It is important to understand the ‘What, When, Where and Why’s of a foreclosure in order to make informed decisions on how and what to do if you find yourself in the circumstances the lead up to a foreclosure. And since a foreclosure and ramifications of late payments can destroy your credit, at least for a period of time, it is important to understand what options you have to avoid foreclosure.

The following are steps that can and should be taken by the distressed owner before losing a home in foreclosure:

Refinance -If you have equity in your home, and your credit is relatively intact, and your Lender hasn’t filed a notice of default you may be able to get another loan with more affordable payments.

Loan Modification – Contact your mortgage company and request a loan modification. For more information go to – Making Home Affordable.gov

Short Sale – Contact an experienced REALTOR to list your home for you. In the Modesto area, contact me, Mark Roan at (209) 402-7116

Deed in Lieu of Foreclosure - This is a voluntary conveyance of title to the Lender. Contact your mortgage company for the paperwork. For more information go to – “Deed-in-lieu FAQ”

And still, with all of the above options, about one in five distressed home owners will go through the process of foreclosure, and since being forewarned means being well prepared – here goes…

Foreclosures begin when the Borrower doesn’t make the monthly payment to the Lender, the first missed payment is technical default, but in practical terms, the foreclosure doesn’t usually start until the third payment is missed.

If the Borrower doesn’t resolve the defaulted payment amount with the Lender through Loan Modification, Short Sale or a payment agreement, the Lender will instruct the Trustee to begin Foreclosure proceedings.

The following time-line is applicable for non-judicial California Foreclosures under a Deed of Trust:

1. Notice of Default is filed with the county recorder.

2. Within 10 business days the Lender mails a Mail Notice of Default to borrower address

3. Within 1 month the Lender Mails the Notice of Default

4. After 3 months, Lender sets the Trustee Sale Date

5. 14 days before the Trustee Sale date, the Lender records the Notice of Trustee Sale

6. 5 business days before sale date, the Borrower’s right to re-instate the loan expires

7. At Trustee Sale the property is sold to the highest third party bidder or reverts to the Lender at public auction.

After the public auction, if the property reverts to the Lender it is now known as bank owned, or Real Estate Owned (REO).

The good news is that distressed owners that have lost their homes through the process of foreclosure can qualify to purchase another home in just a couple of years providing they re-establish credit as soon as possible.