1. When facing foreclosure, most homeowners think they have two options — pay
up or move out. The fact is that you probably have about a dozen options —
everything from refinancing to loan modification to selling your home or simply
walking away and abandoning the property.
Options for Keeping My Home
Loan modification: Also called a mortgage modification, loan modification enables you to negotiate a workout solution with your lender
to catch up on late or missed payments and lower the monthly mortgage payment by adjusting the terms of the loan. Your lender may
be willing to lower the interest rate and extend the term (and perhaps even reduce the principal, although this is rare) to make your
monthly house payment more affordable and help you catch up on any past due amounts. This is currently one of the best, most
available and most popular options.
Forbearance: Forbearance provides you with a payment plan for catching up on missed payments. You’re typically allowed to pay a
few hundred dollars extra each month over the course of 18-24 months to catch up.
Reinstatement: If you can borrow the money needed to pay any balance that is currently overdue, your lender may reinstate the loan,
allowing you to continue making monthly payments as though nothing ever happened. (This is a practical option only if you have
recovered from a temporary financial setback and can now afford the house payment along with any payments required to pay back the
new loan.)
Refinancing: Given the fact that credit is still pretty tight right now (as of Feb. 2009), this option may not be available. If you can qualify
for a fixed-rate, low-interest loan to pay off a higher interest loan and perhaps even consolidate your debts, refinancing could be one of
your best options.
Short re-fi: With a short re-fi, your lender agrees to accept as payment in full less than is required to pay off the balance due on the
mortgage, and you take out a refinance loan to make that payment in full. The end result is that you have a new mortgage with a lower
balance and lower monthly payments.
Government loan programs: The federal government, through FHA, offers down-payment assistance programs and is developing
other programs to enable homeowners to keep their homes. Contact your local HUD office to find out what’s currently available.
Bankruptcy: If you’re buried in unsecured debt, including credit card debt, bankruptcy may be the best option. Even if you’re not
considering bankruptcy, it’s a good idea to consult with a bankruptcy attorney to explore this option. It could be the best option for you.

2. Foreclosure Basics
Foreclosures vary from state to state. The following information will help you to understand the California foreclosure
process.
California is known as a Title Theory state where the mortgage company (i.e. bank) holds thetitle to the property while you live on the
land and continue to make mortgage payments. The document that secures the title is usually called a “deed of trust” but may also be
referred to as a mortgage. California has a complicated set of rules concerning foreclosures. More on theforeclosure process described
below can be found at links below.
How are mortgages in California foreclosed?
In general, foreclosure means that when you miss a payment or two, the bank sends an official notice that you are in the foreclosure
process. Then you have a period of time to cure the deficiency. If you cannot do that, the mortgage company pursues foreclosure
through either judicial or non-judicial means. An auction is then held and the property is sold to the highest bidder. The primary method
of foreclosure in California involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action.
When the deed of trust/ mortgage is initially signed, it will usually contain a provision called a power of sale clause. This allows the
trustee (usually a title company) to sell the property to satisfy the defaulted loan. The trustee acts as a representative of the mortgage
company to sell the property, which typically occurs in the form of an auction. California has a requirement known as the one-action
rule. If a foreclosure is completed by non-judicial means (outside of court), then the mortgage company cannot pursue a second action
at a later date if the auction proceeds do not meet the amount due on the property. If a foreclosure is judicial, the house may be sold
and a separate judgment may be obtained for the remaining balance due on the loan (up to the full amount of the loan plus foreclosure
costs) if the auction proceeds do not cover the balance due on the property. Most loans are foreclosed using non-judicial foreclosure,
but a mortgage company has the option of using judicial foreclosure. Since this process takes longer than non-judicialforeclosure, it is
rarely used. In California non-judicial remedies have stringent notice requirements and the mortgage documents are required to contain
the power of sale language in order to use this type of foreclosure method.
Abandoning your home
Walking away is an option but it is not always the best option, because it can leave some legal strings untied. In some jurisdictions, for
example, your lender can sell the house at auction and then pursue a deficiency judgment against you for the difference between what
the house sold for and the balance of the mortgage.
MERS –links to sites with the latest news
https://www.mortgageoversight.com/state-information/?st=California
http://oag.ca.gov/nationalmortgagesettlement
http://www.nationalmortgagesettlement.com/
Judicial foreclosure
A type of foreclosure proceeding that is handled as a civil lawsuit and conducted entirely under the supervision of a court.
Used only in lien theory states.

3. Non-judicial Foreclosure
A foreclosure process that does not involve court action. This method is typically used in title theory states in which a trustee
or other party effectuates a foreclosure sale.
Hardship package—preparing an Effective One
http://hardshipletters.org/hardship-letter-form-structure/
Bankruptcy & Foreclosure
If you’re buried in unsecured debt, including credit card debt, bankruptcy may be the best option. Even if you’re not considering
bankruptcy, it’s a good idea to consult with a bankruptcy attorney to explore this option. It could be the best option for you.
Short Sale
When the mortgage company agrees to do a short sale in real estate, it means they are accepting less than the total amount due. Not
all mortgage companies will accept short sales or discountedpayoffs, especially if it would make more financial sense to foreclose;
moreover, not all sellers nor all properties qualify for short sales. A short sale means your mortgage company is accepting a discounted
payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the mortgage company
will accept your offer, even if you accept it. Be aware that you need not be in default -- to have stopped making mortgage payments --
before a mortgage company will consider a short sale. A mortgage company may consider a short sale if you are current on your
payments, but the value on your home has fallen. You may have over-encumbered (owe more than the home is worth), so a discounted
price might bring the price in line with market value, but will not bring the loan to a price below market value. A short sale negatively
affects your credit, but it is not as bad as foreclosure.
Loan Modification
Loan modifications can provide much needed relief for individuals facing foreclosure. However, homeowners
must also beware of the growing number of loan modification scams that prey on consumers. The resources
below provide information on loan modifications and how to avoid loan modification scams.
HAMP Program
If you are not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible for the Home Affordable
Modification Program (HAMP®). HAMP may lower your monthly mortgage payments in order to make them more affordable and
sustainable for the long-term.If you currently occupy your home as your primary residence, we encourage you to contact your mortgage
servicer as soon as possible to begin the HAMP evaluation process.

4. In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Obama Administration
expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:
Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently
rented or the homeowner intends to rent it.
Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good
standing.
If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria. Please
check with your mortgage servicer to see if you are eligible to begin the HAMP evaluation process.
To apply for HAMP, you need to complete and provide the following to your
HAMP participating mortgage servicer.
Request for Mortgage Assistance Form
IRS Form 4506T-EZ or 4506-T
Verification of Income
If your mortgage is owned, insured, or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA, ask your mortgage servicer which
solutions might be best suited to your situation.
If you have additional questions about getting mortgage help, contact one of our housing experts at 888-995-HOPE (4673). These
HUD-approved housing counselors will help you understand your options, design a plan to suit your individual situation, and prepare
your application. Research shows that homeowners who work with housing experts like these are more successful and have better
long-term outcomes. There is no cost to you for this valuable, around-the-clock service. Help is available in more than 160 languages.
HAFA Program
If you can't afford your mortgage payment and it's time for you to transition to more affordable housing, the Home Affordable
Foreclosure Alternatives (HAFA) program is designed for you. HAFA provides two options for transitioning out of your mortgage: a short
sale or a Deed-in-Lieu (DIL) of foreclosure. In a short sale, the mortgage company lets you sell your house for an amount that falls
"short" of the amount you still owe. In a DIL, the mortgage company lets you give the title back, transferring ownership back to them.
In either case, HAFA offers benefits that make the transition as favorable as possible: You can get free advice from HUD-approved
housing counselors and licensed real estate professionals.
Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This
means you will no longer be responsible for the amount that falls "short" of the amount you still owe. The deficiency is guaranteed to be
waived by the servicer.In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price.
HAFA has a less negative effect on your credit score than foreclosure or conventional short sales. *When you close, HAFA provides
$3,000 in relocation assistance.
Seek Legal CounselThis information is designed to be of general interest. It should not be considered legal advice. The specific
information discussed may not apply to you. Before acting on any matter contained herein, you should consult with an attorney.

5. Foreclosure.com
Keep Your Home CA
Know Your Options
Hope Now
CA Assoc. of Realtors
National Assoc. of Realtors
Unemployment Mortgage Assistance
Mortgage Reinstatement Assistance
Principal Reduction
Transition Assistance
Location Innovation Fund Programs
CAL HFA
Consumer Home Mortgage Info