Receive a Notice of Trustee Sale in the Mail and Wonder What Steps to Take Next?
If you aren’t able to settle and catch up on your mortgage payments after receiving an initial Notice of Default, you will receive a Notice of Trustee Sale around Day 90 after entering default. The document will state when and where your home will be sold if the defaulted mortgage isn’t brought current. First of all, receiving this notice is not fun and will never sit well. Struggling to make your mortgage payments is a hardship that none of us would choose to endure, and it’s downright stressful. If you’ve found yourself falling into this foreclosure hole, don’t lose hope despite how overwhelming it may feel because you DO have options.
Homeowners Most Commonly Go into Foreclosure due to:
- Negative equity: As we saw from 2007-2009 when home prices drop- we’re all affected. If your home value drop bellows what you owe, this is called negative equity. A common name for this is being “underwater” on your mortgage.
- Interest Rates: If you purchased your home with a subprime mortgage, you may have enjoyed low-interest rates initially…only to be overwhelmed down the line when those rates rise dramatically. This can very easily make it hard to make your payments.
Outside of the external factors mentioned above, there are also many personal reasons homeowners fall into foreclosure:
- Divorce: If you are the sole person now responsible for paying a mortgage after divorce, it may be just too much to shoulder on your own. The stress in general that comes along with a divorce can lead to missed payments as well.
- Death: Losing a family member is one of the leading causes of going into foreclosure, especially if the loved one passed was the breadwinner for the household.
- Unexpected expenses: One example of an unexpected expense that can curtail your ability to make payments is medical bills accrued. Medical bills are the leading cause of bankruptcy and result in a lot of financial distress.
- Lifestyle: No matter what’s sending you into financial stress, if you don’t accept it and adjust your lifestyle, you could put yourself at risk of foreclosure. The sooner you can accept that you can’t keep up with payments given your current lifestyle, the easier it will be to navigate around the trouble.
How to Postpone the Auction Sale of Your Home?
Before getting into ways of avoiding foreclosure, let’s touch on a few ways that you can postpone the auction sale date and ultimately buy yourself more time. Foreclosures can technically be postponed for up to one year in California.
The easiest way = redeem your mortgage. This means, to pay off your mortgage. For most in a traditional foreclosure scenario, this is probably out of the question.
One way to stall the process is to come to an agreement with your lender, or a mutual agreement. This may take a simple phone call, or it may take more formal action like forbearance. But, don’t mistake a forbearance agreement as a fail-safe way out of foreclosure. The foreclosure process still continues and your home can be sold if you miss a payment.
Another way to postpone foreclosure is to file for bankruptcy. When bankruptcy is filed, all debt collections are put at a stop. But, this doesn’t mean that you can avoid the foreclosure. Instead, it simply delays the process until the debt is resolved. If you’re a homeowner who has enough income to make up past due payments after the bankruptcy, then this is an option for you that may be helpful.
The other ways to delay a trustee sale is by beneficiary’s request (decision made by the lender), trustee’s discretion (decision made by trustee), and finally, Operation of Law (if there are allegations of fraud against the lender).
Here is a full list of all the reasons for the postponement.
The Sale is Scheduled, What Else Can I Do to Avoid Foreclosure Altogether?
- Work out a new agreement with your lender, which works for you both.
- Short sale.
- Deed in lieu. Homeowner signs the deed to the home back over to the bank to avoid foreclosure.
If you’re able to refinance to develop a new agreement with your lender, this is always the best option (if you WANT to stay in your home). Most lenders would like to work out a compromise, so always begin by speaking to your lender to come to a common understanding.
If that doesn’t work, you do have the option to take the Deed in Lieu route, but we’d suggest that not be the route you choose. While you can avoid foreclosure, this process will still have negative effects on your credit score, similar to a foreclosure. This most often takes place when a homeowner has tried to sell the home with no luck and ultimately has no other option.
Short sale, if you can’t make payments and your lender won’t budget for you, is your best option. You can avoid the damaging ramifications of foreclosure and walk away from the stress. Ultimately, banks don’t want to foreclose. Foreclosures cost banks both time and money, both of which they’d be willing to avoid if a short sale is brought to the table.
If you are interested in a short sale, consider giving us a call. We have worked with many local homeowners at risk of foreclosure and have purchased their home via short sale. The great part is, we’re an interested buyer and we can move quickly!! When time is of the essence and you’re in a bind, working with an expert who can handle communications with lenders AND move quickly, can be a saving grace. Even if your sale date is approaching, you still have time and should call for more information.