How To Stop Foreclosure in California

What options are available for people who is behind in their mortgage payments and would like to avoid loosing their home and stop foreclosure?

Briefly described are the most practical ways you can stop foreclosure in California in today’s market:

SPECIAL FORBEARANCE

Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments.

• For borrowers who have incurred a short term financial hardship and are two or more months past due.

• Borrowers must be able to show that they can afford their current mortgage payment in addition to a new re-payment plan to bring their behind payments up-to-date.

• If you are able to pay an additional $600.00+ (Estimate) on top of your currently mortgage payment and you no longer have a hardship, then this could be the way to stop foreclosure.

• Borrowers must show paperwork (Lite Doc) to prove they can afford their mortgage payment and their new payment plan.

• If you would like free assistance, you can get it from a non-profit organization called HOPE by dialing (888) 995-4673

PARTIAL CLAIM

Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current.

You might qualify if:

• Your loan is at least 4 months delinquent but no more than 12 months delinquent.

• You are able to begin making full mortgage payments.

When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a lien will be placed on your property until the Promissory Note is paid in full.

The Promissory Note is paid in interest-free and is due when you pay off the first mortgage or when you sell the property.

PRINCIPAL REDUCTION REFINANCE

If you are up-side down in your home…meaning…you owe more than your house is worth…you might qualify for a FHA principal reduction refinance.

• Original loan must have been originated prior to 01/01/2008.

• Must be your principal residence ONLY.

• The existing lender must agree to forgive balance.

• FHA is requesting that the lender accepts 85% payoff of the current fair market value of the home.  (85% of the fair market value NOT 85% of your current mortgage balance.)

• Borrowers must income qualify FULL-DOC. (Show proof on paper like bank statement, check stubs, etc that they can afford the new mortgage)

• Monthly payment on existing mortgage must exceed 31% debt to income ratio. (Principal + Interest + Taxes + Insurance of your current mortgage has to be greater than 31% of your gross income)

• Borrowers must credit qualify…meaning…their mortgage can be behind…BUT…everything else (car, credit cards, personal loans, etc) must be paid on time.

• Mortgage can be currently delinquent due to rate reset (Adjustable Mortgage) or extenuating circumstances (loss of job, sickness, etc)

• Zero late payments during the 6 months prior to the rate reset.

• Borrower must share at least 50% of any equity should the borrowers sold the home or refinanced.  (Borrowers would pay 100% of equity if he/she refinanced or sold in the first year, 90% on the second year, 80% on the 3rd year, 70% on the forth year and 50% on the 5th years on.

    SHORT SALE

This option is available for borrowers who have suffered a long term financial hardship (divorce, loss of job, sickness, business failure), can prove on paper that they can no longer maintain their monthly payments, and that are up-side down on their home (They owe more than what their house is worth)

• The borrower can often times remain in the property a little longer.

• Opportunity to eliminate a deficiency judgment.

• California’s anti-deficiency law applies only to funds used to purchase a residence…This is called NON RECOURSE LOAN.

• If you refinanced your home, the loan is called RECOURSE LOAN. The anti-deficiency judgment laws do not apply. For example: .junior lien lenders would  have up to 4 years according to the statue of limitations to try to collect the the un-paid debt.

• Upon short sale approval, the lenders can give a Full Satisfaction of the debt thus not trying to collect any more debt from the borrower.

If you live in LA or San Bernardino county and would like to discuss your options on attempting a short-sale, please contact us by clicking on the following link:   www.RealtorSpeaks.com/contact-us

DEED-IN-LIEU OF FORECLOSURE

As a last resort, you may be able to voluntarily “give back” your property to the lender. This won’t save your, but it is not as damaging to your credit rating as a foreclosure.

• This option is available to borrowers that have incurred a long term financial hardship and whose house has been on the market at a fair market value for at least 90 days.

• Borrowers must submit a complete financial package showing their inability to continue making their mortgage payments.

• Must provide a copy of their active listing agreement.

• No Junior Liens.

• Lender MAY waive their deficiency judgment rights.

You qualify if:

• You are in default and don’t qualify for any of the other options.

• Your attempts at selling the house before foreclosure were unsuccessful;

LOAN MODIFICATION

This option is available for borrowers who want to keep their home and who can afford a reasonable payments really close to their current monthly payment.

• Borrowers must have incurred a long term financial hardship and can document their ability to afford a reasonable payment may qualify.

• A complete financial package is required  (FULL DOC:  Cover letter, hardship letter, hardship documentation, financial statement, credit report, Verification of Employment, 2 Years of latest income taxes, current asset information, Brokers Price Opinion (B.P.O.)

You must be willing to put 20+ hours on the phone following up on the loss mitigation department  and possess really good negotiating skills or…for a reasonable fee, you can use the services of a great a great company in the LA area who has a 100% money back guarantee (if they don’t get you the loan modification, the don’t charge you a penny) and whose  success rate is 93%.

To get detail information about how we can help you negotiate a loan modification, … contact us by clicking on this link:  www.RealtorSpeaks.com/contact-us

BANKRUPTCY

 CHAPTER 7 - Liquidation Under the Bankruptcy Code

The filing of bankruptcy puts a stop to any action by creditors to collect any debt from debtors.

The automatic stay  gives temporary protection to the debtor from his creditors until the bankruptcy is finished.

Chapter 7 is ideal for people who want to clean the slate from unsecured debt like credit cards or personal loans and who want to live a couple of months for free in your home until the conclusion of the bankruptcy process.

If you went through a temporary hardship, you want to keep your home, and you have the ability to re-pay all of behind payments over a period of 3 to 5 years, then you might want to consider filing for Chapter 13.

 CHAPTER 13 -Individual Debt Adjustment

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income.

Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.