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Options to Resolve

Options Available to Stop Foreclosures in California

There are a number of ways that a homeowner can attempt to resolve or delay a pending foreclosure sale that is being processed against their property.  Following are some of the more often used options that homeowners have been employing to resolve and save their properties.  Please understand that this is just a partial list and there might be other possible options, variations or combination strategies that might prove successful in resolving a foreclosure sale.

Forbearance Agreement with the Lender

This option is available to borrowers who can demonstrate an ability and willingness to reorganize all past due monies owed over time through an installment process.  Under this option the borrower and lender agree on an amount necessary to fully bring current the delinquent mortgage over a specific period of time.  Most lenders structure forbearance agreements with a repayment period that is usually scheduled over a six to twelve month period.

Loan Modification of the Loan

This option is available to borrowers who can’t pay as per the original terms of the promissory note but do demonstrate an ability and willingness to pay.  Lenders will consider reduced monthly payments and in some cases will even allow a permanent reduction of the original principal balance due to reduced property value.  Many lenders are very flexible to approving loan modifications to borrowers rather then foreclosing on the property and taking an immediate loss.

Bankruptcy by the Homeowner

There are 2 options available to a homeowner desiring to retrain ownership to their home.

Option 1

The homeowner files a chapter 13 bankruptcy  

This type of bankruptcy allows the homeowner to reorganize all past due monies owing over a thirty six month period of time and in some instances up to sixty months.  The homeowner must have the ability to resume making regular scheduled monthly payments in addition to a monthly payment to the United States Trustee to begin repaying delinquent monies owing.  This option is very similar in nature to a forbearance agreement but will result in a negative credit entry on the homeowner’s credit report for up to ten years.  Homeowners should seriously consider this option as it will cause additional derogatory credit on their credit report but might prove successful in retaining ownership to their home.

Option 2

The homeowner files a chapter 7 bankruptcy. 

This is refereed to as a liquidation. In this case the lender will be required to file an action in court titled a ”Motion for Relief from the Automatic Stay”.  This is where the court is petitioned to remove the property from the bankruptcy thus allowing the lender the right to continue the foreclosure process.  This option typically only gets the borrower about 2 additional months to own their home.  It’s in no way a permanent fix but just a delay tactic.  There is the option that an agreement could be reached with the lender where the lender will hold off the pending foreclosure sale of the property.  This is usually accomplished when the borrower has equity and wishes to sell the property and pay the loan off through escrow.  Most lenders would agree to this option if waiting will not cause them any additional financial loses.

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