If you do not make your mortgage payments, your lender can take your home. The process they use to take your home is called foreclosure.
Most lenders do not want to take your home. Talk to them promptly and you will have a better chance of working something out with them.
If you are behind on payments
Talk to your lender: Donít ignore letters from your lender. Let them know youíve received their letters and that you want to work with them.
Tell them why you are behind on payments. Ask them what options you have and if they will work with you to get your payments current.
How your lender can help: Your lender may accept a payment plan for the back payments or give you extra time to pay the loan. They can also lower the interest rate or give you time to sell your home.
Where to get help
If you canít reach a deal with your lender, you still have options:
How foreclosure works
Lenders must call you: Your lender must call you on the telephone or try to reach you in person at least 30 days before they begin foreclosure. They are required to ask about your current situation and explore ways for you to keep your home.
This applies only to homeowners who got their mortgage between the years of 2003 and 2007.
Notice of Default: Foreclosure begins when you get a Notice of Default in the mail. The Notice of Default tells you the amount you owe in missed payments and foreclosure fees.
A declaration must be attached stating the lender has spoken to you or tried to reach you without success.
You have 90 days from the date the Notice of Default is recorded to pay what you owe. If you pay the amount on the Notice of Default, the lender cannot sell your home.
Notice of Sale: If you donít pay within 90 days, they will mail you a Notice of Sale. The Notice of Sale tells you the date, time, and place your home will be sold.
The Notice of Sale must be mailed to you at least 20 days before the day they plan to sell your home. The notice also must be posted on your property.
You can pay off the past due amount plus fees up to 5 business days before the sale. If you make a deal with your lender during this time period, make sure you get the agreement in writing.
When you reach 5 business days before the sale, the only way to save your home is to pay off the entire loan amount plus fees.
Notice of Rescission: Once you pay what you owe, the lender must record a Notice of Rescission. This proves they were paid in full and the sale was canceled.
Watch out for scams!
Avoid people who promise to stop the foreclosure by having you:
Transferring title to these people or giving them money in advance does not stop the sale. You will still be responsible for the money you owe even if you no longer own the home. Also, it will not keep the foreclosure from showing up on your credit report.
My landlord is in foreclosure. What are my rights?
As a tenant, you are entitled to a written notice if the property is sold. Once the property is sold, you must be given at least 90 days written notice to either move, or stay for the rest of your lease.
You can also negotiate with the new owner to stay as a tenant or receive "cash for keys" to move out. Make all deals in writing and have them signed by all parties.
What about my security deposit?
Your landlord or the new owner is still responsible for returning your security deposit once you move. If the landlord fails to do so, you can sue them in Small Claims Court.
Contact us for more information or speak with one of our counselors at (800) 973-3370. If you live outside of Southern California, call us at (213) 974-1450.
Updated July 10, 2011
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