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Lenders must contact you before starting foreclosure

New state law helps people facing foreclosure.

The goal is to get homeowners and lenders talking
and avoid foreclosure


If you are a homeowner facing foreclosure, California law requires lenders to contact you before they begin the foreclosure process.

This applies only to homeowners who got their mortgage between the years of 2003 and 2007.

Before filing a Notice of Default

Lenders must call you on the telephone or try to reach you in person before they can file a Notice of Default. Once they reach you, they are to discuss your financial situation and explore options for you to avoid foreclosure. During this conversation, they must offer to set up a meeting with you within 14 days to discuss your financial situation and ways you can avoid foreclosure.

The meeting can be in person or on the telephone. If you wish, you can have a representative discuss the pending foreclosure with your lender. Your representative may include a HUD-approved counseling agency, an attorney or another person of your choosing.

If your lender doesn’t reach you by telephone or in person, they must:

  1. Send you a letter that includes a toll-free number for a HUD-approved counselor. If you don’t respond they must then:
  2. Make at least one telephone call to you on three different days at three different times of the day. If you don’t respond they must then:
  3. Send you a certified letter that includes a toll-free number for the lender.

The lender does not have to follow these steps if you:

  • Surrender the property,
  • File bankruptcy, or
  • Hire an advisor who helps people extend the foreclosure.

When you talk to your lender

We recommend that you contact a HUD-approved counseling agency if you are having trouble making your monthly mortgage payment.

When you talk to your lender you can:

  • Ask about the Federal government's “Making Home Affordable” program.
  • Ask them to lower your payments or the interest rate to help you make payments.
  • If you have an interest-only loan, ask them to lower the interest rate so you can afford to pay both interest and principal.
  • Ask about a short sale.

This California law expires at the end of 2012.

For more information, contact our Real Estate Fraud and Information Division at (800) 973-3370.

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