In a state like California, where most of foreclosures occur by way of trustee's sale, as opposed to judicial foreclosure, if you request a loan modification from the lender or its servicing agent, the trustee may cancel or postpone the sale date, while your loan modification request is under consideration. Unfortunately, that doesn't mean it puts a stop to the foreclosure process. More often than not, your lender has mutiple departments (i.e. loan modification and foreclosure departments) that do not necessarily communicate with one another about what the other is doing. While the loan modification is pending approval, a borrower needs to confirm with the lender and the trustee that the sale date has been postponed. Many borrowers are falsely misled to believe that the sale date has been postponed, only to find out the trustee conducted the foreclosure sale when they get a three day notice to quit posted on their door.
The only way to protect yourself is to verify with the trustee in writing that the sale date has been postponed. Even if the loan servicer or lender tells you that the loan modification is pending approval, a prudent person will verify it in writing. Documentation that the lender and trustee have agreed to postpone the sale date to a date certain is vitally important in the event the servicer does not communicate with the trustee that the sale date is to be postponed. If the foreclosure sale is conducted and there is nothing in writing, it's your word against theirs, and basically, you've got an uphill battle to set aside a foreclosure once it occurs.
Regardless of your loan modification status, the best decision you can make for yourself and your family is to have a plan in place that will be in the best interest of your family's future financial standing. Anyone going through a loan modification process should seriously considering a short sale to avert a foreclosure sale. The best course of action is to have a plan of action. You should plan in advance and prepare to move forward with a short sale incase your lender decides to deny the loan modification request, can't give you a decision, or won't respond to efforts to communicate regarding the status of your loan modification request or confirm that the trustee's sale has been postponed or cancelled. There are many benefits of a short sale that far outweight the negatives of a foreclosure.
Unlike a loan modification, a short sale, if done correctly, will have a definitive postponement date for your trustee sale and a short sale will likely provide you with significant extra time in your home.
If you would like more information on how to prudently plan around the possibility of delay or rejection of your loan modification, please contact The Discover Short Sale Team at Realty One Group today.
(877)REO-2299 / (877)736-2299
Realty ONE Group - Discover Short Sale
4010 Barranca Parkway Suite 120, Irvine, CA. 92604
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