Introduction
The effects of the 2008 financial crisis still linger, even a decade later. The crisis is considered one of the worst economic meltdowns in human history, and a mortgage crisis fueled it.
While people try to get their lives back in place, by trying to build a sustainable growth after the crash, financial commitments like mortgage payments keep piling up.
The number of Los Angeles foreclosures has reduced marginally. However, it still represents a significant amount of households getting their homes taken from them. Regardless of reasons, failure to make prompt mortgage payments can lead to an entire family losing their home and experiencing a sudden lifestyle change.
Reasons such as illness, divorce, and loss of employment are just some of the causes you might be unable to make a mortgage payment. The high-interest rates and late fees are all specially designed to make mortgage payment a long and persistent process.
To prevent losing your home as a result of foreclosure, it is essential to have the basic understanding of the way foreclosures operate in Los Angeles. Also, you should consult with a professional foreclosure attorney in Los Angeles to successfully navigate through the more technical aspects of the process. Take action today to prevent foreclosure since every day counts in a mortgage dispute.
Los Angeles Foreclosures Process
The foreclosure process in Los Angeles is in line with what is obtained in the state of California. There are two broad types of foreclosure. The first type is non-judicial foreclosure, which is the most common and cheaper option and the second type is judicial foreclosure which is a more expensive and slower process.
The majority of home foreclosures in Los Angeles are non-judicial,meaning, there is no court process involved in the entire foreclosure process. The bank is empowered to repossess and sell homes in default without getting a court order. In non-judicial foreclosures, your debt is cleared as soon as the house is sold regardless of whether or not the bank received the value of your outstanding mortgage in the sale.
Judicial foreclosures are uncommon since they are lengthier, complicated, and more expensive. If a home is foreclosed judicially, you are still responsible for mortgage deficiency. Deficiency is the difference between the amount you owe and the amount the bank gets from auctioning your home.
The foreclosure process in Los Angeles is as follows:
Late Payment
Failing to pay your monthly mortgage payments will lead to a default on a mortgage. Generally, in mortgages, a loan becomes default if you are 90 days late in monthly payments. There are some reasons why people miss mortgage payments: illness, divorce, a significant life event, and sometimes carelessness.
The structure of mortgages makes it hard to make up for missed payments. The interests, fees for late payment, and other restrictive terms make defaulting on mortgage payments a recurring theme in households today.
If you have missed mortgage payments and are worried about defaulting, you can speak to one of our foreclosure experts who will provide you with a variety of options that are available to you. It is better to act fast before it becomes a stressful and full-blown case.
As soon as your mortgage becomes the default, which is usually when you are 90 days late, the Californian foreclosure process begins.
Notice of Default: 90 Days After Late Payment
When your late payments make your mortgage default, your bank is required by law to file a formal Notice of Default in a court. You also have a right to be informed, which your bank must notify you of such filing within ten days.
A Notice of Default is a legal instrument that outlines the standing of your loan- a state of default. The notice also informs you on steps on vetting your investment out of default back into a current state. Usually, the announcement will set out terms for your repayment of late payments with accumulated interest and fees.
It is best to consult with a Los Angeles bankruptcy lawyer upon receiving a Notice of Default to begin preparations to prevent foreclosure on your home.
Notice of Trustee Sale: 90 Days After Notice of Default
When you receive a Notice of Default, you have a grace period of 90 days to try and settle your late payments and remove your mortgage from default. If you can make payments with the accrued interest and late fees, your defaulted loan becomes current, and the foreclosure process ceases immediately. If you cannot make the investment present the bank is within its rights to hold an auction on your home. A mailed Notice of Trustee Sale is forwarded to you with the date of the auction included.
Auction: At Least 20 Days After Notice of Trustee Sale
The bank can set an auction date where your home is sold to the highest bidder. Auctions can be moved to a later date by a court or by the bank itself. The auction can be postponed for one year, and a new Notice of Trustee Sale must be sent to you before a new auction can hold. It is disheartening seeing the number of foreclosure auction Los Angeles holds annually.
The entire duration from the first late payment on your mortgage to losing your home in a foreclosure auction can be as short as 200 days which is a little over six months. It is paramount to contact a licensed bankruptcy attorney before or as soon as you get a Notice of Default. This allows you and your attorney enough time to make adequate preparations to avoid losing your home.
Preventing Foreclosure with Bankruptcy
Given the state of the economy, it can be hard to meet the monthly mortgage requirements. When this happens, you eventually default on your mortgage and are targeted by the banks for property repossession and foreclosure. You stand the risk of losing your home as the bank will attempt to auction it off to regain the value of their loan.
Have you received a Notice of Default from your bank informing you that your home stands a risk of foreclosure? It is essential to keep calm and not panic. Consult with a foreclosure attorney Los Angeles, like other places in America, have viable strategies to help you keep your home, and effectively manage your debt.
California’s Homeowners Bill of Rights, 2013, was passed to provide some respite to Californians struggling with their mortgage payments. The bill prevents banks and creditors from foreclosing property when the homeowner was in the process of loan modification or refinancing. Despite this bill, Los Angeles foreclosures still trend upwards. People still fall behind on mortgage payments leaving them at the risk of homelessness and damaging more than just their credit rating.
It is essential to act fast as once the foreclosure auction is concluded; there are no options available to prevent your home being repossessed by the bank. Meet with one of our highly qualified Los Angeles bankruptcy attorney who will examine the merits of your case and draw up an effective strategy to keep your home. Time is of the essence in cases of foreclosure as creditors can decide to expedite action, leaving you blindsided and unprepared for the future.
If you have defaulted on your mortgage payment and the foreclosure process has started there are only two options to halt the proceedings. The first option is making a significant amount to clear your entire debt accounting for the accrued interests and late fees. As soon as you make a payment that makes your loan current, rather than the default, the bank stops the foreclosure process immediately.
However, most people find it impossible to make such a huge cash payment at once. The best option available to you, in this condition, is filing for bankruptcy. Bankruptcy has a robust legal implication that halts all foreclosure or debt recollection processes, automatic stay.
The automatic stay stops banks, creditors, and other debt collectors from trying to repossess your property or foreclose your home due to default.
Automatic stay kicks in as soon as you file for bankruptcy anytime before the conclusion of Los Angeles foreclosures process. You can live in your home, without harassment, and relative peace of mind, during the entirety of the bankruptcy procedure.
Two chapters of bankruptcy law that effectively halt all foreclosure actions are, Chapter 11 and Chapter 13. Although a Chapter 7 bankruptcy will stop a foreclosure, it is only a temporary fix. After a period of 2 months, the automatic stay lapses and banks can continue the process of repossessing and selling your home.
Chapter 13 provides a more comprehensive and effective anti-foreclosure strategy. Under this plan, you can repay your mortgage arrears over a period of up to 60 months. You have up to 5 years to settle your substantial mortgage arrears while living in your home and working on getting your finances back in order. While your arrears are paid with your approved payment plan, you must continue regular mortgage payments during the bankruptcy period.
A Chapter 13 will also help you get rid of unsecured debts such as second or third mortgages on the same property. These junior mortgages or home equity line of credit (HELOC) are stripped- allowing you to pay off such debts at highly reduced costs. At the end of your bankruptcy process, any outstanding junior mortgages are wiped off as unsecured debts.
A Chapter 11 case, although more complicated, can also provide respite against losing your home due to foreclosure. Unlike a Chapter 13 case, your creditors can choose whether or not to accept your proposed debt repayment plan when you file for Chapter 11. Our highly qualified Los Angeles bankruptcy attorneys can help you pick the right bankruptcy plan depending on your specific circumstances.
Bankruptcy is a form of refinancing that allows you clear off vast chunks of debt without losing your property. Declaring bankruptcy can help you hit reset on your financial life, getting a fresh start, free from the substantial debt and mortgage arrears you may have accrued.
Bankruptcy lasts for up to 5 years during which you clear off secured debts like your primary mortgage arrears. Other mounting debts like second or third mortgages that you may have taken on the same property are stripped of their lien and are usually wiped off your slate. Take advantage of this period to get a new lease of life, build better habits, and make smarter financial decisions.
Conclusion
Contact us today to speak to one of our foreclosure attorneys in Los Angeles. You do not have to lose your home because you made a few late mortgage payments. At Wipe Away Debts, we are committed to helping you manage your debts smartly, reposition your finances, and help you better plan for the future.
We have years of experience dealing with Los Angeles foreclosures, successfully staving off the advances of creditors and debt collectors for our clients. Speak with one of our experts today to decide on what the right part of the action in your foreclosure case. We can help you decide on whether Chapter 13 or Chapter 11 represents the best values for your short-term and long-term finances. Understand your options to make informed decisions and prevent making a regrettable financial decision.
A foreclosure brings a massive change for you and your family. We will be with you throughout the entire journey helping you get your finances in order and ensuring you do not lose your home in the process. Our bankruptcy, foreclosure, and debt management services are unparalleled as our team is made up of professional and highly qualified Los Angeles foreclosures attorneys.
Bankruptcy does not have to carry a negative connotation. It is a legitimate move which shows your readiness to take responsibility and take back control of your life. Our experts will provide you with not only professional support but the motivation to push through this period and come out on the other side repurposed and financially sound.