THE FORECLOSURE TERMS

Please read the following information for your understanding of terms. 

The Foreclosure Process

When a homeowner defaults on a note and deed of trust, sometimes the only recourse for the lender is to proceed with foreclosure of the property.  This is an uncomfortable situation for all parties involved and we always handled it with the utmost professionalism.

California: Judicial and non-Judicial                                    

When you as a Borrower in Default?

This includes, but is not limited to the following:

            Failure to make their monthly payments as scheduled

            Defaulting on a Senior Lien

            Failure to pay property taxes on time

            Failure to maintain proper insurance

Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.                                                                                                                                                    

Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

CSRS Team has been working with Institutional beneficiaries to help handle Residential, Foreclosures and now Home Retention Services. We have a staff to help you stop the foreclosure process if the current systems in place apply to your financial position. We will always serve and protect as we try to reconnect with your investor, lender, according to their parameters and the laws we understand to be in place to protect your home, with total professionalism.

Credit Risk

Any foreclosure is detrimental to your credit. The idea of settling an account can reduce and save your credit risk by simply reducing any further damage to your credit scores with the right agreements in place.  

SIA Solution Home Retention Processing Department 

Our team of processionals includes chosen Legal Counsel, Real Estate and Credit Analyst, Mortgage brokers and Processor specialists, who are here to handle the possibility of your foreclosure in a totally professional and respectful manner. We will examine your entire income and expense situation and credit risk, and then develop your plan. This process may take as long as six months or as little as ten days. CSRS offers additional systems and services for you to stay in a direct contact with your assigned Credit Analyst and your file with contact options for your convenience. We feel very confident that if we take you on we can help you through these tough times anbd you are able to decide what direction you wish to take. 

Deed in Lieu of Foreclosure

One alternative to a non-judicial foreclosure is a “deed in lieu of foreclosure”.  The deed in lieu of foreclosure is an instrument that conveys all interest in the property form the borrower to the mortgagee in order to satisfy a loan in default and avoid a foreclosure.

A deed in lieu of foreclosure actually offers numerous benefits to both borrower and lender.  The primary and most important advantage to the borrower is that it immediately released them from most or all the indebtedness involved with the loan and default.  A second advantage to the borrower is they avoid the proceeding and public knowledge of a foreclosure.  In addition, the borrower can often get better terms by going with a deed in lieu of foreclosure, than if they have a formal foreclosure.

The main advantage to the lender is a major reduction in the time and costs it takes to proceed with a non-judicial foreclosure and there can be other advantages to the lender if the borrower ends up filing for bankruptcy afterwards. The deed in lieu of foreclosure is always entered into on a voluntarily basis and in good faith by both parties.  Because the deed in lieu of foreclosure is required to be voluntary, most lenders will often require a written offer of such a conveyance from the borrower that specifically states that they are offering to enter into the negotiations on a voluntary basis.  This conveyance enacts the “parole evidence rule” and protects the lender from any future claims by the borrower that they felt pressured in to the settlement or the lender acted in bad faith.

Forbearance Agreement

Sometimes in the process of trying to work out a bad loan, the parties will use what is called a “Forbearance Agreement” which basically establishes the ground rules for continuing the mortgage loan relationship, while both parties try to work out a solution to the defaulted loan and the issues are resolved.

What is a Forbearance Agreement?

A “Forbearance Agreement” is an agreement where a lender will agree not to proceed with an action against a borrower, that it otherwise would have a right to take.  In our case, the lender will “forbear or postpone” proceeding with a foreclosure action against the borrower, while both parties try to resolve the issues that are causing the problems with the debt.

When a borrower has a good history with a lender, and has simply run into some temporary financial problems, it can sometimes be in the lenders best interest to enter into a forbearance agreement with the borrower and try to work things out.  This avoids the time and costs associated with foreclosure, and will preserve both the loan and the lenders relationship with a good borrower.

SIA Solution:

We will present an evaluation to the lender and advise them about what our analysis provided as a better alternative solutions for each particular situation. Please understand the lender has always determined the final decision. Any other alternatives may need the use consulting with our Attorney or yours. Attorney only needed if the lender chooses not to move forward or give us any further alternatives. 

Short Sale:

If the client does not qualify for a HAMP or decides on a short sell. Then the next best option is to have an agreement written by all parties to proceed with this solution. At CSRS we believe that all parties must take responsibility and work together as we move towards selling a home. Due to our business practices our outcomes have been a very positive process.

Please note:

Lenders are still coping with new ideas and have not yet fully understood the social ecomics of their work and current process. As we work to develop and introduce our SIA Solution System with lenders, it is our hope that we can help generate a common ground and stop foreclosures as a finale answer.  This just may take more time.

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