Hello Bigger Pockets,
I am in Southern California and a friend of mine, that has been in the loan modification process for over 2 years, was just notified that the lender/servicer (BofA/NationStar) has filed a Notice of Default. How can he save the property? What steps should be taken? Do you know a San Diego Attorney that can stop the process and get a favorable conclusion. Nationstar has never given a decision either to decline or give other viable options. In addition, there is an email where the day the NOD was filed, the contact at NationStar asked for additional information? Is this legal in California. Please Help.
Maybe attorney @Rob K. can help your friend out. He's in your neck of the woods.
Best of luck.
You should sit down with your friend and discuss with him if he can afford the property monthly payments or not. Loan mods have worked for some, but there is no guarantee, and most loan mods are ultimately denied after long, long process. You are really at the mercy of the bank. Its a big 'set-up' what these banks are doing to homeowners; they fall behind on monthly payment, and they tell them its OK, and the loan mod will allow them to re-start the payments in the future at a new payment amount. Then the loan mod is never approved, they slap a NOD on the property and they are too far behind to bring the loan current. Its almost criminal.
This leaves your friend with only a few options. If he can't come up with the money to bring the loan current and make the payments going forward, then he will have to sell the property or he will eventually get foreclosed on. There are attorneys and other companies that can help DELAY the Notice of Sale, but its only buying some time and delaying the inevitable. Some will say that you can file for bankruptcy, but that is only another delay, and its usually not worth it to get a bankruptcy AND a foreclosure on your record.
Is the house with equity or under water? If he has at least 10% equity - then selling should be no problem. If the house is not under 10% equity and less than 20% underwater, you can sell the property subject-to the existing loan, and a new homeowner can bring the payments current. This is the best outcome for your friends credit and avoids a short sale or foreclosure on his credit.
If the house is more than 20% underwater, then short sale is the way to go. You REALLY, REALLY need a GOOD quality short sale negotiator. I have seen many short sales get listed at too high a price, and the home just sits there on the market, and foreclosure is a result. I work with a short sale negotiator that has a very, very good track record. Good luck to your friend. Contact me if I can answer anymore questions or be of any help.
Great California Homes.
@Richard Alvarez it is unfortunate your friend is in a bind. The real result is that if he doesn't get a HARP or some other program he must either make the mortgage payments or he will get foreclosed on. Larry was correct on trying to sell it as probably the best option. Your friend needs to act quickly though. Once banks do the NOD the foreclosure process has started and they have no reason to stop it. Foreclosures cannot really be stopped by anything short of paying the bank off unless the bank agrees, delayed yes, stopped no.
The California Homeowner Bill of Rights (HBOR) was passed not to long ago. It outlaws dual tracking, exactly the situation you describe. Checkout this link, Q&A number 4.
@Richard Alvarez make sure that you have the details about your friend's situation. He should not have gotten an NOD while the modification is not yet resolved. As @Account Closed pointed out the HBOR is there to protect the homeowner from just such a situation.
Let's say you ask and find out there's a letter from Nationstar that he neglected to open. When he looks, he finds they denied the mod. OK, fine. How much is your friend in arrears? Can your friend certainly make the monthly payments going forward? How much does he want to stay in the house? How much equity does he have in the house?
There are a thousand folks out here that could help your friend through his situation depending on what exactly it is. The NTS won't be issued for at least 90 days from the date of the NTS. There should still be plenty of time, provided that your friend jumps on it now. The sooner you respond to a foreclosure the better your options.
I hope this helps. Let me know if you'd like to discuss the options and solutions further. If you want to send a PM with more details, I'll be happy to take a look at it for you.
All the best.
Not sure how the process works with the new law in CA.. however in Oregon once an NOD is filed.. the Trustor has the right to call for a face to face meeting with the bank. And the banks here have hired professional mediators to sit in on the meetings. I just rescued one for a builder buddy of mine were we were able to go to this mediation we negotiated a payment schedule that allowed him to catch up.. Nothing was waived but instead of coming up with 35k to cure.. they gave him a year to payit.. so its basically double payments. We are in the process of subdividing the lot and building 3 homes on it.. Should turn out very good for all.
So maybe CA has that same law were you can ask and must be granted a face to face with the bank or servicer. At that point be in a position to make a deal
We have experience with Nationstar, you have to start making a plan. The plan should include what can he afford as a monthly payment, but don't make it so high that it can be missed in the future. Depends if he really needs to stay in that home also. There are options life is not over just because Nationstar says it.
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