step on the path to foreclosure is missing payments. Your lender typically can’t initiate foreclosure unless you’re at least 120 days behind on your mortgage payments. During pre-foreclosure, which lasts for 120 days, your lender is required to provide you with “loss mitigation” options. These options are designed to help you resolve the situation with as little damage to your credit and finances as possible. If you can’t work out an alternative plan, your lender will pursue foreclosure and repossess your house. The type of foreclosure process that can be used is determined by the state in which the property is located.

The average time it takes to complete the foreclosure process has risen over the past decade, and in 2021 it was around 2.5 years. Non-judicial foreclosures can take only a few months. Typically, the quickest and cheapest option is for the creditor to take back your home without going to court (non-judicial foreclosure).

Judicial foreclosure is slower than other methods because a creditor must file a lawsuit and get a court order before taking legal control of a house and selling it. You’re still legally allowed to live in your home until the foreclosure concludes since you own the house until it’s sold.

The more precipitously your credit score will drop if you have a foreclosure, especially if your score was high, to begin with. According to data from FICO.com, if you had a 780 score before losing your home, you might lose as many as 160 points after a foreclosure. Someone with a starting score of 680 is likely to lose 105 points in comparison. It can take around three to seven years for your score to fully recover after a foreclosure, short sale, or deed-in-lieu of foreclosure, according to the data.

It’s possible to get another mortgage after a foreclosure, just not immediately. Not all lenders make you wait seven years for a foreclosure to fall off your credit report.

Here are the most common waiting period requirements:

You can reach out to your mortgage lender at any time if you’re having financial difficulties — you don’t have to wait until you’re behind on payments to get help. Before foreclosing, lenders are required to offer you other options and are generally motivated to help you avoid foreclosure by their own financial interests. Your mortgage lender may be able to offer you a few options to ease your financial hardship, here are several options:

1. With forbearance, you make an agreement with your lender that allows you to temporarily pay less or stop making mortgage payments altogether. You will still owe the payments you missed once the hardship is over.
2. A mortgage modification program changes the terms of your home loan to make your mortgage payments more affordable. For example, the Flex Modification program offered by Fannie Mae and Freddie Mac can reduce your payments by 20%.
3. A mortgage release, also known as a deed-in-lieu of foreclosure, allows you to transfer legal ownership of your home to your mortgage lender. By doing this, you will lose the asset and have a drop in your credit score, but you will be freed from your obligation to repay the loan. This is a type of sale in which the seller’s proceeds are less than the amount owed on the property.
4. If you are struggling to make mortgage payments and are at risk of foreclosure, a short sale may be a good option for you. With a short sale, you sell your home for a price that is less than the balance remaining on your mortgage. This allows you to pay off your mortgage and avoid foreclosure. In return for the money, your mortgage lender agrees to release you from any further debt.
5. Sell your house fast in California to a Real Estate Investor that can quickly buy your home and avoid any negative effects of a foreclosure on your credit.

You should face the home foreclosure process head-on, even though it can be scary and discouraging. If you begin to struggle to make your mortgage payments, reach out for help immediately. You may be able to mean working with your lender and speaking with a housing counselor. The federal government’s housing counseling program offers foreclosure-prevention counseling free of charge to anyone. An active approach can help you come out the other side with less damage to your credit and finances than you might think.

There are many homeowners who are unable to pay their mortgage and as a result, they file for bankruptcy. Filing for bankruptcy can stop the foreclosure process from happening, even if the property is intended to be sold at auction. As long as the property has not been sold, the homeowner has the opportunity to stop the foreclosure.

What happens after 90 days of no payment?
The lender will typically take action against the homeowner, issuing a delinquency notice. The homeowner can do one of two things: they can either pay the mortgage amount and avoid the foreclosure situation altogether, or they can continue not making any payments, leading to the lender foreclosing on the property.

After 120 days of no payment, the lender will issue a notice of their intention to foreclose and the foreclosure attorney will post a legal notice of the sale.

In California, you have five days to bring your loan current. You can pay back all the missed mortgage payments, as well as any associated fees. Within the last five days, you still have the right to pay off the entire mortgage, but the lender has the final say on whether they will accept back payments to keep you current.

The homeowner has 5 weeks to make up all missed payments, or to work with an attorney to stop the foreclosure process. If the homeowner does not take action within the 5 week notice period, the property will be sold at a public auction.

1. Contact Your Lender Immediately

Many lenders offer loan modifications, forbearance plans, or repayment plans to help homeowners catch up on missed payments. The sooner you contact them, the more options you may have.

2. Apply for a Loan Modification

A loan modification changes the terms of your mortgage—such as reducing the interest rate or extending the loan term—to make payments more manageable. Under the California Homeowner Bill of Rights, lenders must review loan modification requests before proceeding with foreclosure.

3. Consider a Short Sale

If your home is worth less than what you owe on your mortgage, a short sale may be an option. In a short sale, the lender agrees to accept less than the full loan amount. While this impacts your credit score, it is less damaging than foreclosure.

4. Refinance Your Mortgage

If you have equity in your home, refinancing can help lower your monthly payments and prevent foreclosure. However, this option depends on your credit score and income.

5. File for Bankruptcy (Last Resort Option)

Filing for Chapter 13 bankruptcy can temporarily stop foreclosure and allow you to restructure debt. While this should be a last resort, it can give you time to catch up on payments.

6. Sell Your Home Before Foreclosure

Selling your home before foreclosure can help you pay off your mortgage debt and protect your credit score. Working with a cash buyer or real estate investor can speed up the process and help you close the sale quickly.