If you have an FHA loan, you're entitled to a special loss mitigation process to help you avoid a foreclosure. But the foreclosure itself isn't any different.
During the 5 week notice period, the homeowner can stop the foreclosure by making-up all missed payments (including late fees and attorney costs) or working with an attorney to stop the foreclosure process. The only time it is too late to stop a foreclosure is when the property is sold at auction to a new party.
One way to attack a foreclosure is to argue that the foreclosing party does not have standing to foreclose. If the foreclosing party cannot produce the promissory note on which the loan is based, the court likely will dismiss the case.
To contest a judicial foreclosure, you have to file a written answer to the complaint (the lawsuit). You'll need to present your defenses and explain the reasons why the lender shouldn't be able to foreclose. You might need to defend yourself against a motion for summary judgment and at trial.
If you're facing foreclosure, you might be able to stop the process by filing for bankruptcy, applying for a loan modification, or filing a lawsuit. If you're behind on your mortgage payments and a foreclosure sale is looming, you might still be able to save your home.
A "foreclosure bailout loan" is a mortgage loan designed to stop a foreclosure. Usually, the foreclosure bailout loan will refinance the entire balance of the existing loan. But some lenders make loans in an amount that's just sufficient to reinstate the defaulted loan.
Summary of Potential Foreclosure Defenses
The loan owner or mortgage servicer didn't follow federal mortgage servicing laws. The foreclosing party can't prove it owns the loan (it lacks "standing"). The servicer made a serious mistake when handling your loan account.
A party can defeat a motion for summary judgment by presenting evidence to create a dispute over an important issue in the case. In a foreclosure case, this may be evidence that the lender did not follow proper foreclosure procedures or evidence that the homeowner did in fact pay their mortgage on time.
In some cases, refinancing your mortgage can reduce your loan costs, which could help you avoid foreclosure. As a last-ditch effort, you may be able to modify your loan, sell your home, or even sign it over to your lender and at least walk away debt-free.
This means that if your loan falls under California's anti-deficiency protections, you're not going to owe any additional money to the bank after the foreclosure sale.
Deal breakers: If the appraisal notes a health or safety hazard that the seller will not agree to fix, the lender won't approve the property. For example, the FHA usually won't insure a home that needs major repairs to be livable such as a structural crack in the foundation. In this case, you can't get an FHA loan.
In general, mortgage companies start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees are charged after 10-15 days, however, most mortgage companies recognize that homeowners may be facing short-term financial hardships.
Home equity possibilities include a home equity loan, home equity line of credit and home equity agreement. Other types of loans that can help homeowners avoid foreclosure include the foreclosure bailout loan and reverse mortgage.
Removing an old foreclosure from your credit report involves disputing the foreclosure and providing evidence of the timeline of the foreclosure. Providing documentation that seven years has passed since your mortgage payment issues started can help repair your credit and increase your chances of obtaining financing.
Also, California's anti-deficiency laws provide that once your lender forecloses it cannot later sue you for a deficiency balance.
Paying Off the Lien Completely
If the homeowner musters up enough money, they may elect to pay off the entire loan to call off the dogs. Whether an owner reinstates the loan or pays off the loan, additional fees and costs must be satisfied to cancel the foreclosure.
You can only appeal when you're denied for a loan modification program. You can ask for a review of a denied loan modification if: You sent in a complete mortgage assistance application at least 90 days before your foreclosure sale; and. Your servicer denied you for any trial or permanent loan modification it offers.
In some cases, a lender will lose the note during or before a foreclosure proceeding. When a lender cannot produce a note, then they are not able to prove when they took ownership or assignment of the note. A court may dismiss the case as a result.
A Foreclosure Bailout Loan is the best option for someone about to lose their investment property due to Foreclosure.
The bailout support can come in the form of cash that does not have to be paid back, loans with favorable terms for the entity receiving the funds, bonds , and stock purchases .