When is it too late to save a home from foreclosure? What NOT to do if owner wants to keep the house

Real Estate Agent with Alain Pinel BRE 01367196

This woman called me, clearly in distress. She's losing her house that she felt she shouldn't have bought in the first place. She saw me on HGTV's "What's my house worth" and was reminded that she wanted to talk to me.


When she was looking to buy a house, using money from her 401K as a downpayment, she fell in love with a house. Three times she was turned down by lenders who told her that with her income, she couldn't qualify for a loan. But a third lender told her that she can: with a negative amortization loan.

That was three years ago. When her monthly payments started rising, she couldn't afford to make the payments and stopped altogether.


She said she talked with the lender numerous times, that her case was under review. She made numerous phone calls to the bank and was told the same thing. At no time was she informed she would receive a Notice of Default soon. She made the tax payments, and hoped for the best.

She asked "several" people what to do, but never asked her realtor.

OWNER MOVED OUT (Mistake #3)

She moved out while she was negotiating directly with the bank, thinking that she needed to vacate because she wasn't making her payments. But she continued to talk with the lenders.


By the time she called me about what she can do, I asked her if she received Notices of Default or a Trustee Sale. At first she said she hasn't received any notices (her mail was supposed to have been forwarded to her at her new address).

Then she went to the house ---- and there they were. She did, in fact, receive both a Notice of Default AND a Notice of Trustee Sale. She had no idea they were there considering that the bank had been corresponding with her with letter sent to her forwarding address.


When she called them to protest, and to also tell them she would like to try for a loan modification (as she had tried to do all along), and that if that doesn't work, she'll try to do a short sale, she was told "It's too late. The property had already foreclosed on April 27, and that it would go to auction soon." She was told to go to the website www.IndyMac.com and check out the REO lists --- it's not there. Then she was told it's going to auction and it will be posted later.

Not having seen all her paperwork and notices, I advised her to speak to my company's loan modification specialist to review the documentation and to verify whether or not there is a way to postpone the auction.

However, she cancelled the appointment. She said she is resigned to having her home foreclosed.


 RELATED POST: BULLET POINTS for homewners contemplating a short sale


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Carol Lee
Dilbeck Real Estate - Oak Park, CA
Realtor - Agoura, Oak Park, Westlake CA Homes

I have spoken to several potential short sales, who said they just didn't care, they would walk and let it foreclose.  The banks were not helpful in lowering their rates or payments AT ALL.  It is too bad, and makes me think the banks deserve a lot of what they have gotten, but not the people on the other end.

May 08, 2009 12:29 PM #1
Cameron Wilson
Labrum Real Estate - Murrieta, CA
The Short Guy - Murrieta,Temecula,Menifee Californ

Sad part of this is it happens on almost a daily basis. The department she was dealing with is separate from the department that executes the foreclosure and the communication between the two is non existent until the loss mitigation dept. contacts the other. On the other hand a notice of Trustee Sale is always posted on the front door of the property so the owner cannot use the excuse of "not knowing".

PS: HGTV? I'm impressed!!!!

May 08, 2009 01:27 PM #2
Terry Chenier
Homelife Glenayre Realty - Mission, BC


The more I read the more I understand your system down there-it's complicated!

May 08, 2009 02:10 PM #3
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Carol --- the real tragedy is that this woman really didn't know what to do, how to do it, and who the right person is to ask!

Cameron --- you're right. She honestly thought she was communicating with the proper individuals. Had she stayed in her house, she may have seen the notices. But she said she was receiving letters from them,  and that her mail was forwarded to her sister's house where she was staying. So it's a tragedy of so many errors, and the worst is her error of judgement.

As for HGTV.... I was lucky enough to be contacted to do two episodes for them. That was a lot of fun. And I did get all kinds of emails and calls from friends.

Terry --- it may behoove us to call/contact all the folks we sold homes to and gently tell our clients that if they know someone who is under water with their mortgage, that there are things they can do to save their home, or at least minimize the effect on their credit.


May 09, 2009 08:44 PM #4
JoAnna Jensen
Volo Law & Legal Realty - San Jose, CA


It is very important for homeowners to know that they can stop a foreclosure sale all the way up untill the day before the foreclosure. 

I am a realtor and also a legal assistant.  I think the main problem is homeowners are confused as to how to fill out the paperwork to try and get a modification.  Also, from what I have heard from some realtors it is very misleading to homeowners who are in distress.  Lenders do not want to take homes back, however homeowners either need to be in constant contact with the lender or hire someome with experience in getting restructuring done.

I have stopped at least 5 foreclosures sales, one  within 24 hours of the sale, the other had two weeks before the sale.  This was me doing it by being on top of my job and calling even though I am given 6 differnt phone numbers to call.  As realtors we have to be able to look at a financial situation and know weather it would be approved for a loan mod instead of always pushing a short sale.  When a homeowner has steady income, I truly recomend working with a professional who can help your client keep their home.  You will have a much happier client in the long run that if you short sale a home that the lender will need to reduce more than they would have to if they modified.

It is important to know the Net Present Value of the home.  That means if you modify the home and the owner pays today will they net more money by the modification than if they were to short sale or foreclose.  A lot of the time it is positive for a mod but some people just dont know all of the tools necessary to get this done correctly.


JoAnna Jensen

Legal Assistant  Realtor

Pleasanton Ca

Jan 20, 2010 09:32 PM #5
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Pacita Dimacali

Alameda/Contra Costa Counties CA
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