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02/24/2016 : michaelgaddis : 4:51 pm : California Loan Modification Attorney
Although the peak of the housing crisis is in the rearview mirror, Notice of Defaults (“NOD”) and Trustee Sales continue for many homeowners. The question is “What do you do when you receive a NOD?” One thing is for sure, sticking your head in the sand like an ostrich and pretending it is not happening is not a productive course of action. In California, a NOD represents the beginning of the foreclosure process. Lenders (all lienholders) have to wait 90 days from the issuance of the NOD before they can issue a Notice of Trustee Sale (“NOTS”) and the sale date has to be 21 days from the date of the NOTS. So the minimum amount of time that a homeowner has from the Date of the NOD to earliest date that the property can go to sale is 90 days + 21 days. So pretending that nothing is happening is not an efficient use of time. Additionally, chasing after “leprechauns” and “unicorns” can be equally unproductive and, in most cases, detrimental to a homeowner’s situation. By leprechauns and unicorns I mean paths of action that have an extremely low probability of success. These paths of actions are usually driven by emotions such as desperation and false hope.
The threat of losing a home can be an extremely emotional time and emotions such as fear and panic can drive out logic and patience and begin driving decision making. The key once a NOD is received is to not panic. Remain calm and take a few deep breaths. The next step is to seek out someone experienced with foreclosure and lender issues. Homeowners facing foreclosure should not seek out companies or individuals that merely tell them what they want to hear. Believe me, they are out there. They will tell you everything will be okay; that you will be able to keep your home; that they are the most experienced at handling your situation; and that you have nothing to worry about. Homeowners should immediately hang up the phone on anyone that paints a rosy picture of the process. The truth is that obtaining a loan modification or stopping foreclosures is more difficult than ever. Not impossible, just very difficult. In order to determine whether or not you have a chance of success of keeping your home a thorough review of your situation must be made.
So, what are the options? First, there are loan modifications. Loan modifications are adjustments to the terms of your existing loan. Loan modifications are subject to a Net Present Value (“NPV”) analysis which is essentially a computer program that determines whether giving you a loan modification is in the best interests of the investor of your loan. The NPV takes into consideration all variables associated with your situation such as months delinquent, current market value of the home, current interest rate, proposed interest rate, current remaining term of the loan, proposed term of the loan, etc. If the NPV issues a PASS that means that your loan is worth more to modify than to foreclose. If the NPV issues a FAIL that means that the investor feels that less money will be lost via a foreclosure. Fighting for a loan modification in 2016 can be tricky and if you are going to have someone help you make sure that they know what they are doing or you might lose precious time. Another option is to file a Chapter 13 Bankruptcy. This is a viable option IF you are able to begin paying on your loan at its present terms AND if you are willing to pay a trustee payment on top of the current payment. I suggest you do not let emotion get in the way when analyzing whether a Chapter 13 makes sense. A third option to avoid foreclosure is to short sell your home. I know a lot of people do not like that option BUT sometimes it is the best option. Plus, with the HAFA incentive as high as $10k, you might have a financial reason to cooperate with the short sale process. Additionally, a short sale will allow you to control the “chaos” of the foreclosure process. Most lenders will work with homeowners and allow the property to be sold via short sale which can potentially 1) allow you to stay in the home longer (short sales take on average 3-6 months) and 2) make it easier for you to qualify to purchase a new home in the future. Another option is to give the house back to the lender via a Deed-in-Lieu (“DIL”). DILs will work provided your title is not clouded with issues such as junior liens, solar liens, judgment liens, HOA assessments and/or liens, etc. Finally, you could always try and file a lawsuit against the lender. This option can be costly and the probability of success can be very low. However, sometimes homeowners want to exhaust all options prior to accepting that the reality that there might not be a way to save the home.
My suggestion is to 1) seek out competent assistance and 2) think of your situation as a business decision. Keep emotion out of the process as much as possible.
For more information on foreclosure alternatives please contact Michael Gaddis, J.D. at Michael@MichaelGaddis.com or by calling 760-692-5950. Michael Gaddis, J.D. helps homeowners throughout the State of California.
01/05/2016 : michaelgaddis : 2:54 pm : California Loan Modification Attorney
Loan Modifications in 2016
I wanted to start out 2016 by sharing my recent experiences with assisting homeowners in their efforts in obtaining a loan modification and/or preventing a foreclosure. There is no doubt about it, loan modifications are becoming more and more difficult to obtain. Ever increasing property values and appreciation factors in lenders’ Net Present Value (“NPV“) calculations are causing more and more homeowners to be denied loan modifications. Every day I receive three to five calls (or emails) from homeowners desperately looking for clarity on their “REAL” options. Most of these homeowners are at the end of their emotional “rope.” The stress and uncertainty of dealing with their housing situation has affected them emotionally, physically, in their relationships, in their workplace, etc. Most of the homeowners that contact me have already tried to modify directly with their lender, or with the help of a nonprofit, or with the help of litigation, or with the assistance of a “Loan Modification Assistance” company or with the assistance of another attorney. I am usually a homeowner’s last hope. Homeowners typically find me after hours and hours of Internet research. These homeowners find my blogs, copies of the mods that I have obtained for my clients that I post on my website, YouTube videos, etc. One of the first questions that I ask homeowners that call me is whether they want me to tell them the truth or a lie. Homeowners are usually surprised by this question. The reason I ask this question is because I am not going to tell them about leprechauns and unicorns. I am going to tell them the truth. Loan modifications are very difficult, even for me, so I do not want to provide someone with false hope, especially when I know that the probability of success is very low. With that being said, loan modifications are still attainable, but the probability of success can only be determined after a thorough review of each individual situation. In other words, I need to review them case by case.
I understand the enormous amount of stress and pressure that homeowners are under when dealing with the imminent threat of losing their home. I would make the following suggestions to homeowners facing foreclosure in 2016:
- Do not wait until the last minute! For whatever reason some homeowners wait until the LAST possible minute before seeking assistance. Stopping Trustee Sales is becoming more and more difficult. I have literally had homeowners call me to tell me that they have sales at 9AM the next day. If you are a homeowner do yourself a favor and do not wait until the last second. I promise you it will not end well.
- Take detailed notes when communicating with your lender! At a minimum write down the date, time and name of the person from the lender you are speaking to. Ask questions like “Is my loan modification application with an underwriter?” “Are you missing any documents?” “Is there a scheduled sale on my property?” Make sure that you take detailed notes and write down everything that you are told. Do not assume anything!
- Follow up at least 3x per week! I do not care what the lender tells you, you need to call, at a minimum, Monday-Wednesday-Friday. You need to ask the same questions every call. Do not assume that you have already been told the information and do not need to ask again.
- Do not become overly friendly with your dedicated point of contact! Your dedicated point of contact is not your friend. No matter how nice or friendly they may seem, they are not your friend. Do not assume that they have your best interest at heart.
- Do not trust what your dedicated point of contact is telling you! If your dedicated point of contact attempts to tell you how to structure your income or your package BE CAREFUL!!! Dedicated points of contact do not have any specific information related to how to achieve a loan modification. It is amazing how many people call me and tell me “I don’t understand why I failed, my dedicated point of contact told me exactly what to do!”
- If you are using a 3rd party to assist you, keep updated on what is going on! If you have a 3rd party working on your loan modification file make sure that you are receiving AT LEAST weekly updates. Do not just pass your file to them and forget about it.
- Pay attention to your mail! Make sure that you are reading all of the mail that you receive from your lender. Some homeowners do not want to read it. Do not ignore your mail!
I could go on and on giving suggestions but I think you get the point. You need to be vigilant and prudent when seeking a loan modification.
Loan modifications are not the only loss mitigation tactic that you could utilize to resolve your housing situation. You could file a Chapter 13, seek a repayment plan, obtain assistance from Keep Your Home California, seek a deed in lieu, pursue a short sale, etc. The most important thing is to weigh the pros and cons of each and determine the best and MOST REALISTIC option. I know that emotions can sometimes cloud reality so you should really do your best to look at your situation objectively.