At the Law Office of Linda C. Garrett, Solano County, California-based consumer, bankruptcy and family- law practice , I receive numerous calls from distressed homeowners facing foreclosure. No doubt, the thought of foreclosure is a scary thought, promptly hard-working homeowners to slap down thousands of dollars to anyone offering to save their home. Because most people don't know all their legal options and/or their legal rights, they are willing to trust almost anyone willing to offer help. If this is you--stop! Don't panic and, please, don't do anything else until you have read this Blog post.
From about 2007 to early-2011, many of my callers were inquiring about a loan modification. However, with the passage of time, I receive fewer calls regarding loan modifications and, instead, receive calls regarding foreclosure-related issues. Questions include:
1. I have a sale date, how can I stop the foreclosure?
2. Do I have to pay taxes if my home is foreclosed on?
3. Will the lender(s) come after me for a deficiency judgment after my home is sold?
4. Do I have to move out before the foreclosure sale date?
5. My lender has engaged in predatory lending, can I sue my lender and negotiate a principal reduction?
6. Do I have any other options in lieu of foreclosure?
7. I received a solicitation in the mail (or call) from a law firm offering to sue my lender to "save my house"--should I use their services?
The stories behind the questions are all heart-breaking to hear--as one hears the fear, panic and desperation in their voice. My goal is to be the calm to their emotional storm--with the underlying goal of at least paving the way to empowering my clients to make informed decisions regarding the distressed property. My mantra is "knowledge is power."
Below is an overview of some options a homeowner has in connection with their distressed property:
First and foremost, a distressed homeowner should not do business with anyone or any company without first undertaking, at a minimum, a basic background check on them. For instance, a homeowner should Google their name to see what turns up. Second, check their rating with the Better Business Bureau. Third, check to see if their name is listed as a scam by going to http://www.preventloanscams.org/. These are the basic steps a homeowner should take when conducting business with a third party with whom they have no personal experience.
Second, check online to determine whether the homeowner is eligible for one of the government-sponsored programs, such as HAMP, by going to the Making Home Affordable website.
Third, contact a free certified HUD approved housing counsel in order to negotiate a mortgage work-out plan with the lender.
Fourth, if possible, reinstate the loan. This means making all payments to bring the account current. In some instances, the homeowner can negotiate with their lender to reduce or eliminate the extra fees, such as late fees.
Fifth, determine whether the homeowner is able to refinance their mortgage loan. Usually, homeowners who have equity in their home, and are not in default of loan payments, are in a better position to refinance their home loan. Some motivations for refinancing the home loan are to procure favorable terms, e.g. reduced interest rate, and fixed interest rate for the life of loan.
Fifth, short-sale or deed-in-lieu of foreclosure. Both options are designed to allow the homeowner to leave the home without worry of post deficiency judgments. While possible options, there are preliminary issues that need to be addressed before proceeding with these particular options.
Sixth, is the homeowner over the age of 62 and has sufficient equity in their home? Maybe, a reverse mortgage is the right thing for the homeowner. Many senior homeowners are house-rich and dollar poor. This option would make it possible for the senior homeowner to take out some of his equity without worry of paying it back to the lender.
Seventh, does the homeowner just need time to catch up? Maybe filing Chapter 7 or Chapter 13. Filing a petition helps, amongst other things, to delay the foreclosure sale.
Eighth, fight the foreclosure in a court of law to either stop the foreclosure or delay the foreclosure.
As you can see, there are many options. For a modest consultation fee, I can work a homeowner to determine your various options, as well as help assess which their your best options--taking into account the pros and cons of each of your options as it relates back to their financial situation.
It is very important that a homeowner make an informed decision about their distressed property. Panic, fear and ignorance should not guide a homeowner into making poor and expensive choices.
How Can I Help?
I can conduct a complete financial history for the homeowner in order to assess all their options, as well as answer any and all questions the homeowner may have in connection with their distressed property.
Contact me to set up a consultation.