With many homes in Los Angeles still going into foreclosure every day, it’s important for mortgage holders to understand the process.
So what is a pre-foreclosure anyway?
Many homeowners across Southern California are facing difficulties making their monthly mortgage payments.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.”
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course this number can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, you’re likely to receive a “notice of default” from your mortgage lender.
This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.
You have options that can delay or even prevent losing your home:
- Forebearance – When the lender agrees to temporarily reduce or suspend mortgage payments for a certain period of time without starting foreclosure. The borrower must resume the full payment at the end of the forbearance period.
- Loan Modification – For most homeowners, modifying or restructuring their current mortgage loan is a better alternative to foreclosure. A loan modification is a permanent restructuring of the mortgage where one or more of the terms of a borrower’s loan are changed to provide a more affordable payment.
- Sell Your Home – You may be able to quickly sell your home, using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments.
- Short Sale – You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off. In some short sales, you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan.
- Bankruptcy – You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage.
Lenders are very much aware of the financial troubles that homeowners sometimes face and they’re willing to work with borrowers a lot of the time.
If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.
A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very dutiful if you’ve received a Notice of Default from your lender.
But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.
Ways We Can Help If You’re In Pre-Foreclosure
- We will do a FREE Evaluation of your situation.
We will put our many YEARS of experience to work for you! We will look at all the alternatives that you aren’t currently working on, haven’t already considered or realized are available to you.
- We don’t need a lot of information.
Most of the information we need is public record. We won’t run your credit or need any personal info.
- It only takes us 24 hours to complete.
When we’re done, we can tell you if there are any solutions you qualify for. If you’re interested in any of them and want to discuss them further, we would meet with you and answer all the questions you have.
If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.
Just connect with your bank to see if they’re willing to work with you… or contact us if you’d like to see what options you qualify for or to tap into our free foreclosure resources.