Thursday, June 14^th, Allen Pezeshikian of Countrywide Home Loans sponsored a presentation conducted by representatives of Countrywide's Home Retention Division.  Formerly known as the Loss Mitigation Division, the re-naming better describes Countrywide's perspective on home owner retention versus short sale/foreclosure options.  The audience was about 400 Realtors from the Glendale, California area primarily, although there were some from as far away as Palmdale.

(Disclaimer- each lender has their own policies.  If you have questions contact your lender).

The Foreclosure Process:

1.         Mortgage a payments are normally due on the first of the month, with a fifteen day grace period, which most mortgage payers take advantage, so technically one is in default the second day after the payment is due.

2.         Depending upon the profile of the borrower, Countryside starts a calling  program either on the second day, or certainly by the 17^th day.  Countrywide's goal is to talk with the borrower and create a dialogue so Countrywide can understand the borrower's situation.

3.         Beginning the second month of delinquency (after the first day of the second month, or from the 31^st to 45^th day of delinquency) a notice is sent to the borrower called the Notice of Intent To Foreclose (sometimes referred to as a "breach letter"), which includes a 30 to 35 day expiration period (or the 61^st to 75^th day of delinquency).  At this point the borrower is responsible for the scheduled payments, penalties, and late fees.  If the borrower repays the debt, the account can be made current. 

4.         In California, the typical timeframe is 120 days (60-90 days after the first missed payment due date) until the Notice of Default is issued (N. O. D.).  The notice must be mailed to the borrower within ten days of recordation (The formal recording at the County Recorder's office that the Trustee of the note plans to sell the property in order to receive payment).  The Notice of Trustees' Sale mailed to the borrower 31 days prior to the auction date, so in Countrywide's case, approximately 6 to 7 months in total pass until the borrower loses title to the home.  The deadline to cure default (borrower can settle and prevent the sale) is up to five business days before the date of the sale.

5.         According to their spokesman, the average delinquent borrower receives 5 to 12 calls per month from Countrywide, trying to establish contact.  Over 50% of cases never have contact with Countrywide.

The moral to the story is to contact your lender as soon as you are aware that you may be delinquent so you can make arrangements (instead of the lender contacting you). 

I'll be posting part two in a few days.