A few more days on March 16 and the Official release date of our new blog on Coping With Upside Down Loans: A Legal Perspective

If you or anyone you know is faced with losing their home, the information available on this site is a must read.

Plus you’ll find unique resources such as Steve’s e-book, Coping with Upside Down Real Estate: A Legal Perspective

Understanding Your Options – Forced Remedies

There are two types of forced remedies for an Upside Down Mortgage, Foreclosure and Bankruptcy.

Foreclosure:

In California, there are two types of foreclosure, judicial and non-judicial.  For the most part, these two types of foreclosure are used nationwide, although some states may only employ one or the other.  Non-judicial foreclosure (also called “trustee’s sale) is a fast track program taking as little as 111 days (in CA).  It starts with recording a Notice of Default which gives the borrower 90 days to cure the default. If not cured, the lender will record a Notice of Sale. If the default is not cured in the next 21 days, the will sell the property to the highest bidder which in today’s market is generally the lender.

In CA, no deficiency judgment can be obtained if the foreclosure price is less than the amount owed.    If a lender wants a deficiency judgment, they will have to use judicial foreclosure which is a lawsuit in the courts.   This can take 18 months or more and  CA provides a one year right of redemption.

So the practical reality is that unless the loan is on some major property like an office building, a lender is not likely to seek a judgement when they foreclose your home or duplex.

Bankruptcy:

This is protection that the Federal courts can give an upside down borrower and there are two types for individuals: Chapter 13 to get a payment plan and hopefully keep your assets, and Chapter 7 in which you get rid of your debts and get a chance to “start over”.

The critical thing to remember about bankruptcy is that once a debtor files for Bankruptcy protection, and automatic stay becomes affective stopping foreclosures and evictions and any other adverse action. Congress is debating allowing BK Chapter 13 judges to reduce principal amounts owed on upside-down home loans.

As I write this, the House has approved the measure and it is now being considered in the Senate.  Watch our Blog for further news.

Update : Many people are turing to an Upside Down Mortgage Refinance 2009 for their Upside down mortgage relief.  There are plenty of no closing cost refinance options out there so take a look and see what you find.

Are you facing Involuntary Remedies?  Tune in tomorrow for more.
Need help now?  E-mail Steve at sjbeede@bpelaw.com.

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