AVOID FORECLOSURE IN CALIFORNIA: OPTIONS IF
YOU’RE BEHIND ON MORTGAGE PAYMENTS
By Juliette Ferguson, CRS, MBA, Associate Broker, Sotheby’s International Realty,
Juliette "Jette the Realtor" Ferguson, Jette Ferguson Real Estate Group, Inc.
DRE 01405735, teamjette.com 831-402-3800.
March 27, 2020
Job loss, Covid19, divorce, and medical issues—sometimes life happens in unexpected ways and then the mortgage payment is due. If you get behind and are unable to catch up on payments, the bank may begin foreclosure proceedings against you. Being foreclosed on can create a ripple effect—not only losing your home, but also losing the money you put into your home to update it. Additionally, your credit score will be negatively affected for up to seven years. I have clients who believed it was over after seven years, only to be taken to court to recover any leftover money owed. There are also tax consequences.
Last year, I was able to assist a client (seller) on Edinburgh Street in Monterey, California, to avoid foreclosure. He hired me as a realtor at the last possible minute—when his home was set up to be sold at auction on the court house steps in Salinas, California. My team was able to jump in immediately and sell his home in less than one week with multiple cash offers for much more than it would have sold for on the court steps. Additionally, he ended up with the remaining funds after the sale. Funds his family needed.
They were able to avoid credit issues. I only wish we could have known a few months earlier because had we jumped in to sell his home before it was set to be auctioned off, we would have been able to sell it for more than $100,000 more. I am proud that we sold it within the 10 day window of time for more than the seller expected. These are the heart-wrenching experiences we go through with our clients. As a realtor, I am involved in the highs and lows in our client’s lives. From marriage, to first time home purchases, to end of life situations and working with the children of past clients. I am often asked why I do this and I truly cannot imagine doing anything else. I love being a part of important times in our client’s life. It creates a lifelong bond and I consider past clients “my forever peeps”.
If you’ve missed a mortgage payment or two and are concerned that the bank may foreclose on your home, take heart. There are things you can do to avoid foreclosure. No one wants a home foreclosure—neither you nor your . Your lender wants payment, not a house. They may be flexible in helping you keep your home. If all else fails, you may find that selling your house is the best solution for you.
Contact your lender immediately if you are unable to make a mortgage payment. Please do not be shy about this because your lender may be able to support you through the process. Be honest about the situation you are in and what you are doing to improve that situation. Each lender varies on how the work to help you to avoid foreclosure on your home. Some banks allow more time before starting the foreclosure process, but usually it is a matter of months. Your lender may offer advice on how to avoid foreclosure altogether. If you do not know your mortgage type, ask your lender. If you have a mortgage backed by CalHFA—California Housing Finance Agency, they have a foreclosure prevention program. (https://www.calhfa.ca.gov/myaccount/hardship/ )
Avoid Foreclosure with a well times home sale
You can avoid the hassle of negotiating with the bank and the possibility of an eventual foreclosure by selling your house with a real estate agent. If you sell your house before you miss any mortgage payments, your credit record will not suffer at all. Even if your mortgage payments are not current, your house can be listed on the market.
I have experienced many home sellers in distress and it seems, every single time, there is a cash buyer or neighbor buyer offering a low-ball offer. I have been able to sell their home for at least $100,000 more than any of those offers. And while it is important to sell your home to someone you feel good about—it is also important to keep money to support yourselves in challenging times. I always recommend selling your home to the person paying the highest price with the best terms FOR YOU—MY SELLER.
Other things to consider are forbearance, loan modification, deed in lieu of foreclosure