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How to Avoid Loosing Your Home to Foreclosure...How to Avoid Loosing Your Home to Foreclosure...How to Avoid Loosing Your Home to Foreclosure... … IMPORTANT INFORMATION FROM YOUR REALTORS®

SPENCER & EHLING Realtors®

925.250.0399 (JANICE) OR 925.381.3224 (CINDY)

www.JaniceSpencer.com Www.learn2ownit.com

With property values in the East Contra Costa County area lower

now than in 1998, and with many people’s incomes shrinking because of

unstable economic conditions, many homeowners are at risk of loosing

their home to foreclosure. While Law Makers and Administrations at the

National and State Level are working on plans to address the problems, it is

important for owners to stay informed and be proactive.

This article is basic information for At Risk homeowners. It is by no

means comprehensive, and every homeowner’s situation is different. It is

important to obtain professional advice for your specific situation.

Article Objectives:

• Discover the stages of pre-foreclosure and foreclosure from the notice

of default to becoming an REO or being sold at auction.

• Discuss the options available to an owner before the first stages of

foreclosure begin.

• Discuss the options available to an owner after the foreclosure process

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Article courtesy of Janice SpencerArticle courtesy of Janice Spencer

Stages of Pre-Foreclosure and Foreclosure

Stage One: Pre-Foreclosure

A pre-foreclosure begins with the filing of a notice of default (NOD) by one of the lien holders on the

property. This notice may be filed after an owner has fallen behind in their mortgage payments.

Stage Two: Notice of Sale

A minimum of 90 days must pass after a notice of default is filed before the next step in foreclosure

can be taken, filing a notice of sale. This may be called a court sale or trustee sale or an auction on the court

steps. Once this notice is filed, the trustee working for the lien holder can affect a sale of the property by

auction on the court steps.

Stage Three: Real Estate Owned

If the property is not purchased at the court steps by an outside party, the bank in first position usually

buys the property back, and then it becomes an REO, short for Real Estate Owned. Under most circum-

stances, the bank contracts with an asset management company to oversee the preservation, marketing and

sale of the property. These asset management companies usually hire the services of a real estate agent to

assist in this process.

Options Available Prior To Pre-Foreclosure

Before a Notice of Default (NOD) has been filed, homeowners generally have a number of

options to consider. The list here is not meant to be comprehensive, and homeowners having difficulty

making their payments should consider obtaining advice from a tax accountant or attorney and a

bankruptcy attorney.

• Ask the bank to restructure your current loan.

This is called a loan modification, and homeowners can try to negotiate directly with

the bank or contract with a third party negotiator to deal with the bank on their behalf.

Care should be taken in selection of a modification service. See special notes at the end

of this article.

• Refinance your loan.

If there is enough equity in your home, you may qualify for a refinance. Many banks

require homeowners to apply for a refinance before they will discuss a modification.

• Renegotiate your loan balance.

This may be part of a modification negotiation.

• List the property as a “short sale.”

A short sale is selling the property at current market value and asking the banks with

notes on the property to accept payoffs that are for a lesser amount than what is owed.

Generally speaking, most banks require that homeowners prove a hardship before approving a

modification or short sale. Homeowners who have assets than can be liquidated may be required to

pay some of the shortage, and sometimes they may be asked to sign an unsecured note for a portion of

the shortage.

Options Available After the N.O.D. Is Filed

In addition to the options already discussed above, homeowners may:

• Ask the bank to issue a deed in lieu of foreclosure.

It should be noted that signing a deed in lieu of foreclosure does not always release the

homeowner of all liability to the bank.

• Sell the property and pay the deficit or substitute another property with equity.

If the homeowner has an interest in another property that has equity, the bank may agree to

shift the deed of trust to this substitute property.

• File for bankruptcy.

Banks will not negotiate a loan modification or short sale with a homeowner who has filed

for bankruptcy, but there are provisions in the recently adopted “Homeowner Affordability

and Stability Act of 2009” that may allow banks to negotiate a modification during the

bankruptcy process.

Because your choices may have tax implications, it is important to speak with a tax advisor, and

you may also want to consult with a bankruptcy attorney. There are also some other important

considerations discussed under “Special Notes.”

How to Avoid Loosing My Home To Foreclosure continued…..

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Special Notes

When considering hiring a third party negotiator for help with a loan modification,

make sure that you find a professional and reputable company or individual to work with that

is knowledgeable in this specific area. And should you decide to try to do a short sale, be sure

to carefully interview any agent you are considering hiring to make sure they are experienced

with listing short sales. These transactions are far more complicated than an arms length sale,

so you need to have the benefit of an agent who has taken the time to get educated for this type

of sale.

You should note that real estate agents are prohibited from collecting any advance fees

from homeowners for services that have not already been successfully performed. The only

exception is if the agent has registered an Advance Fee Agreement with the Department of

Real Estate. You can find a list of agents who have registered Advance Fee Agreements on

the California Department of Real Estate’s official website (www.dre.ca.gov). Companies that

utilize an attorney for negotiations may charge fees in advance.

For a non-judicial foreclosure timeline or for a complimentary foreclosure counseling

consultation, contact us at Spencer & Ehling.

Janice Spencer 925.250.0399

Cindy Ehling 925.381.3224