Legal Question in Real Estate Law in California
Our home is about to go into foreclosure
We are currently in default (but no legal default has been filed yet) we received a letter stating we are in default and they said pay $xx or move out. The gave us another month to come up with $xx. We tried to work out something with them. We are a few months behind because of the wildfires in San Diego. they gave us 3 months to pay our mortgage because were evacuated and our work areas were as well. Now they all those months combined. it was our understanding that those additional months would be put in the rears of the loan. We had no idea we had to have all of it. We don't have it. Our home is now worth $50k less than what it was thanks to the market. This is even after improvements of about $15k. Is there any way get them to admit they misinformed us and put those payments in arears? Their re-payment plan offer is nearly double what our regular mortgage costs us. There is no way we can make those payments for 10 months. We also have a second. It's like they want us to foreclose. But all we here is that it is the last thing they want. We're confused and frustrated.
1 Answer from Attorneys
Re: Our home is about to go into foreclosure
A lawyer would have to look over everything the lender put in writing to figure out exactly what rights the lender waived, if any, when giving you what appears to be a few months' grace period due to the fires. It would be especially helpful to know how you were informed of the three months' grace period (by phone? in writing?) and how it was worded.
Is this in institutional lender, like a bank or savings and loan, or a small outfit or individual? Their conduct has some unprofessional ring to it. On the other hand, some banks are changing their tactics on foreclosure because there are so many and the foreclosed properties are worth less than is owed, so it's now better not to foreclose and hope the borrowers can pay over time or that a foreclosure in two or three years rather than now will bring a full price bid.
If you are in a position to keep current now, you may be able to negotiate a better deal with your lender, possibly including tacking the arrearages onto the end of the payoff instead of requiring them to be cleaned up now, or in the next ten months.
Borrowers who are straightforward about their payment capabilities, have decent income and credit, and are willing to negotiate are in a relatively strong position these days to get an acceptable loan work-out deal approved rather than suffer foreclosure.
As to having to move out, the law provides that you must be served with a formal Notice of Default before the foreclosure process can begin, and then it takes more than three months to notice and carry out a trustee sale. Until the sale, no one can order you to move out.
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