Know Your Foreclosure Rights

You missed a housing payment. Times are tough; maybe you lost your job, had unexpected and significant medical bills, or had to spend thousands to fix a collapsing roof. Sometimes even the most responsible homeowner can fall behind. Can your bank foreclose on you within a few months? Is there any way to stop a foreclosure? What do you do if they’re saying you owe more than you believe you owe? You have foreclosure rights as a homeowner, even if you are in default.

Let’s talk about five of the most important rights for homeowners in Sacramento who are facing foreclosure. Staying aware of your legal rights can spare you from unnecessary confusion, and it may even save your home altogether.

  1. The Bank Has to Give you a Written Notice

The bank can’t just show up with the sheriff and demand you move out. In California, the foreclosure process can take up to 200 days (the first day is considered the date of your first missed payment). The first step is a written notice of default, which must also include how you can resolve the overdue balance before a foreclosure proceeding is initiated. You will also get a notice when the bank files a Notice of Default at about 120 days of default, and before the trustee sale takes place a few months later.

2. You Can Refute the Amount Owed

Another one of your foreclosure rights is to know exactly what they’re claiming you owe. This includes the outstanding principal balance, interest, overdue fees, attorney’s fees, and other costs. Is the lender charging you fees that are not permitted under the terms of your mortgage? Did you make a payment you’re not getting credit for? You have the right to refute the written filing if you believe it’s wrong. This could help you lower the bill and make it more realistic to become current and avoid foreclosure.

3. You Must Be Given the Chance to Become Current

You become officially in default after about 90 days with most lenders. But it’s in your bank’s best interest to keep you in the home so they don’t have to assume the burden of selling it. And the home is technically yours until it gets auctioned off at about day 200. During that time, you have the right to negotiate a loan modification with your lender or come up with the cash to become current. If you still have good credit, you can apply for a personal loan or take money from your 401k, for instance, to pay off your overdue mortgage.

4. Short Sale May Be an Option

A lender has to agree to a short sale — and they may not — but you have the right to request it. This type of sale is what happens when the lender agrees to accept less than the remainder of your mortgage balance. For instance, if you owe $130,000 on your mortgage and sell it for $105,000, the bank forgives the rest and the new owner takes responsibility for the property at the close of escrow. If you have a lot of equity a short sale might not make sense to the bank, but it can save you from foreclosure if you are already upside down on the mortgage. Again, the lender must approve a short sale, but they can’t stop you from making your case.

5. Some Actions Automatically Pause a Foreclosure

Some foreclosure rights include ways to automatically and legally pause a foreclosure. If you file for bankruptcy, for instance, an automatic stay is placed on the foreclosure. The same is also true if you apply and are approved for a loan modification. This is because California doesn’t allow lenders to “double-track”, or proceed with a foreclosure while also proceeding with a loan modification. A bankruptcy should not be undertaken lightly, but it will temporarily stop the bank from being able to kick you out of your home. And with other debts erased, you can make the case that you are in a better position to pay your mortgage moving forward — your bank may be willing to negotiate a way for you to become current.

Understanding foreclosure rights is important, but you may be able to avoid it altogether if you sell before things get bad. California Family Homebuyers purchases Sacramento homes in as-is conditions. We often close within a week! If you have a fixer upper that you don’t want to sell on the MLS, give us a call today!

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