Are You Getting Underwater?
The law allows banks to secure their loans with what is commonly called a mortgage but is in actuality a “deed of trust.” The deed of trust is exactly what it sounds like. A trust is created to hold the deed to the property. Every trust has three parties. First is the trustor who funds the trust or in this case places property (the deed) in the trust. Second is the trustee who holds the property. Third is the beneficiary who gets the property held in trust. In the trust created by a deed of trust, you agree as trustors to turn over the property to the trustee who will give the property to the beneficiary (the bank) if you don’t make payments on promissory note as promised. You may recall signing the note when you got the loan on your home.
The law provides homeowners protection in the event of foreclosure. It requires certain steps be undertaken before the bank can sell your home out from under you. Specifically, if you fail to make payments (or commit some other breach of the note or deed of trust), the trustee has to give you a Notice of Default (“NOD”). This notice advises you that the trustee contends you have violated the terms of the note by failing to make payments. It also provides you with an opportunity to cure the default.
If you do nothing about the default the trustee will give you Notice of Trustee’s sale. In other words, the trustee is advising you that it is going to sell the property to pay off the note. Typically this is given 60 days after the NOD and the advance notice on the sale is 30 days.
You must act immediately after getting the NOD but in no case may you wait past the trustee’s sale. After the sale, someone else owns your property, and you cannot get it back without re-purchasing. However, before the trustee’s sale you have options and should explore your options with an attorney. There are rare circumstances where you can undo a trustee’s sale. However, it is best not to let your situation get this far.
Many people are enlisting certain “loan modification” companies for assistance with loan modifications on their residences. This is a largely unregulated area of the law and it is the firm’s experience that many people are being ripped off. The Gwynn Law Firm is prepared to give your mortgage an honest look to see if we can help with a modification. The law is changing quickly. You need an attorney on your side to protect your most important asset.
One final word on foreclosure: Once a NOD is recorded it is a matter of public record. Certain companies calling themselves Foreclosure Consultants or some variation of that will contact you about the foreclosure. Typically, the consultants will get involved where there is equity in the property. We highly recommend that you seek counsel from an attorney before agreeing to sign up with a Foreclosure Consultant.