How to Stop Foreclosure in California on a Mortgaged and Refinanced Home

If you have refinanced your California home to reduce your monthly mortgage costs and you still cannot afford your mortgage payments, you may be at risk of foreclosure. This is a process in which a lender exercises its right to sell your home as collateral under a defaulted loan. Unlike in many other states, a lender in California does not have to involve the courts in foreclosure proceedings, so it can complete the foreclosure quickly -- typically within four months of issuing a notice of default. If your lender is contemplating foreclosure, several strategies can help you stop this action in California.

Instructions

1

Pay the lender the entire past-due amount, plus any late fees and other related costs, within 90 days after your lender issues a notice of default. Paying all past-due amounts and costs cures the default, which stops foreclosure proceedings in California.

2

Contact your lender to ask about repayment arrangements. Your lender may accept repayment of past-due amounts over a period of several months, or may grant a forbearance of payments to allow you time to overcome a short-term financial obstacle. Have your pay stubs, monthly bills and documentation of other expenses ready when you call -- your lender will need income and expense information to determine if you are eligible for a repayment plan or forbearance.

3

Ask your lender about a mortgage modification under the Making Home Affordable Program. A mortgage modification can reduce your payments by extending your loan terms, reducing your interest rate and absorbing past-due amounts into the balance of your mortgage loan. Your lender will typically suspend foreclosure proceedings pending approval of a mortgage modification.

4

Contact your lender to inquire about a deed in lieu of foreclosure. This strategy involves surrendering the title to your home instead of simply allowing the lender to complete the foreclosure. In some cases, the lender may be willing to lease the property back to you, allowing you to remain in the home; however, not all lenders will accept a deed in lieu of foreclosure or assume the risk of leasing the property back to you.

5

Call a California bankruptcy attorney to determine if bankruptcy is the right strategy for you. A bankruptcy filing will stop foreclosure proceedings in California. Whether you get to keep your home depends on the type of bankruptcy you choose -- in a Chapter 13 bankruptcy, you agree to make affordable payments to your creditors, which may allow you to remain in your home; in a Chapter 7 bankruptcy, all of your nonexempt assets, which include your home, are liquidated to pay your creditors.