Just a quick question. I have already sent an e-mail to my broker and will be meeting with them tomorrow to discuss. In the meantime I wanted to get some input. I am located in California and I have a client that wants me to list their house and sell it. The situation is that they just found out that the foreclosure process has begun. They have not received any letter. I think they had called the lender and found out that way. At this point they would like to avoid foreclosure. If they could sell the house and pay it off, that would be great. My question is once the notice of default is issued the borrower has 3 months to become current or they can have a Realtor sell it for them. Right? Are there any special forms I need aside from the standard forms?

If they could sell the house and pay it off, that would be great. My question is once the notice of default is issued the borrower has 3 months to become current or they can have a Realtor sell it for them. Right? Are there any special forms I need aside from the standard forms?

They can list there property at anytime up until the foreclosure sale,the banks do not own the property they just hold the paper on it.Whether they could get out of it without a loss is another story.You need to do your cma and get the current payoff from the seller or the lnder with written authorization from the seller to see what is owed.

Then after doing your cma you will see if it is realistic to payoff the loan or if you are looking at a short sale,there will be many ,many factors involved.Including possible defeciency judgment against the seller,Liens and judgement that have to be negotiated down to make the sale work,any redemption periods.

Best advice talk to your broker and hopefully they have done one of these before,this is primarily most of what i focus on and it does get involved.

If it is a possible short sale,what type of loan it is will have a huge impact on the options available,all banks and lenders are different with there workout options.You need to find out if this is an fha,va,or conventional backed loan and if it is conventional is this a insured or non-insured loan.

I just closed a listed short sale on Monday. Be aware the forclosure process still runs if you have it listed. In California talk to your broker about short sales. There are so many unique laws in Ca. that you may need to have everyone talk to someone that has experience in your state.

For a CA nonjudicial foreclosure, the homeowner can stop a foreclosure sale up to five business days prior to the sale by curing any deficiency plus costs. Taxes, insurance, and any senior liens must also be paid current. And of course any recurring payments owed but not shown on the notice of default must also be paid. Anything shorter than 5 days prior to sale, the homeowner can only stop the foreclosure by paying off the entire loan owed to the foreclosing lender plus foreclosure costs.

By the way, if an unrepresented investor buys the home (non-owner occupant) prior to the foreclosure auction, you'll need CAR forms NODPA, HEAA, BNA and possibly TBA if appropriate. A CA licensed agent cannot represent an investor purchasing a home that is in default because the bond required by statute is not commercially available.

Be sure to fully document all of your marketing efforts so that you don't expose yourself to a claim later that the home didn't sell and the equity was lost due to inadequate marketing, etc.

And as mentioned by super realtor, if projected sale proceeds won't cover liens and sale costs, you need to get authorization to discuss and arrange a possible short sale with the lender.

Step 1 (after talking to your broker, you will want someone experienced helping you) is to get the Letter of Authorization. The lender cannot and will not discuss anything w/you otherwise.

Next step is to contact the lender, introduce yourself and see if they are open to discussing short selling. The lender may have a package of paperwork for you.

Or they may tell you to get lost until you have a signed purchase contract.

What I think people have trouble with is understanding that there is no Universal Truth about lenders tho I see plenty of postings on boards that suggest otherwise.

IOW each lender is different and has a different temperament about foreclosures. I just saw one lender foreclose as a new lender was desparately trying to pay the loan off w/refi $. Others will bend over backwards to avoid fc.

Try also not to take the fc people personally. They are basically debt collectors and not necessarily the friendliest of folks.

I would also STRONGLY recommend that you advise your seller (in writing) to seek legal and tax advice from a qualified xpert. Tho Cali is an anti deficiency jurisdiction, that is only true for purchase money DOTs. If the lender is fc-ing on a refi or HELOC, the possibilty of a deficiency judgement is there down the road.

And the client really needs good tax advice. If there is a short sale or deed in lieu, the lender will 1099 the amt of debt that gets cancelled and the borrower gets tax liability for it.

Short sales are tough. Good luck. And be prepared to give up some comission to make it go.

Also if a NOD was filed, you also must disclose such in your advertising and in the MLS. Check with the title company.

Again your state and local board will likely have rules about this, your broker should know.

It may or may not be required to be disclosed in the MLS, I've known sellers to get very upset about this altho once the NOD is filed, it's public record. If there is a chance of a short sale, I definitely put that in the MLS to give other agents the heads up.

Here in Cali, once the NOD is filed it is a property *in foreclosure* and the rules change. And we have a really bizarre rule that I recall being posted here before.