We Can Negotiate With Your Lender.
Once you decide to contact us we can immediately begin negotiating with your lender. Depending on your financial situation and future plans, one of the following options may be appropriate:
Loan Modification or Restructuring
This is normally the first step taken by borrowers who are having trouble making their payments. We can negotiate directly with your lender to have the balance owed reduced (this is rarely an option, however), have the interest rate reduced permanently or temporarily (this is a more likely option), have late fees or other additional charges forgiven, add delinquent amounts and late fees to the balance of your loan to be paid later, or extend the term of the loan to reduce your monthly payments. Before we can decide whether a loan modification or restructuring is right for you we will need to carefully consider all aspects of your financial and legal situation. Only then will you be able to make an intelligent choice.
Reinstatement of Loan
Normally, this would require you to pay all delinquent payments as well as late charges. This is usually not feasible unless the lender is willing to accept small payments over a period of time in addition to your existing mortgage payments.
Refinance of Loan
If you have sufficient equity in your home a refinance of your existing loan may be the best way to solve your problem. If you have no equity, or if your home is worth less than what you owe on it, refinance will probably not be an option for you.
Sale of Home at a Discount with the
Lender's Permission, or "Short Sale"
One way to avoid foreclosure and related problems is to sell your home in a "short sale." A short sale is when you ask your lender for permission to sell your home or less than the amount you owe on the mortgage. For example, if you owe $500,000 on your mortgage, and your house is with $490,000, your lender may allow you to sell the house for the lower price and your lender will accept the net proceeds from the sale as if you had paid off the loan. There are potential tax implications (which can be complicated) relating to short sales.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is where you give (deed) your house back to the lender, the loan is forgiven and there is no foreclosure. Lenders are often unwilling to take a deed in lieu of foreclosure because they don't know what other liens may be on your house. Lenders prefer to foreclose in most situations because, by doing so, they wipe out any other liens on your property that arose after the date they recorded their mortgage.
Agreement of Forbearance
An agreement of forbearance allows you to put off paying delinquent payments and late fees to a later date when you are financially in a better position. In an agreement of forbearance the lender agrees not to proceed with the foreclosure so long as you make your current payments. An agreement is usually reached as to how you'll pay the delinquency over a period of time or at some date in the future. This is not a good option for those who do not expect a significant increase in their income in time to make the required additional payments of the delinquent amounts.
Sale of Your Property (Non-short Sale)
If you do have some equity in your home, one way to avoid a foreclosure is to simply sell your property prior to the date of the foreclosure sale. Generally speaking, it takes about four months for a lender to foreclose on a property in California. There are special rules concerning foreclosures that are covered in another area of this website. Even though you're in foreclosure during that four month period, you can still sell your home at any time. This does not necessarily mean, however, that you are off the hook on some of your debts related to the property. Again, California law is rather complicated as to what debts can be collected by lenders after foreclosure and what debts cannot.
Bankruptcy
Bankruptcy may be an option for you if you expect to obtain additional funds in the near future, or, if you have very large credit card or other unsecured debts which, if you were not required to make payments on them, would allow you to have enough money to make your mortgage payments. Bankruptcy should only be used as a last resort, however, because there are significant drawbacks to it. For one, the bankruptcy trustee and the courts take control of your property and can make decisions about your property. Secondly, there is a large negative effect on your credit report. Finally, although bankruptcy may save your home temporarily, if you do not obtain relief from other debts or increase your income you will most likely be unable to make your mortgage payments.
For more information, see the Bankruptcy page of this website.
Foreclosure
You may want to simply allow your lender to foreclose on your property. In many situations, there will be no "deficiency" which you will have to pay after the foreclosure. A deficiency is an amount of money which you still owe your lender or lenders after the foreclosure has been completed. Whether you will owe any deficiency or not depends on a variety of factors concerning the nature of the loan or loans you obtained to purchase the property: if you have refinanced the property, how many loans you have on the property, who the lenders are on the loans, if you occupy the property as your principal residence, and other aspects of the loans on the property. Again, California law can be rather complicated with respect to whether a deficiency can be obtained by your lender in a foreclosure situation.
For more information, see the
"What is Foreclosure?" page of this website.
