During each downturn, short sales and foreclosures significantly impact values in Los Angeles County. For some homeowners, difficult choices must take place. Plan to consult with a tax professional and an attorney. What are your foreclosure alternatives if you can no longer afford your home?
- Loan modification: If you have previously attempted a loan modification without success, servicers are now more motivated. It’s worth another attempt. Home Affordable Modification Program (HAMP) includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. This enables you to remain in (and afford) your home. Contact your servicer (to who you make your payment). Expect lots of paperwork. Make copies of everything.
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 before initiating the foreclosure proceedings, the lender must contact the borrower (via 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 a 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: A Notice of Sale is filed if the loan is still not current. This date must be at least 21 days from when 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 move. Often they may offer the homeowner “cash for keys”. Suppose the homeowner does not accept cash payment (usually less than $5,000) in exchange for moving in a couple of weeks. In that case, the lender will likely initiate eviction proceedings by hiring an attorney.