What is Foreclosure in Los Gatos, California?
Foreclosure is the legal process by which the lender in a mortgage arrangement takes possession of the property (normally a house) that secured the loan. This is done when the Los Gatos, California debtor has repeatedly failed to make their payments. Foreclosure often requires the house to be sold at auction. Often, banks want to get rid of the property as soon as they can, in order to gather as much money as possible, and move on.
In all states in the U.S., including California, there is an option to go through foreclosure via judicial sale, in which a court oversees the sale, and makes sure that the proceeds first go to the lender, and then to any other entities that might have a lien or other interest in the property (in order of priority), and, finally, to the borrower, if anything is left. In many states, mortgages which have not been refinanced are "non-recourse loans." This means that, in the event of default, the bank can take ownership of the house and sell it; but if the sale price happens to be less than the balance of the mortgage, the lender cannot go after the borrower for the remainder. Because of this, some people have found that their best option is to simply walk away from the home if the mortgage is more than the house is worth. You should talk with a Los Gatos, California attorney to see if this state is one of them.
How Can I Avoid Foreclosure in California?
First of all, you shouldn't ignore the problem. You should stay in contact with your bank, and be straightforward with them. Ignoring the issue will not make it go away. It is important to remember that banks don't really want to own homes in Los Gatos. In issuing a mortgage, they expect to make a profit through interest on the loan, and they'd prefer to continue collecting from you. Therefore, they're likely to make reasonable accommodations to your financial situation if it will enable you to keep paying them in the long run.
If no deal can be worked out, or the mortgage payments have become prohibitive, you might consider a "short sale". While the lender has to consent to it, many will take a moderate loss if it means avoiding foreclosure (which lenders typically treat as a last resort). This allows you to sell the house for whatever price it can fetch on the current market, and hand the proceeds over to the bank. If the sale nets less than the balance, some or all of the deficiency might be forgiven. There is also the option of a "short refinance," which forgives a considerable portion of your mortgage debt, and refinances the rest.
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How Can A Los Gatos, California Attorney Help?
If you are facing the possibility of foreclosure, a good Los Gatos, California real estate attorney can help. At the very least, they will be able to inform you of your legal options.