Homeowner Rights when Facing Collections and Foreclosure

For those that have already fallen behind on their mortgage and are in the pre-foreclosure stage, you are probably already receiving consistent phone calls from the bank. There are several restrictions placed on creditors and banks on how and when they attempt to collect money that is owed. This provides some “fairness” in how the bank or lender treats its communications with you. A homeowner should pay close attention to a California’s foreclosure laws to make sure that the bank is not acting overly aggressive in pursuing the foreclosure. By law banks are required to follow rules regarding time frames at each stage of the foreclosure process.

 

Restrictions on Collections Activities

It is important for homeowners to understand that they are protected by the law whenever they are facing any type of collection activity, including late or back payments on their mortgage. The two federal laws that pertain to these situations are the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. All agents and representatives must comply with these laws which prohibit any unusual, abusive or misleading practices such as:

1. Attempting to contact the borrower (homeowner) at unusual times or places
2. Using threatening or abusive language
3. Harassment
4. Discussing your debt or obligation with a third party
5. Using a third party or a false identity to contact you

 

Have you been Given Enough Time and Notice?

Foreclosure laws affecting homeowner rights vary by state. It is fundamentally important that you understand what specific laws and rights are available in California: http://preventingforeclosure.org/foreclosure-rights/. Start by reviewing the basic foreclosure timeline (http://preventingforeclosure.org/help-stop-foreclosure/california-foreclosure-basics/) and make sure to understand the foreclosure process.

Some of the most important points for a homeowner in foreclosure to research are:

1. Redemption Period: Does your state/area have one, and how long is it? A redemption period is the amount of time that a homeowner has to purchase (redeem) their property back after being sold at public auction.
2. Eviction after the Auction or Sale: How much time do you have to move out after the home is sold or auctioned?
3. Bank/Lender Notice of Foreclosure: Did the bank/lender give you enough notice and did they notify you in the right manner? If a bank does not follow your state’s foreclosure procedures according to the law and regulations, you may be able to file a suit in court to give yourself more time. Period for Reinstatement: How much time before the sale or auction do you have to catch up on your late mortgage payments?

How to Prepare the Fight Against Foreclosure

Generally, the first step to take to avoid a foreclosure is to contact your lender. This might strike fear or feelings of embarrassment in many of you, but you should understand that without making contact and keeping an open line of communication you are effectively kicking yourself out of your own home. Before we place that call though, we must first cover some preliminary details.

How to Prepare

Educate Yourself on Foreclosures: Become educated on foreclosures so that you understand what you are facing. This should bring to light the options that are available and will help alleviate your stress by learning what can and will not happen when you are dealing with a foreclosure. Familiarity with the topic of foreclosure will also help you avoid foreclosure scams and other costly mistakes.
Learn the Timeline: Homeowners facing foreclosure should be aware of the typical foreclosure time line in the state of California. Familiarize yourself with the general timeline showing some major milestones in the foreclosure process along with other important characteristics for foreclosures in California: http://preventingforeclosure.org/help-stop-foreclosure/california-foreclosure-basics/
Learn the Process: Understanding the foreclosure process, including where you stand in the process, will affect the best option to avoid or prevent a foreclosure.
Keep Your Finger on the Pulse: Stay abreast of the market conditions for real estate in your area. Know how severe the rate of foreclosures are in your local area of California since this will affect your options. For example, if there is a flood of foreclosures in your neighborhood, putting your home up for sale, one of the options to avoiding foreclosure, may not be the best idea. An abundance of unsold inventory (homes) would push down the value of homes, increasing the amount of time required to sell.