Whisenant & Ellis
Short Sale & Foreclosure Specialist
Foreclosure Timeline from California Association of Realtors Legal.
When a real estate transaction involves a property in foreclosure, knowing the foreclosure timeline hleps you as the real estate agent to assess whether you have enough time to close escrow before the foreclosure sale. Starting September 8, 2008, California has a special foreclosure timeline for loans originated between 2003 and 2007, inclusive, which are secured by owner-occupied residences. Indeed, loans involved in short sales are likely to be owner-occupied loans from the years 2003 to 2007, which was the heyday for subprime lending. The special foreclosure timeline does not apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations. The special foreclosure timeline will remain in effect until January 1, 2013. (Cal. Civ. Code § 2923.5.)
FORECLOSURE TIMELINE FOR OWNER-OCCUPIED REAL PROPERTY LOANS (made from 2003 to 2007)
The approximate minimum time frames for the non-judicial foreclosure of owner-occupied real property loans made from 2003 to 2007 are as set forth below. In California, most lenders elect to foreclose non-judicially by conducting trestees' sales, not by judicial foreclosure.
Pre-Foreclosure Period
A lender may initiate the foreclosure process when a borrower defaults on a loan, such as by missing a mortgage payment. However, a slight delay may not justify acceleration and foreclosure by the lender. Hence, in practice, lenders generally wait a few months after a missed payment before starting the foreclosure process.
Day 1: Lender Contacts Borrower
For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.
Day 31: Filing of Notice of Default
For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure. The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice. The notice of default informs the borrower of the default. It must also include the lender's declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property.
Day 121: Filing of Notice of Trustee’s Sale
Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. Because of the gravity of a notice of trustee’s sale, it must be widely disseminated. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.
Day 145: Deadline to Cure Default
Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.
Day 152: Trustee’s Sale
Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens. At the trustee’s sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by trustee’s deed.
USING THIS FORECLOSURE TIMELINE
A foreclosure timeline helps you as a listing agent ascertain whether you have enough time to market and sell the property as a short sale. Depending on the stage of foreclosure the homeowner is in (“Foreclosure Stage”), the chart below gives you the total time frame you have, at a minimum, to sell a property as a short sale before the trustee’s sale occurs (“Minimum Time Left to Sell”).
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Foreclosure Stage
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Minimum Time Left to Sell
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Homeowner just missed making mortgage payment for the first time.
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About 6 to 8 months total
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Homeowner has just been contacted by the lender to explore options for avoiding foreclosure.
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About 5 months total
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Notice of default has just been filed.
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About 4 months total
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Notice of trustee’s sale has just been filed.
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Date of trustee’s sale is on notice of sale
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As an example, if a notice of default has just been filed, you have a minimum of about four months to sell the property before the trustee’s sale may occur. That’s four months not only to find a buyer, but also to get the lender to approve the short sale and close escrow. The short sale lender may agree to postpone the trustee’s sale in some situations (such as when there’s an accepted offer), but be sure to get any agreement for a postponement in writing.
FORECLOSURE TIMELINE FOR OTHER TYPES OF LOANS
For loans that are not secured by owner-occupied real property or not made from 2003 to 2007, lenders are not required to contact the borrowers to explore options for avoiding foreclosure. For these loans, the total minimum time for the foreclosure process is roughly only 122 days, not 152 days. If the lender is not required to contact the borrower, the foreclosure process takes a minimum of about 4 months from the filing of the notice of default to the day of the trustee’s sale.
If you would like more information about Your situation, just fill in the attached form so that we can assist you.
See most frequently asked questions below.
1) What is a Short Sale (short pay)?
When your lender agrees to accept less than what you owe to discharge your mortgage and sell your property.
2) Do you service the entire country?
YES We offer a Nationwide service of Short Sale and Foreclosure Management. We are Licensed REALTORS in the state of California. In all other states we Manage the Short Sale or Foreclosure process using local REALTORS to list your property. Every REALTOR is trained in our specific process. All pricing, paperwork and negotiations are approved by experts in our office.
3) I just received a letter indicating "Foreclosure" what do I do?
Act quickly and contact professionals to review your options. Foreclosure letters come in many forms and could represent different time lines for you.
4) Are you a Law Firm?
NO, We are a team of Licensed Real Estate Professionals and support staff. The Firm that we work for Richard Realty Groups, Inc. is owned by Bill Richard. Always consult an Attorney for legal advice. We would be happy to refer you to an attorney for all legal matters.
5) There are a lot of companies offering to "Buy Houses For Cash" are you any different?
YES, We are not in the house buying business. An investors willingness to buy your house is based on equity. If you have a lot of equity someone will buy your house at a discount because they know they will "flip" it or rent it using your equity to profit.
6) I can't sleep or eat, I'm always nervous can you help?
In most cases we can help. When you contact us we are dedicated to serve you honestly, fairly and with kindness. We are not a big call center, we operate a neighborhood office staffed by humble, family oriented people. Many of us have been in your situation, which is why we dedicated our practice to education and assistance.
7) How do you make money I'm sure you don't work for free?
YES this is a job and we need to get paid. All of our fees come from Lenders and Real Estate sales commission. You will never be asked to pay for our services. We negotiate our salary or commission, or we do not get paid.
8) Why would my bank accept less money or work with me?
Any Mortgagee (the lender) can establish an estimated cost of loss if you default. Most banks and mortgage companies even have a loss mitigation or prevention department. As a general rule Mortgagee's do not want to own property. They are lenders not property managers. The cost to maintain your property after they take it from you includes: taxes, insurance, maintenance etc. The Mortgagee's "loss" can continue to grow long after you are gone. Even at a sale the Mortgagee expects to get much less than market rate because it is not an ideal way to sell property. In many cases a preemptive offer or attempt to sell your property, even for less than you owe, will actually be a better option for the Mortgagee.
9) I started to get a lot of flyers, letters, postcards and other solicitations from people who say they can help. How did they get my information? Can any of them help me?
Foreclosure is a public process. A notice is filed in court, usually by your Lenders Attorney. Once this happens there are several companies and individuals who take the information and attempt to market their services to you. Your information will even be sold several hundred times. Most of these offers are equity driven. If you don't have a lot of equity left or want to keep some of it yourself then most solicitations won't work. Remember anyone who contacts you is trying to make money. Ask yourself how will they get paid? Who will pay them?
10) How does a short sale affect my credit?
If we can sell your property before a sale it will typically show up as "paid" however the lender does reserve the right to make a notation typically "less than originally owed". The best way to preserve your credit is to act quickly. The actual foreclosure sale and subsequent judgment for the sale difference is what you MUST avoid. Your credit report will show the sale and in most cases a large judgment against you for the banks losses.
11) I've heard there are tax consequences if the lender forgives some of the debt? December 20, 2007
President Bush Signs H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007 No tax consequence on primary residence (restrictions possible consult an accountant ) YES there might be. Your Lender will report the debt as a tax loss. Similarly you will have to account for the gain. In most cases if it is a primary residence there are 5 situations that will forgive the tax burden. 1. Insolvency - your total debts exceed your total assets at the time your debt was settled or deemed non-collectible 2. Bankruptcy - the debt was already discharged through a bankruptcy proceeding 3. Indebtedness due to certain real property business losses 4. Indebtedness due to a qualified farm expense 5. Discharge of your debt was treated as a gift
12) I know when the sale date is, do I still have time?
In most cases the Lender will review offers right until the actual sale. You also might be able to take action that secures more time. However, you must act very quickly and call us for a free consultation.
13) What will I need for the Lender?
Most Lenders will require information from you. Essentially it is a reverse loan application. Instead of convincing the lender that you are credit worthy, your data should indicate your inability to pay. This may include: personal hardship letter, tax returns, pay stubs, bank statements etc.
14) I am 60 days late, do I have to sell my house?
NO, not necessarily. Although the pressure seems to be mounting there are still many options available to you. You must act quickly call 866.249.5349 ext. 6225.
15) My Husband is in the Military is there any assistance for Military families?
Mortgage relief is available for military personnel under the Civil Relief Act (SCRA). It prohibits the sale, foreclosure, or seizure of service member property secured by the mortgage during the period of military service, or within 90 days thereafter. There are some stipulations.
16) Should I try and sell my house myself?
FSBO (for sale by owner) is always an option while you own the property. Most Lenders will require that you list your home for sale with a REALTOR who subscribes to MLS. It is a proven and the most credible method of selling property. The Listing Agreement is often proof of your willingness and attempt to sell. Which could secure you more time to sell.
17) I'm ready to work with you, what's next?
You need to call us for a brief interview or fill out the "contact us" form. We will get you several documents that you must sign before we proceed. a) Lender authorization letter which will allow us to communicate and get information from your Lender. b) Listing Agreement which will allow us to market and sell your property. c) Property disclosure statement verifying the condition and items in your home d) financial statement.
18) Is it legal?
YES, We do not condone any fraudulent activity. Everything that we do for you is done legally and negotiated with all parties involved.
19) Do you cover all of California?
YES we are Licensed to do business anywhere in the state of California and we can assist with the process in other states.
20) What options do I have?
The options available to you depend on a couple of factors. a) the immediate disposition of your mortgage (what stage the mortgage is in) b) your goals, concerns and objectives. Options we might review with you include: Pre-Foreclosure Sale, Short Sale, Deed-in-Lieu of Foreclosure, Chapter 13 Reorganization of Consumer Debts, Do Nothing, Reinstatement Plan, Repayment Plan, Loan Modification, Loan Restructuring, Loan Refinance, Loan Forbearance, Assumption Partial Claim,
21) I have a second mortgage on my property. How will that get paid or go away?
In this market there is no second or third lien holder who has any interest in foreclosure. In fact the worst thing they could hear is that the 1st position lien is going to foreclosure. When the 1st position goes to foreclosure they are guaranteed to get nothing (in the current market). Many second position lien holders are settling for as little as $1000. Most 1st position investors are setting policy to buy 2nd position for as little as $1000. Everything starts with an offer on your property. The offer gets submitted to the first lien holder with a proposed HUD. If the second position is completely left out we usually pull a little from the first to satisfy the second. (on the proposed HUD) . A non-performing or "bad" loan is not good for the bank to have on their books. It hurts their loan portfolio and ability to borrow more money. In many cases it is better to accept something just to close out the loan..
*The information contained in this website is for informational purposes only and is an opinion of the Author.
There are no warranties or guarantee's, implied or expressed. Consult your Accountant and or Attorney for advice.