Stopping Foreclosures in California
Written by: Unique Home Solutions
The fear of housing foreclosures discourages several potential homeowners from purchasing new homes. Although the foreclosure process is embarrassing and painful, learning more about it will be handy. Continue looking at this complete guide to discover everything you need to know about foreclosures starting from pre-foreclosure to post-foreclosure.
Defining Housing Foreclosures
A housing foreclosure refers to the legal process lenders use to recover the remaining loan balance if the current owners cannot service the debt or sell the mortgaged house through a short sale. The foreclosure process starts when the borrower fails to pay specific monthly payments. Failure to accomplish other terms in the mortgage document can also lead to a foreclosure.
Understanding the Foreclosure Process
The legal basis of foreclosures comes from the deed of trust contract. This mortgage document allows lenders to use the property as collateral if borrowers fail to meet the terms on the document. Though the foreclosure process differs from one state to another, it usually begins when borrowers fail to pay specific monthly payments. Your lender will send a missed payment notice to you if you fail to make that month’s mortgage payment. You will then receive a demand letter if you miss two payments. Although demand letters are more serious than missed payment notices, you can still seek favorable terms from your lender. Notice of default is sent to you if you fail to make three consecutive payments. During this stage, the loan will be forwarded lender’s foreclosure department. Borrowers will then have a 90 days reinstatement period to make payments and stop a looming foreclosure.
Learn More About Pre-Foreclosure
This process starts when a lender sends a notice of default to a defaulting borrower. It is also a legal process, which allows lenders to repossess property when the lender defaults. Lenders file notice of default to let the defaulting borrower know that they will be taking legal action. However, some lenders are open to negotiations. Moreover, borrowers can arrest the situation by paying the balance or selling the property before foreclosure eviction.
The Foreclosure Process in California
The foreclosure process differs from one state to another. Some of the aspects that differ in each state include the various options homeowners have, the types of notices lenders should publicize, and the house selling process. Although this process differs in each state, it begins when borrowers fail to make regular payment and follows similar steps. You can discover more about the foreclosure process in California below:
- Non-Judicial Foreclosure
Also known as the power of sale, it is used in California. Non-judicial foreclosure is faster than judicial foreclosure because it does not involve the courts. However, the process can go through the courts if the borrower sues the lender.
How Does Forbearance Work?
Forbearance programs give lenders permission to take a break from payments for an agreed number of months. Qualifying is easy if you can provide proof of hardship. Failing to make payments during forbearance will not ruin your credit. However, borrowers will continue paying the money when this period ends.
Understanding the Consequence of Foreclosure
Apart from being stressful and embarrassing, the foreclosure process also has other long-term consequences. For example, evicted homeowners lose their home and equity and various leasing opportunities. Foreclosure can also ruin your credit.
Borrowers can still avoid foreclosure by using various alternatives. Below are some of the alternatives borrowers can use to stop foreclosure:
Borrowers can stop foreclosure during the reinstatement period by servicing their debt.
- Short Refinance
Your lender might choose to give you a new loan amount that is less than the debt to help you avoid foreclosure. Some lenders prefer this option because it allows them to avoid the costly foreclosure proceedings.
- File a Bankruptcy Petition
Lenders cannot repossess the house once your file a bankruptcy petition. However, this method will only buy you more time instead of allowing you to avoid the process altogether.
- Sell Your Home
Another way of stopping foreclosure is by selling your home. You can choose to sell your home to a direct buyer or a real estate agent. You can also list your house with a realtor or sell your house fast to a cash buyer.
Why You Should Sell Your House to Cash Buyers
Selling your house to a cash buyers, such as ourselves, is the best thing you can do if you want to stop foreclosure and sell your house fast. Learn more about the benefits of selling your home to fast homebuyers below.
- No Fees
Selling your house, the traditional way attracts a lot of fees. For example, you will have to pay a commission fee, which is around 6% when you sell it the traditional way and closing costs associated with the sale of the property . Cash buyers will not ask for commission and we pay all your closing fees.
- Sell As-is
The last thing you would want when facing foreclosure is to incur costly repair expenses. That is why you should let cash buyers buy your house in its current condition.
- Avoid Complications
You can forget about several complications like the deal collapsing at the last moment and financing when you sell your house to a cash buyer.
- Quick Funding
Cash buyers will make you an offer you cannot resist for your house and close the deal as soon as you are ready,
Potential Wave of Housing Foreclosures Coming in 2021
The Coronavirus pandemic has hurt all industries, including the real estate industry. This explains the reason why there has been a spike in foreclosures. About 9, 889 properties have received foreclosure filling in August 2020 alone. This is an 11% increase from the last month. While these numbers are below those of 2019, it is expected that this trend will continue in the coming months. California is one of the states with the highest number of foreclosure starts and completed REOs in August. Real estate experts predict there will be a 70% fallout in the coming two years in California. However, the coming wave of foreclosure is not similar to the 2008-2010 recession because credit standards are still high as we enter this recession and the housing market is still standing strong.
If you need to sell your house fast, please contact us any time to get a fast offer for your house. We buy houses in any condition.
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