Foreclosure is undoubtedly a nightmare for homeowners. It’s like waiting to witness your dream house being taken away anytime.
If your home is at the brink of foreclosure, you must be wondering about how to stop foreclosure in Northern California. Isn’t that right?
There are many challenges associated with this financial burden, but you may be able to avoid the foreclosure sale of your home. The sooner you begin to explore your options, the more favorable the outcome is likely to be.
Let’s explore all the available options to avoid foreclosure on your home.
Table of Contents
- How to avoid foreclosure in Northern California the quick way
- How to stop foreclosure in Northern California
1. Bringing your loan current
2. Requesting a loan modification
3. Making a forbearance agreement
4. Refinancing
5. Making a short sale
6. Obtaining a reverse mortgage
7. Declaring bankruptcy
8. Filing a lawsuit to stop the foreclosure process
9. Seeking a deed in lieu of foreclosure
10. Avoiding scams
11. Selling your home to a real estate investor
- Can you stop a notice of trustee sale?
- How to stop a trustee sale
- Our Key takeaways on how to stop a foreclosure sale in California
How to avoid foreclosure in California the quick way
If you’re being threatened with foreclosure on your home and the auction date is looming around, you need to step up and take action quickly.
Many people in such a situation feel paralyzed by this embarrassing financial predicament, but the truth is that you’re not alone.
Difficult financial times have left many homeowners in the same boat, and you’ll be glad to hear that you do have options when it comes to stopping the Northern California foreclosure process.
Too often, homeowners keep the matter out of sight and out of mind until they’re forced to face the truth.
By moving beyond your denial and reaching out for the help you need – regardless of the path forward that you choose – you maximize your options and decrease the risk that you will lose your home to foreclosure.
While repaying your missed mortgage payments not be an option, this isn’t the only remedy. To begin, Northern California lenders who implement the foreclosure process must abide by the state’s homeowner bill of rights, which helps to level the playing field.
A Northern California real estate investor who pays cash for houses – even houses in foreclosure – may be able to help.
If you’re wondering who that might be, Diroddi Home Buyers is here to help. We pay cash for homes in Northern California, and the benefits are clear.
From wiping the financial slate clean to protecting your credit rating, our process is quick, efficient, and has a higher success rating.
In the end, any equity that you’ve built up over your years of ownership can also provide you a lump sum amount in cash – in addition to getting you out from under the foreclosure.
How to stop foreclosure in California
If your home hasn’t gone to the auction, you may be able to stop the foreclosure process.
If you act before it’s too late to stop the wheels that have already been put into motion, there are a range of ways to stop foreclosure in California
1. Bringing your loan current
Until five days before the foreclosure sale, you can halt the process by making loan payments and bringing your mortgage current. Whether the bank proceeds with foreclosure at this point, however, is up to them. By restoring your mortgage in this way, you may get a fresh financial start.
When you make payments and demonstrate to the bank that you’re ready to do what it takes to stop the foreclosure, they’ll very likely be more interested in working with you on the matter.
This is an option that will allow you to stay in your home. If you’ve taken a serious financial hit, however, or if your mortgage payments have risen considerably, this approach may not be sustainable.
2. Requesting a loan modification
Many homeowners facing foreclosure on their properties in Northern California seek loan modifications through their lenders. The best time to reach out for a modification is as soon as you recognize that you’re facing a financial problem, but there is nothing stopping you from attempting to use this approach as a means of avoiding foreclosure up to the last minute. Some banks are simply more inclined to make loan modifications than others.
When you apply for a loan modification, it’s a form of loss mitigation. Because your lender can’t engage in what is called dual tracking, the foreclosure process will be delayed while your loan modification application is pending. Some lenders are highly motivated to work with borrowers on foreclosure prevention like loan modifications, while others are not.
3. Making a forbearance agreement
If you’ve been through a difficult situation like any of the following, your lender may be interested in making a forbearance agreement with you:
- You’ve suffered a serious illness.
- You’ve been through a divorce.
- You’ve lost your job.
- You’re taking care of a gravely ill family member
Any of these can affect your financial situation, and if your lender recognizes this fact, they may offer a forbearance agreement that could involve lower payments or even no payments for a specific amount of time.
If you’re able to demonstrate that the financial downturn you’re experiencing is a short-term rather than a long-term problem, your lender may give you a grace period that buys you the time you need to catch up.
4. Refinancing
With interest rates on the rise, now isn’t a great time to refinance. If your lender, however, is a real stickler, you may be able to find a bank that will be more lenient in the future if you run into trouble again – making refinancing more of a preemptive option.
Further, if your current interest rate is quite high, shopping around for a lender to refinance your mortgage is worth a shot. It’s important to point out, however, that – if your credit rating has already been affected by your inability to cover your mortgage payments – it will affect your ability to obtain favorable refinancing.
5. Making a short sale
Those who don’t qualify for any form of financial assistance in the face of foreclosure may want to consider a short sale. In a short sale, you must obtain the lender’s approval to sell your home for less than what you owe on it.
When it comes to short sale vs foreclosure, the following apply:
- A short sale can help salvage your credit, while foreclosure stays on your credit report for seven years.
- A short sale allows you to continue living in your home during the sale process, while foreclosure means the lender will immediately take ownership of your home.
- With a short sale, your chances of purchasing a new home aren’t as bleak as they would be after a foreclosure.
- Because foreclosure avoidance is generally in your best financial interest, a short sale is not a terrible option – if you’ve already exhausted many of the others on this list.
But how to short sale your home in Northern California? You’ll need to first obtain permission from your lender. In the process, the lender will agree to release any of your debt that remains after the sale goes through.
Points to keep in mind include that you can’t engage in a short sale if you’re in the bankruptcy process, that your lender will need to approve the deal and will be looking for a price that exceeds the expected foreclosure value, and that the process is both clunky and time consuming.
While a short sale is generally less harmful to your credit score than a foreclosure would be, the difference may not be as significant as you’d hope. Your credit is likely to take the most serious hit during the time period when you’re actively missing mortgage payments, and by the time foreclosure rolls around, the bulk of the damage to your credit may already be done.
A final issue to consider is that, while your additional debt will be released in a short sale, you may face tax implications. For example, if the house sells for $20,000 less than you owed on it, that $20,000 can be taxed as regular income, which generally involves a steep tax rate.
6. Obtaining a reverse mortgage
Another option may be a reverse mortgage, but this only applies to homeowners who are at least 62 years old and have built up equity in their home. With a reverse mortgage, you borrow against that equity for a lump-sum amount that you can use to make your mortgage payments from or for a monthly mortgage allowance.
As time passes, the equity in your home will decrease while your reverse mortgage balance will increase. When you move out, sell your home, or pass, the reverse mortgage will be repaid. Reverse mortgages are generally considered financially dubious, but if it’s your only option for saving your home and that is your goal, it might be worth it.
7. Declaring bankruptcy
While bankruptcy may seem like a dire option, it can offer real benefits when experiencing financial hardship, and it ensures that the foreclosure proceedings will stop. In order to declare bankruptcy, you must qualify, but if you do qualify, simply filing bankruptcy papers triggers an automatic stay that stops the foreclosure process and prevents the lender from going after missed payments from you.
Chapter 13 bankruptcy will allow you to restructure your unsecured debt via a repayment plan that you’ll have three to five years to pay off. This can keep you in your home and can provide you with the breathing room you need to get your finances back in order.
Chapter 7 bankruptcy, on the other hand, can only delay the foreclosure, which can buy you the time you need to make new living arrangements and make arrangements to get out of your financial hardship.
8. Filing a lawsuit to stop the foreclosure process
If you’re facing a non-judicial foreclosure, you may be entitled to file a lawsuit against your mortgage lender. A non-judicial foreclosure is one in which the lender doesn’t file an actual foreclosure lawsuit but, instead, goes through either the Clerk of Court or the Sheriff’s Office in the county where your home is located.
The lender is, nonetheless, required to send you a notice of default and to allow you a specific number of days to catch up with your missed mortgage payments. Non-judicial foreclosures are generally based on failure to make mortgage payments.
In order to successfully sue your mortgage lender, you’ll need to prove that they violated California’s applicable state laws, which include the Homeowner Bill of Rights.
This typically means that one of the following applies:
- The lender failed to follow the rules and requirements that guide foreclosure
- The lender failed to comply with California’s mediation requirements
- The lender cannot prove ownership of the promissory note
Bringing a successful lawsuit against your lender is a legal challenge that only works in highly specific situations. If you believe this option may apply in your situation, having an experienced California foreclosure attorney in your corner is always in your best interest.
9. Seeking a deed in lieu of foreclosure
If you have reached the point that there’s little chance of stopping the foreclosure you are facing, you may be able to negotiate a deed in lieu of foreclosure with your lender. While the effect is the same as a foreclosure and you will still lose your home, it can mitigate the damage to your credit report.
A deed in lieu of foreclosure involves you handing over the deed to your home to the lender, and – in exchange – the lender canceling all related debt. At this point, you’ll need to move out of your home.
10. Avoiding scams
If you are facing foreclosure on your home, you have plenty to worry about, and it’s unfortunate that there are scammers out there who are more than willing to take advantage of your vulnerability.
Some of the tell-tale signs of a we buy houses scam include the following:
- They represent themselves as a foreclosure rescue company that helps homeowners avoid foreclosure
- They offer to buy your home temporarily and to make your mortgage payments in the interim
- They will make an oral agreement instead of a written contract
- The contract includes blank spaces that they can fill in later without your knowledge
- They offer to help you obtain affordable financing to avoid foreclosure for a fee
- They offer forensic loan auditing services
- The foreclosure representative contacts you personally by mail or phone
- The foreclosure representative provides very few details about the foreclosure process
- The foreclosure representative tells you that the foreclosure process will be simple and swift – when foreclosures are neither
11. Selling your home to a real estate investor
Wondering whether it’s possible to sell my house before foreclosure?
Yes, you can sell your house that’s in foreclosure if you follow the legal requirements and do everything above board. If putting the foreclosure behind you and salvaging your finances to the degree possible is your goal, your best option may be to sell your home to a real estate investor.
At Diroddi Home Buyers, we pay cash for homes throughout Northern California – even homes that are already in foreclosure – and we take care of all the pesky details for you. We’ve streamlined the process to include only the following basic steps:
- Give us a call at 415-763-0083—or fill out the short form below—to request your fair cash offer.
- Await our prompt response to discuss your property in greater detail and schedule a one-time inspection that allows us to offer the highest amount possible.
- At the time of the inspection, our in-house inspector will quote you a fair cash offer, and if you’re on board, you can consider your home sold!
- Choose your closing date, and leave the rest to us. You can choose payment via check or wire transfer. It simply doesn’t get any easier.
Can you stop a notice of trustee sale?
A notice of trustee sale (NTS) is a notice the lender issues in relation to foreclosure regarding the property’s auction. This is considered the final auction or final foreclosure notice, and it serves as your last warning before the lender sells the property at auction to cover what you owe on your mortgage.
If you’ve been going through the foreclosure process to this point – doing everything you can in your attempt to shut it down – and the NTS arrives anyway, it’s unlikely that your repeated efforts are going to make any difference this late in the game.
If, on the other hand, you’ve been ignoring the issue in a stress reaction, which is not uncommon, you may still have a chance to turn things around by acting quickly.
How to stop a trustee sale
While you don’t have much time left once the matter of a trustee sale is addressed, you may have options to stop trustee sale:
- File for bankruptcy since it will stop the foreclosure process
- Seeking a loan modification, which mortgage servicer, bank, is open to
- Bringing your loan current, such as by selling other assets
- Making a short sale
- Pursuing a lender misconduct lawsuit – in highly specific situations
- Seeking a deed in lieu of foreclosure
- Another option is selling to a real estate investor like Diroddi Home Buyers in Northern California. If the circumstances are right and you like the offer we make, we’ll buy your house for cash and make this very difficult chapter in your life disappear entirely.
Our Key takeaways on how to stop a foreclosure sale in California
If the matter of foreclosure has reared its ugly head in your life, the most important point to keep in mind is that acting quickly is always in your best interest.
Until the lender has sold your home out from under you, however, there may be options available to stop foreclosure on your home.
BTW– if selling the home and putting the matter behind you is your priority, reaching out to a real estate investor in California – like Diroddi Home Buyers – may be the right option for you.
If you’re interested, get in touch with us for private and discrete consultation.
