Short sales and foreclosures have had a major impact on values in Los Angeles County. For some homeowners, difficult choices need to be made. Consulting with a tax professional and an attorney are advised. If you can no longer afford your home, what are your foreclosure alternatives?
- Loan modification: If you have previously attempted a loan modification without success, servicers are now more motivated and it’s worth another attempt. Home Affordable Modification Program (HAMP) includes opportunities to modify or refinance your mortgage in order to make your monthly payments more affordable. This enables you to remain in (and afford) your home. Contact your servicer (who you make your payment to); be prepared for lots of paperwork, and make copies, in the event it gets lost in the shuffle.
If you are not successful with a loan modification:
- Short Sale: Contact Phyllis Harb for a confidential consultation. Each lender and each situation is different, but in some instances, the home seller may be eligible for $3,000 in moving costs. A short sale will avoid having a foreclosure on your credit report.
- Deed in lieu of foreclosure: Contact your servicer; they may accept your signing the property back to them in lieu of a lengthy foreclosure process. This too will avoid having a foreclosure on your credit report.
What to expect during the foreclosure process?
- Contact borrower to work out: Recent legislation was passed that prior to initiating the foreclosure proceedings the lender must contact the borrower (certified mail, phone or in person) and try to arrange a loan modification.
- Notice of Default (NOD): After the servicer has attempted the above contact, and after a borrower is 30+ days delinquent the lender will file an NOD. By law these notices are public record and published in the newspaper. You will have 90 days to reinstate (bring your loan current).
- 90 Days after the NOD was issued: If the loan is still not current, a Notice of Sale is filed. This date must be at least 21 days from the date the Notice of Sale was filed.
- Foreclosed: The property was foreclosed and you are no longer the owner. Typically the servicer’s Realtor® (or the new owner) will contact you regarding your moving. Often they may offer the homeowner “cash for keys”. If the homeowner does not accept a cash payment (usually less than $5,000) in exchange for moving in a couple of weeks, the lender will likely initiate eviction proceedings by hiring an attorney.