My House is in Foreclosure.  What Do I Do Now?

Written by Cynthia Nemelka on 4/7/2008

Being an REO LISTING AGENT (fortunately), a LEASING AGENT (fortunately), and CURRENTLY LOSING MY OWN HOME (unfortunately) makes me kind of an expert in this area.  With this expertise however, I can offer understanding, and more importantly, information to help you through this foreclosure process.

We receive several calls a week from people looking for rentals because they are losing their homes to foreclosure.  Many times they are in panic mode as they don't know much time is left before the bank takes their home.  We can look up tax records to verify Notice of Default and Trustee Sale dates.  Knowing these dates will help you to know when you should start looking for a Rental Home. 

STOP!  BEFORE YOU GO FURTHER, HAVE YOU TRIED:

1.  Short selling your home?  (this will help save your credit)

2.  Asking your Lender for a Loan Modification?

Call us if you have not yet pursued these options: (951) 263-6021

The following will help you understand the foreclosure timeline a little better.

California Foreclosure Timeline

After 1-3 missed payments
Lender considers property to be in Default

Day 1
Record Notice of Default

Within 10 Days
Notice of Default Mailed to Trustor (Borrower) and Special Requests for Notice

Within 1 Month
Notice of Default mailed to parties pursuant to California Civil Code 2924(c)

After 90 Days
End of 90 Days redemption period. Trustee’s sale date can be set.
 
25 Days Prior to Sale Date
Notice to the IRS must be given if required

At Least 20 Days Prior to Sale Date
Publish Notice of Sale, Post Notice of Sale on Door of House, Mail Notice of Sale to Owners

Within 10 Days From First Publication of Notice of Sale
Send beneficiary request for property directions.

14 Days Prior to Sale
Record Notice of Trustee’s Sale
 
5 Business Days Before Sale Date
Right to reinstate expires
 
Sale Date
Property Sold to highest bidder

  AND THEN...Usually...

  
2-10+ Days after Sale Date
Lender’s REO Listing Agent sends letter, or comes knocking on door, to negotiate “Cash For Keys” or “Relocation Assistance Program”.  They will usually offer between $500 to $2500 and will requie you to set Move-out date to occur within 2-3 weeks.  (Note:  Some Lenders will also require you to show PROOF that all utilities have been paid up-to-date on Move-out date.)

NOTE:  If you don’t accept the Cash For Keys negotiation, or if you ignore the REO Agent and the letters from the Lender's eviction attorney, EVICTION PROCEEDINGS WILL BE STARTED.  You DO NOT want this to happen as this will GREATLY HAMPER your ability to RENT A HOUSE.

Move-out Date
Lender's Agent inspects property, verifies no appliances missing, and that property has been left in broom-swept condition (including garage and yard).  Owners give keys to Agent, Agent gives bank Check to Owners. 

In simpler terms:

90 days* missed payments + 90 days redemption period + 21 days until Trustee Sale + 7 days until REO Agent contact + 14 days to Move-out = 7 ½ months approx

DISCLAIMER:  All Lenders move at different paces, individual time frames will vary.  This simple time frame above is what I see to be the norm here in our area.

*The California Foreclosure timeline is applicable for California Non-Judicial Foreclosures under Deed of Trust. Foreclosures begin with the Trustor (borrower) not making the monthly payment to the Beneficiary (Lender). The first missed payment is technical default, but in practical terms, most Beneficiaries do not begin the process until the third payment is missed. If the Beneficiary cannot resolve the defaulted payment amount with the Trustor through Forbearance or other Loss Mitigation measures, the Beneficiary will instruct the Trustee to begin Foreclosure proceedings. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary, therefore, please consult a professional for specific advice.

 A LITTLE ADVICE

Save as much money as you can during these months of non-payment because you may be required to pay and ADDITIONAL deposit on a rental home.  (First month + deposit equal to one month's rent + pet deposit (if applicable) + ADDITIONAL deposit equal to one month's rent = your move-in costs)

Do not count on the Cash for Keys to be part of your move-in costs, as if you do receive this, it will not be until AFTER you are fully moved out of your house.

Visit us at www.Menifee4Rent.com to get a general idea of the rental homes and prices in our area.  Start actively looking for a rental as soon as you get the Notice of Trustee Sale date. 

Try to keep the rest of your credit under control.  Most property management companies and landlords accept the current foreclosure situation of potential renters.

Start saving your paycheck stubs as landlords want to see documented income - usually at 3x the amount of the rent.

Keep your bank account under control.  Many times Landlords want to see your last two month's of bank statements.

SAVE SAVE SAVE... no one will understand a family coming out of foreclosure, having paid no house payment for over 6 months, not having enough funds to move into a new house.  Once you find a rental, you need to be ready to give a full month's rent as a deposit for it to be held for you until move-in.

I hope this information helps you.  Please feel free to let me know if you have any other questions.  If you know of other families that are in the same situation, please tell them to call me so I can help them too!

Believe me, I know (all too well) how sad it is to have to walk away from your home.  My Team and I will do our best to help guide you through this process and help find you a great home to rent.  Please feel free to call me anytime (951) 259-9019.

Looking forward to being of help,

Cynthia Nemelka

(article written August 7, 2008)