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Foreclosure Defenses in California

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Just curious if anyone has had any experience defending against foreclosures in California or in any other non-judicial foreclosure state. I am currently 3 months behind on my first mortgage and have filed for Chapter 7 bankruptcy recently. The automatic stay is currently in effect, and the lender has not filed the motion for relief of stay (not yet). I have sent one QWR request and got the note, deed of trust and other basic stuff. I have also sent the loan modification docs, but was told not to expect too much to happen on it while I am in chapter 7. I have sent one payment this month (that's all I could do), but was told by the servicer that they need to consult with their lawyer to see if they would accept the payment. I'm not too optimistic that they will take the payment.

 

Anyway, I am not really expecting much from the loan mod, and am trying to see what my strategies are to delay the foreclosure for as long as possible. I do have a BK attorney who has filed my case right before the lender got a chance to record a notice of default, so the foreclosure clock hasn't started yet. Once I get my debts discharged and the stay is lifted, I will still have those 90 days before the notice of Trustee sale, so I could try to catch up on my payments. My financial situation is such that I can keep making a monthly mortgage payment, but have hard time closing that 3 month payment gap unless I delay the foreclosure some 6-12 months out, which would give me a chance to catch up. My attorney has recommended filing a Chapter 13 in good faith shortly after Chapter 7 to save the house, but Chapter 13 is really my least favorite option, and I'd almost prefer to lose the house than to go through two bankruptcies in a row. I had to do chapter 7 because of various other debts (long story), but I realize that Chapter 7 only delays the inevitable (foreclosure) and is not really designed to fix it. However chapter 13 bankruptcies have such a high failure rate, so I didn't really want to go that route. With all the debts and high mortgage payments, it seemed like I would have had a really tough time surviving the 3-5 year payment plan.

 

Now, I've seen a bunch of blogs online with people in non-judicial foreclosure states filing the Quiet Title complaints, other injuction actions, TILA actions, etc. etc. Has anybody here done any of it? I am trying to use my automatic stay wisely and read up on all defenses before the stay is lifted in my case.

 

Also, I am seeing some of the securitization defenses, etc. but since my lender is a Credit Union, I am not really sure how to find out whether my loan has been securitized at all. I've tried searching through EDGAR, but there's nothing there. Apparently, with a credit union not being a public company, I am kind of a loss at how to even get a hold of the pooling and servicing (PSA) agreement for my mortgage.  If I file any sort of lawsuit (quiet title) against my lender and do any discovery, they'll probably object the heck out of me trying to get a hold of the PSA.

 

Does anyone know of any good foreclosure delay strategies? Anyway, I'm willing to fight it all the way through the unlawful detainer Court (if the lender forecloses), but would like to concentrate on all I can do to gain several more months of time before the foreclosure. Somebody here has commented that Unlawful Detainer Court is pure hell, so it'd be nice not to get there in the first place.

 

 

Thanks.

 

 

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Unfortunately you do not have many options - the best is trying to catch up on the payments, working out a payment plan with the bank.  California is one of the four states we do not do modifications in, specifically due to your state ruling "Senate Bill 94".  I could write an essay explaining it, in short homeowners in your state borrowers cannot pay a 3rd party to modify their loan, including attorneys.  I know there has been a big repeal against that which I have not been following. 

 

There is a common misconception between a Hardship Letter and a QWR.  A Qualified Written Request is from an attorney sent to the lender to "apply" for a modification. An attorney is "qualified" to legally represent, speak or write on a financial level on behalf of a borrower . A hardship letter is what a borrower sends to the lender, to be accompanied with financials to "request" a loan modification.  Many people get denied on modifications because they do not understand the process.  Saying your working with your lender and sending your financials to them.  That is bad because you are leaving your self wide open.  

 

The following applies to any type of mortgage - FHA, Fanny, Freddy, or Private (Credit Unions). First matching the mortgage with available modification programs available for the loan.   Then look at if 31% of your gross income to check affordability.  If there's is not enough income - the options are getting another job, have a roommate or renters, or letting the house go.

 

A big issue is your type of lender.  Loans are owned by investors when mortgages serviced by conventional lenders.  Mortgages through credit unions, are owned by members.  What needs to be done is understanding what programs the leader has for modifications, and see the lowest modifiable payment.  As long as there is enough house hold income, chances are good on receiving a modification.  I have also seen the opposite, sending too much information including people that are not on the loan and lenders are calculating the total household income to result in a higher payment.  Understand the bank only thinks one thing - Profit Profit and Profit.  You owe them, they do not owe you.

 

Years ago when foreclosures reached a pinnacle point and the government lent money to the top conventional banks.  One stipulation was setting up modification programs to help home owners save their home.  Lenders that received the money created modification departments. This government stipulation did not require them approve modifications.  Lenders looking at request's for modifications approved them if they made a profit or denying if they made no profit.  My point is since your loan is through a credit union, that received no money from the government bailout.  They don't have to help you, and will most likely follow the guidelines set forth on your loan note.  Also realize your credit union will lose money if the foreclose,  especially if you are upside down with the value. 

 

I don't understand why your BK attorney filed bankruptcy before your received your notice of default when there was no sale date.???

 

The correct course of action is to send in the loan modification paperwork at two to three months late (which takes minimum of three months to review).  Then you either get approved or send you a notice of denial.  30 days later is sending you a demand letter to pay the arrears or start the foreclosure process (30 days).  Then another 30 to 90 days before a sale date.  On a national level I am seeing a minimum of six months in non judicial states for a foreclosure to go forward.   Then bankruptcy can be filed the day before to stop a sale.

 

Filing protection through bankruptcy is normally a one shot deal.  When there is an actual sale date since you already filed a chapter 7,  the remaining two options are a chapter 13 which you would fail the means test, or the other option is letting the house go. 

 

A relief from stay of a chapter 7 bankruptcy is for unsecured debt which protects you from creditors from coming after you.  Chapter 13 bankruptcy use for secured debt home (or car), making payments to the trustee.  If you go late on the payments the lender has the option to remove to home from bankruptcy protection by filing a mortgage relief from stay.  By filing a chapter 7 in your case, doesn't buy you any extra time.  All the lender has to do is reapply which takes about three months (90 days) from when your chapter 7 was filed with the courts.

 

The internet has brought a mortgage red herring fallacy especially for people who are in financial hardships seeking answers.  Searching for anything to support a fake argument to not be held responsible to pay a debt.  In my opinion you are not going to find your answers on the internet.  Stay away from a quiet title or an action trying to block a foreclosure, because all you are doing a putting a band-aid on the problem that will require a bigger band-aid later.  Every month you don't pay gets added to your arrears, there will be a point of no return trying to save your home.  Your strategies to delay the foreclosure for as long as possible, is only going to end up in one result. - losing the home.

 

Just this month a lady (loan officer) in Arizona lost the battle to save her home.  When she was two months late spoke to me about the steps a get her loan modified. Her goal was get the lowest payment doing everything herself. Her real problem was she didn't have a steady income and didn't want to get professional help.  Over the course of a year developed a relationship followed her situation.  The arrears grew to the point the loan was no longer affordability. She began reading into things other people had done, which didn't apply because her loan was held by a private investor.  She finally paid an attorney to file a bankruptcy, it went in and out of court stalling the foreclosure.   Spoke with her a couple of nights ago, she wished she could go back and do things differently.

 

Again you best option to save your home is working with your bank. If they don't work with you they another option is a deed in lieu or short sale.

 

Good Luck

 

..

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This is my understanding of a QWR: http://www.consumerfinance.gov/askcfpb/207/what-is-a-qualified-written-request-what-is-a-qwr.html

 

Most people don't have a clue who the proper party to pay on a mortgage debt is. The servicer claims they know. They don't. Odds are that with a private investor or a credit union the homeowner may actually know the correct party to pay. Paying the wrong party because you believe you "owe someone" is not the smartest move IMO (although most JDBs would probably say that you are brilliant).

 

If the CU never sold the note or has placed it with a private trust it would be challenging to wage a fight. I am not sure what that fight would look like. A fight often has potential to delay but also can come with its on perils especially when done haphazardly.

 

The Internet, just like the non-online world, is full of bad information and some buried gems.

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BK is one tool that can delay a foreclosure until the party listed as a secured creditor in BK files and is granted a motion for a relief of stay. Delays vary and can be rather short. If an attorney files a BK they likely filled in the forms with whatever information the servicer provided the homeowner. That may be accurate with a private lender or CU but it is definitely not accurate in typical securitized mortgage.

 

A short sale might create some delay. Fighting any procedural errors in the non-judicial process may add some time. There is no magic delay button that I am aware of.

 

One thing I would do is read and reread my deed of trust, note, and the foreclosure statutes in my non-judicial state.

 

In AZ not following the (minimal) statutes can cause problems (delays) for the foreclosing party. In AZ a trustee deed (post sale) is considered mostly unassailable. Barring a failure to properly notice the sale or some significant procedure snafu the Unlawful Detainer (CA) or Forcible Entry and Detainer (AZ) suit is all about possession and is likely  going to be a quick and efficient process (assuming they provided proper service to the homeowner).

 

Best of success to the OP.

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Thanks to everyone for all of your help. The CU accepted my one month mortgage payment, which is encouraging. I am doing my best not to fall more than 90 days late with the loan, and am planning to start closing the gap with two payments in December cutting the arrears down to 60 days, modification or no modification. I suppose this is going to mean having to be on a rice and beans diet for a while, but I am willing to give it a try. My income is pretty decent/stable moving forward, and with the CC debt about to be discharged in Chapter 7, my income to debt ratio will get way better, which should in theory help the loan mod.

 

The whole foreclosure delay would essentially be a plan B, if I don't get a loan mod and the CU doesn't want to work with me. If I end up losing the house in that case, I want to live for free in the home for as long as possible to build up some income to be able to afford the housing in the future. This is not the scenario I am really looking forward to at all, but I am trying to keep all of my options open at this point.

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