California has led the way in foreclosures since the housing crisis began in 2007. Its state capital is no exception, although data as of mid-2013 indicates a recovery in the Sacramento foreclosure market. As prices for foreclosures rise and lenders slow property repossession, financially distressed homeowners are well-positioned to gain help from their lenders to avoid foreclosure. State legislation and resources can help stop the foreclosure process for Sacramento residents.
Local non-profit agencies approved by the Department of Housing and Urban Development, or HUD, aid Sacramento homeowners by dealing with the lenders and loan servicers on their behalf. HUD-certified counselors can initiate the loss mitigation process on your behalf or intervene if you are having trouble dealing with the lender on your own. Entities in your area that provide mortgage delinquency and default resolution counseling can be located on the HUD website.
Sacramento homeowners can fix their mortgage problems on their own or request assistance form an agent, such as a real estate agent or broker or an attorney. Restructuring your loan's interest rate, terms or payments through a modification allows you to stay in your home. Other options, such as a short sale, also allow you to avoid foreclosure, but you must move out once you sell the home for less than the amount owed. Agents and lawyers may not charge up-front fees for these mortgage assistance relief services, according to the California Department of Real Estate.
As of 2013, state legislation helps protect Sacramento homeowners from foreclosure and facilitates the mortgage-workout process. The California Homeowner Bill of Rights prohibits the practice of dual-tracking by lenders. Lenders can't initiate or continue the foreclosure process until they explore your foreclosure alternatives and decide whether to grant or deny your foreclosure-prevention request. They must provide you with a single point of contact who will assist you until all options are exhausted. It also imposes a fine of $7,500 for lenders that rob-sign, or sign off on foreclosure proceedings without reviewing or obtaining knowledge on your case. The law also empowers homeowners to sue lenders for violating the Homeowners Bill of Rights, maximizing lender expenses for foreclosing unfairly.
As a rule of thumb, contact your lender as soon as you become aware of mortgage trouble. Explain your financial hardship and prepare to supply the lender with details about your income, assets and expenses. The lender must contact you by phone or in person soon after a missed payment and it can't initiate foreclosure until it has reviewed your information and explored all of your options. You can request another meeting after the initial contact, which must take place within 14 days. You have the right to reject any offer the lender comes up with during these meetings.
Karina C. Hernandez is a real estate agent in San Diego. She has covered housing and personal finance topics for multiple internet channels over the past 10 years. Karina has a B.A. in English from UCLA and has written for eHow, sfGate, the nest, Quicken, TurboTax, RE/Max, Zacks and Opposing Views.