Q: How Does A Foreclosure Work?
A: We get a lot of questions about how the Foreclosure process works… or what can I expect to receive from the Mortgage Company and when? We will try and walk you through the process to hopefully help you understand what is going on and what might happen. We don’t have all of the answers and each case may be handled a little different, but we have done this for a long time and this is how a foreclosure will typically take place.

This is the process the foreclosure will follow in a judicial foreclosure state. At anytime in this sequence, before the sheriff’s sale date, this process can be stopped or postponed.

What is “Notice to Accelerate”?
A: Once you miss your first payment the foreclosure process will begin… you will receive letters-form the Mortgage Company telling you that they have not received your payment and please remit immediately. These types of letters will continue for 2-3 months if no payment is made. Once you reach the 60 day past due point you will receive a Notice to Accelerate from them. This will demand payment to bring the loan current. At this point they will not accept a partial payment… you must pay the entire delinquent amount plus any late fees. They will threaten you by saying if you don’t pay by a certain day they have the right to accelerate the due date of the loan and initiate the foreclosure. They will also tell you if they accelerate the loan attorney fees will be added to the delinquent amount.

What is “The Demand Letter”?
A: If you do not respond with a payment by the date the mortgage company established in the notice to accelerate letter they will hire an attorney. The attorney will forward you what is called the demand letter. This letter is formal notice that if the loan is not brought current medially the foreclosure will be filed with the court system.

What is “The Notice of Default”?
A: If you do not respond to the demand letter to the attorney for the mortgage company will file the foreclosure with the court… this is called a notice of default. This Court document you should receive will list the entire debt amount that needs to be paid. It will also give you 20 to 30 days to respond to this judgment notice.     Click here to see a sample Notice of Default Letter.

What is “The Notice of Sale”?
A: If you do not respond to the notice of default after the 20 to 30 day period has expired; the attorney will file a notice of sale. This notice of sale will set a sheriff’s auction date where your house will be sold at auction.  Click here to see a sample Notice of Sale.

What is “Non-Judicial Foreclosure”?
A: Non-judicial foreclosures allow the bank to skip the step of going to court in some states. The mortgage documents include a “power of sale” clause giving the lender the automatic right to seize and sell the home when payments are not made.

In such cases, when the home owner doesn’t pay up on time, the bank can automatically take the house. Usually, they send notice to the homeowner that they are doing so, while simultaneously listing the house for sale in a foreclosure auction in the newspaper.

Q: How long does The Foreclosure Process Usually Take?
A: Here is a great resource that shows the exact timelines for foreclosures for each state: http://www.foreclosurelaw.org

Q: Does filing bankruptcy work to stop a foreclosure?
A: Having an attorney file bankruptcy can help you to stave off foreclosure for awhile. The attorney will tell you that they’ll stop the foreclosure process. They want all of the money up front and the average price is $2,500.00 minimum. Yet it only costs you about $300 to file your own bankruptcy. Then most attorneys don’t tell you up front that you’ll have to appear in court (this would frighten most people). Yet in about 3 months, you’ll have to go to court. This is to keep the bankruptcy valid and to reinstate your mortgage payment.

The attorney then reinstates your exact same mortgage payment and then adds on top of it the amount that you’re in arrears. This is called the “monthly catch up payment”. They generally structure this over a 5 year period. So generally you end up paying a higher monthly mortgage payment than you were paying in the first place.

* For example the average homeowner is $30,000 or more behind in their payments. So they divide $30,000 over 5 years, or 60 months, which works out to be $500 month. This is in addition to your monthly mortgage payment. Then they add in any additional court costs on top of that. So, while they may have stalled your foreclosure date for several months with the proceedings, you ultimately wind up with a higher monthly mortgage payment.

And finally, once the attorney files bankruptcy for you to stop the foreclosure, they can’t do it again for several years.

Q: Can’t I simply sell my home (short sale) to avoid foreclosure?
A: Selling your home can be a viable option for you. The current market conditions don’t make it easy though. When you speak to a Realtor, they’ll usually tell you to “short sell” your home. As you may have discovered, most homes don’t get sold. Houses simply sit on the market for months without even getting a single offer. Add to this, that the banks are very reluctant to lend money. Also, they make it very difficult for people to even get a mortgage nowadays. So the houses just sit on the market and eventually get foreclosed on.

Q: I heard loan modifications are the best way to prevent a foreclosure. Is this true?
A: Here’s a direct quote from the news to answer this one: “45 percent of loan modifications end up costing the borrower a HIGHER monthly payment. That’s with late fees, penalties and adding unpaid amounts to back of mortgages. The amount owed grows and pushes up the monthly payment for people who were in trouble with the payment in the first place. And this explains why half of last year’s modifications ended up with re-defaults” - Paul Leonard, California Director, Center for Responsible Lending. Click here for more information

Q: Can’t my bank help me?
A: Sure the bank can help you by approving a loan modification for you. If you call that help! Most banks use a method called NPV formula to determine the Investor benefit of whether it is in their best interest to foreclose on you or provide you with a Loan Modification. So there is never any guarantee that you will receive approval for any type of Loan Modification. Click here for more information

Problems with a Loan Modification:

1. The borrowers will think they are modifying their current loan when in fact they are starting all over again.

2. The Foreclosing entity which lacks standing to bring lawsuit, is not authorized to modify anything since they are not the owner of the loan in question.

3. Since the real parties in interest are nowhere to be found, they are taking it upon themselves with the help of their lawyers to steal your property.

4. The borrower is actually getting a new loan which may enjoin borrower from rescinding new transaction.

5. The foreclosing entity is STILL not using their funds to modify (new loan) loan. They are getting funds to lend borrowers through Federal bail outs, insurance proceeds and believe it or not Investors. [same process]

6. Their lawyers are not acting in a lawyer’s capacity but as BROKERS; [middlemen] they are getting paid commission on every new loan they help brokered.

7. What Does Loan Modification Mean?
A modification to an existing loan made by a lender in response to a borrower’s long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default.

8. Why would they need to re-qualify if they claim they would make the borrowers payments and rates to be less?

9. The borrower took the loan out with lender “A” but an unknown lender “B” is trying to modify it.

10. When the modification is said and done, the borrower will have lender “B” as the lender. What happened to lender “A”?

Q: What is a trust?
A: A Trust is a legal entity that can hold title to property for the benefit of one or more other persons or entities. The person who sets up the trust is called the Creator (also known as the Grantor, Trustor, Donor, or Settlor).

The person or entity that controls the Trust and is responsible for managing the Trust assets is called the Trustee (you). The Trustee holds the legal title, but not the full title, to the property that is in the Trust. This means that the Trustee can only use the assets and proceeds from the Trust property for the benefit of the people the Trust is set up to benefit (your beneficiaries), never for his or her own profit.

The persons who are intended to benefit from the Trust are known as Beneficiaries. Beneficiaries own what is called the equitable title to the property held by the Trust. This means that they have a right to have the assets used for their benefit in the way directed by the Trust provisions. You select whoever you want to be the beneficiaries of your trust (your children, parents, friends, family, etc.).

These parties to the Trust need not be different people. It’s possible in most states to be all 3 at once. Historically courts concluded that there was no need for a Trust when the Trustee was also the Beneficiary. (The legal and equitable titles were said to have “merged.”) However, now, in most states, if it is done right, a Trust Creator may establish a revocable Trust, serve as the initial Trustee and be able to obtain immediate benefits as a Beneficiary from Trust property.

The property that is transferred to a Trust becomes the Trust estate (also called the Trust corpus, Trust res, or Trust principal). A Trust estate consists of all of the property, rights, and obligations that are transferred to the Trust.

The Trust estate is managed in accordance with the terms and conditions of the document creating the Trust, which is called the Trust agreement or declaration of Trust. This document sets out the purpose of the Trust, the identities and powers of the Trustees, the names of the Beneficiaries, how the Trust assets should be managed, and how they should be distributed to Beneficiaries.

Trusts can be “inter vivos,” (set up during the Grantor’s lifetime). This means that the Trust comes into being and functions while the Grantor is still alive. A Testamentary Trust is set up by a Will and does not come into being or begin to function until after the death of the Grantor.

Trusts are also revocable or irrevocable. This means just what it sounds like; a revocable Trust can be revoked and the Grantor can reclaim the Trust assets. An irrevocable Trust can’t be revoked once it has been set up. The Grantor can arrange to be the Beneficiary of an irrevocable Trust during the Grantor’s lifetime, but he or she cannot take the trust assets back again.

Q: Can you work with clients in every state in the US?
A: Yes. Our proven strategies work effectively in most of states.

Q: How long do I have to decide?
A: You must get started no later than 10 business days before your sale date. We can stop the sale even up to 2 business days before yet if you wait until less than 10 business days, you’ll have to pay an additional $1,000 to $1500 for RUSH service.

Q: Do your strategies also work on investment properties?
A: Yes.

Q: Are you a law firm or accounting firm?
A: No. Home Recovery USA, dba of KHK88, LLC, a California Limited Liability Company, is not a Governmental agency, law firm or accountancy firm and makes no such representation to be such. Borrowers should seek legal representation or guidance for any questions.