The number of foreclosure notices filed against California homeowners has reached its highest level in more than fifteen years. According to real estate information service DataQuick Information Systems, lending institutions sent homeowners 81,550 default notices in the last quarter of 2007, up 12.4 percent from the previous quarter and up 114.6 percent from fourth-quarter 2006.
In the past, most people who lost their homes to foreclose did so because they were unemployed or suffered unexpected medical expenses caused by a catastrophic illness. But the subprime mortgage crisis has changed all that, according to John Taylor, president of the National Community Reinvestment Coalition. Seven out of ten people foreclosing on their homes are healthy and gainfully employed; they simply cannot afford to make their monthly payments.
The only way to stop foreclosure is to declare Bankruptcy. 11 USC 1301-1330. Foreclosure can be stayed if you are a member of the armed services under the Servicemembers Civil Relief Act (SCRA) (formerly Soldiers and Sailors Civil Relief Act (SSCRA) (50 App. U.S.C. 501-596)).
In California 99% of foreclosures are non-judicial, that is, there is no need for the mortgage company to go to court to recover from a borrower when the borrower does not pay their debt in accordance with the mortgage agreement. In these cases there is a "power of sale" clause in the deed of trust or mortgage that pre-authorizes the sale of the property to pay off the balance of the loan when the loan is in default. If the deed of trust or mortgage contains a power of sale clause that specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure must conform to California Civil Code sec. 2920-2924:
The Trustee must record a "Notice of Default" (NOD) in the county where the property is located. Recording the NOD commences the three-month "reinstatement period" in which the borrower may cure the default by paying all delinquent payments and late charges, plus Trustees' fees and expenses
The Trustee must mail the borrower a copy of the NOD within 10 days of recording it.
After the three-month reinstatement period the Trustee can schedule a sale if:
The Trustee publishes a "Notice of Trustee's Sale" (NOTS) in a newspaper of general circulation in the county where the property is located. The NOTS must be published once a week for three consecutive weeks over a 20-day period.
Twenty days before the sale the NOTS must be mailed via registered or certified mail to the borrower.
Fourteen days before the sale the NOTS must be recorded in the county recorder's office.
The NOTS must be posted for at least 20 days in at least one public place in the city or judicial district or county of the sale.
The NOTS must be posted for at least 20 days in a conspicuous place on the property, on the front door if the property is a single-family residence.
Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.
Judicial foreclosure is used when no power of sale is present in the mortgage or deed of trust. The lender must file a lawsuit and obtain a court order to foreclose. Lenders using judicial foreclosure may seek a deficiency judgment, that is, if the borrower owes more than the house is worth the lender may obtain a judgment for the difference between the amount owed and the selling price of the house. Under certain circumstances, the borrower may have up to one year after the property is auctioned to redeem the property, that is, to reclaim the property after paying the total amount of the mortgage plus costs and fees.
Because of the public nature of foreclosures, anyone can access foreclosure listings. Armed with the owner's name and address, scammers can take advantage of a desperate owner. To encourage fair dealing in the rendition of foreclosure services, the California Legislature enacted the Mortgage Foreclosure Consultants Act, Civil Code 2945, which requires that foreclosure consultant service agreements be in writing, permits the rescission of such contracts, and prohibits representations that tend to mislead. Be on the lookout for these common foreclosure scams:
A party offers to buy your home, then lets you rent it back. It sounds good at first, but you're losing your property, and your new landlord can now legally kick you out of your home with little notice.
Scams involve paying large sums of money to some sort of "foreclosure prevention service." These services usually offer counseling, a budget and approaching the mortgage company to consider a payment plan. But the services don't do always do this work thoroughly, or follow through at all. The most important thing to remember when it comes to any foreclosure service is this: Foreclosure advice and direction should always be free.
Some will prey on the stress and anxiety surrounding the foreclosure process by convincing owners to sign things they don't understand. Don't sign anything without either first talking to an attorney, your mortgage company or a nonprofit foreclosure prevention organization listed below:
HOPE 24 Hour HotLine1-888-995-HOPEHomeownership Preservation Foundation, an independent nonprofit that provides HUD-approved counselors dedicated to helping homeowners.http://www.995hope.org/
State of California Consumer Home Mortgage Informationhttp://www.yourhome.ca.gov/mortgage-help.shtml
Local Housing Counseling Agencies
Home Loan Counseling Center of Sacramento 2003 Howe Avenue, Suite 100Sacramento, CA 95825(916) 646-2005
NeighborWorks HomeOwnership Center 2400 Alhambra BoulevardSacramento, CA 95817(916) 452-5356, ext. 229
ByDesign Financial Solutions4636 Watt Avenue, 2nd FloorNorth Highlands, CA 95660(800) 750-2227
Senior Legal Hotline - Legal Services of Northern California444 North Third Street, Suite 312Sacramento, CA 95814(916) 551-2140
Acorn Housing Corp.4433 Florin Road #830Sacramento, CA 95823(916) 451-9659
Sacramento Mutual Housing Association3451 Fifth AvenueSacramento, CA 95817(916) 453-8400, ext. 43
Other Web Resources
U.S. Department of Housing and Urban Development Links:
Avoiding Foreclosure(En Espanol)
How To Avoid Foreclosure Brochure (pdf)
Help For Homeowners Facing The Loss Of Their Home(En Espanol)
Veterans Administration Link:(VA) - Trouble Making Payments
Freddie Mac (FHLMC) Link:What if You Cannot Pay Your Mortgage? (En Espanol)