Foreclosure 101
Understanding the Foreclosure Process Â
Foreclosure 101
Who Cares About Foreclosures? ........................................................................................................................................ 4 Ownership Rights ................................................................................................................................................................... 5 Who or what is an Owner? ................................................................................................................................................................... 5 What does an Owner Own? .................................................................................................................................................................. 6 Mortgage or Deed of Trust? ................................................................................................................................................................. 7 Why Foreclosure Happens ................................................................................................................................................................... 8 Negative Equity ............................................................................................................................................................ 8 Five D's of Foreclosure .............................................................................................................................................. 8 What about Subprime? ............................................................................................................................................. 9 A business transaction ........................................................................................................................................................................... 9 The big bluff ............................................................................................................................................................................................. 11 Judicial or Non-‐Judicial Foreclosure ............................................................................................................................. 12 Judicial Foreclosure .............................................................................................................................................................................. 12 Non-‐judicial Foreclosure .................................................................................................................................................................... 13 Important Notes ......................................................................................................................................................... 13 The step-‐by-‐step Non-‐Judicial Foreclosure process ................................................................................................ 15 Black hole of payment default .......................................................................................................................................................... 16 Visible inventory .................................................................................................................................................................................... 17 Loan modification recycling .............................................................................................................................................................. 18 Trustee sale postponements ............................................................................................................................................................. 18 Foreclosure Suffering Flow Chart ................................................................................................................................................... 19 Bad Credit is best result ...................................................................................................................................................................... 21 Borrower options .................................................................................................................................................................................. 21 Lenders Captain the Titanic .............................................................................................................................................................. 22 Recourse sucks for borrowers ......................................................................................................................................................... 22 California Foreclosure Rules ........................................................................................................................................... 24 The Purchase Money Rule ................................................................................................................................................................. 24 The One Action Rule ............................................................................................................................................................................. 24 The Cancellation Of Debt Rule ......................................................................................................................................................... 24 The Bankruptcy & Insolvency Exception .................................................................................................................................... 25 The First Action Rule ........................................................................................................................................................................... 25 California Legal Code Pertaining to Foreclosure ..................................................................................................................... 25 Why Trustee Sales? ............................................................................................................................................................. 26 Trustee Sale Risks and Limitations ................................................................................................................................................ 26 Cash Only ...................................................................................................................................................................... 26 Selection ........................................................................................................................................................................ 27 No Inspection .............................................................................................................................................................. 27 No Insurance ............................................................................................................................................................... 27 No Remorse .................................................................................................................................................................. 27 Unannounced Postponements and Late Cancellations ............................................................................. 27 High Opening Bids .................................................................................................................................................... 28 Competition ................................................................................................................................................................. 28 Trustee Sale Research ......................................................................................................................................................................... 28 Preparing for Trustee Sale ................................................................................................................................................................. 29 What happens at auction? .................................................................................................................................................................. 30 Getting the Trustee’s Deed ................................................................................................................................................................ 31 Taking Equitable Title (possession) .............................................................................................................................................. 31 Is it worth it? ............................................................................................................................................................................................ 32 HUD.GOV – Avoiding Foreclosure .................................................................................................................................. 33 Making Home Affordable ................................................................................................................................................................... 33 Modify or Refinance Your Loan for Lower Payments ............................................................................... 33 “Underwater” Mortgages ....................................................................................................................................... 34 Assistance for Unemployed Homeowners ..................................................................................................... 35 Managed Exit for Borrowers ................................................................................................................................ 35 FHA-‐Insured Mortgages ......................................................................................................................................... 36 info@ochousingnews.com
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Foreclosure 101
CONTACT FHA ............................................................................................................................................................ 36 Home Affordable Foreclosure Alternatives (HAFA) Program ............................................................................. 37 Eligibility ................................................................................................................................................................................................... 37 Program Availability ............................................................................................................................................................................ 38 Steps to Apply for HAFA ..................................................................................................................................................................... 38 Home Affordable Refinance Program (HARP) .......................................................................................................... 39 Eligibility ................................................................................................................................................................................................... 39 Program Availability ............................................................................................................................................................................ 39 Steps to HARP Refinance .................................................................................................................................................................... 40 Home Affordable Modification Program ..................................................................................................................... 41 Eligibility ................................................................................................................................................................................................... 41 Program Availability ............................................................................................................................................................................ 42 Steps to apply for a HAMP Modification ...................................................................................................................................... 42 Principal Reduction Alternative (PRA) ........................................................................................................................ 43 Eligibility ................................................................................................................................................................................................... 43 Program Availability ............................................................................................................................................................................ 43 Second Lien Modification Program (2MP) .................................................................................................................. 44 Eligibility ................................................................................................................................................................................................... 44 Program Availability ............................................................................................................................................................................ 44 For More Information .......................................................................................................................................................................... 45
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Foreclosure 101
Who Cares About Foreclosures? Why should you read this guide? If you are dealing with a burdensome mortgage, and you want to know what your alternatives are, this guide provides updated information on current government programs designed to help distressed borrowers avoid foreclosure. If you are an investor looking to profit from the foreclosure crisis, this guide provides detailed information on the foreclosure process and what you will face if you consider bidding on properties at the public auctions. If you are simply looking to expand your understanding of our property rights system to know why we are seeing millions of foreclosures nationwide, this guide will satisfy your curiosity. Written by someone with experience buying more than 50 properties at public auction, it’s a detailed description from someone who has been in the trenches dealing with these issues on a daily basis. This guide has something for everyone interested in this topic which has impacted so many people over the last several years.
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