How to Stop Foreclosure in Los Angeles, California: Options, Rights, and Available Services

Foreclosure is a legal process initiated by lenders to recover the balance of a loan when a homeowner falls behind on mortgage payments. In California, most foreclosures are non-judicial, meaning they don’t go through the court system. This can speed up the process, so it’s essential for homeowners to understand their rights and options.

If you’re facing foreclosure in Los Angeles, California, you’re not alone, and there are ways to halt the process and protect your home. In recent years, new laws have provided additional protections, including Assembly Bill 2424 (AB 2424). This bill strengthens protections for homeowners at risk of foreclosure, giving more time and options to resolve their situations. Below, we’ll cover your options, services available, your rights under new and existing laws, and how bankruptcy can serve as an alternative if needed.

Understanding Your Rights and Protections with AB 2424

California homeowners now benefit from increased protections under AB 2424, a law that further reinforces California’s Homeowner Bill of Rights (HBOR). Effective as of 2024, AB 2424 offers the following key provisions:

• Enhanced Communication Requirements: AB 2424 requires lenders to make diligent efforts to reach and inform homeowners of their foreclosure status and available options. This includes multiple attempts at contact through various communication channels, ensuring homeowners are informed early on.

• Extended Cure Period: The new law extends the period during which homeowners can "cure" (or resolve) their mortgage default before the foreclosure proceeds. This gives homeowners more time to explore options like loan modifications, refinancing, or repayment plans.

• Mandatory Alternatives: Before initiating foreclosure, AB 2424 mandates that lenders must explore viable alternatives, including loan modifications and forbearance agreements. This makes it more difficult for lenders to proceed with foreclosure without exhausting all other possible solutions.

• Protection Against Dual Tracking: The dual-tracking restriction prevents lenders from pursuing foreclosure while a homeowner’s application for loan modification or other assistance is being reviewed. This protection helps prevent homeowners from facing foreclosure without a fair chance to seek alternatives.

 Options to Stop Foreclosure in Los Angeles

If you’re facing foreclosure, there are several ways to potentially stop the process and keep your home:

• Loan Modification: A loan modification adjusts your loan terms to make payments more affordable. With AB 2424, lenders must prioritize loan modifications and consider them before initiating foreclosure. This could mean adjusting the interest rate, extending the loan term, or even reducing the loan principal.

• Repayment Plan: Some lenders may agree to a repayment plan, allowing you to catch up on missed payments by adding an extra amount to your monthly payments. This option is helpful if you’re temporarily behind but can afford to pay more each month to stay in your home.

• Forbearance Agreement: Forbearance temporarily reduces or pauses your mortgage payments, providing relief during a temporary hardship, such as job loss or medical issues. AB 2424 encourages lenders to explore forbearance options before proceeding with foreclosure.

• Refinancing: In some cases, refinancing may help homeowners struggling with their mortgage. By refinancing, you replace your current mortgage with a new loan that has better terms, which could reduce your monthly payments.

• Short Sale: If you cannot continue making payments, a short sale might be an option. This involves selling your home for less than the amount owed on the mortgage with lender approval. While you won’t keep the home, it can prevent foreclosure and reduce the impact on your credit.

• Deed in Lieu of Foreclosure: This option allows you to transfer ownership of the home to the lender in exchange for forgiveness of the mortgage debt. It’s an alternative to foreclosure but does mean losing ownership of the property.

 Available Services and Resources in Los Angeles

• HUD-Approved Housing Counseling: HUD-certified agencies offer free or low-cost housing counseling to help you explore options like loan modifications and repayment plans. The Los Angeles Housing and Community Investment Department (HCIDLA) can refer you to trusted counseling services in the area.

• Keep Your Home California: This state-run program offers financial aid to California homeowners in danger of foreclosure, including programs for mortgage reinstatement, principal reduction, and transition assistance. The program aims to help Californians stay in their homes or, if needed, transition more smoothly.

• Legal Aid Services: Several non-profit organizations in Los Angeles provide free or low-cost legal help for homeowners facing foreclosure. The Legal Aid Foundation of Los Angeles and Bet Tzedek Legal Services can guide you through foreclosure laws, assist in negotiations with lenders, and help you understand your rights under AB 2424.

 Bankruptcy as an Alternative to Foreclosure

For some homeowners, bankruptcy might be a last-resort option to stop foreclosure. Here’s how it can help:

• Automatic Stay: Filing for bankruptcy triggers an automatic stay, halting all collection activities, including foreclosure. This temporary pause can give you time to reorganize your finances.

• Chapter 13 Bankruptcy: This option allows homeowners to create a repayment plan to catch up on overdue mortgage payments over three to five years, helping you keep your home and avoid foreclosure.

• Chapter 7 Bankruptcy: While Chapter 7 may discharge some of your debts, it won’t stop foreclosure if you cannot continue mortgage payments. However, it can help eliminate other debts, freeing up resources for your mortgage.

Note: Bankruptcy can have long-term effects on your credit, so consult with a bankruptcy attorney or financial advisor to determine if it’s the best choice for your situation.

 Practical Tips for Homeowners Facing Foreclosure

• Stay in Communication with Your Lender: Open communication increases your chances of finding a solution. Avoiding contact can speed up foreclosure.

• Document Everything: Keep records of all correspondence with your lender and copies of notices, as well as proof of payments and other documentation.

• Watch Out for Scams: Scammers may target vulnerable homeowners with "foreclosure rescue" schemes. Always work with HUD-approved agencies and trusted legal services to avoid fraudulent offers.

Conclusion: Protect Your Home with Knowledge and Support

Facing foreclosure is a challenging situation, but with laws like AB 2424, California provides increased protections for homeowners. By exploring your options, understanding your rights, and utilizing available resources, you can take steps to potentially stop foreclosure and keep your home. If you need help understanding your options, I’m here to provide guidance and support to help you through this difficult time.

What You Can Do Next

If you're facing foreclosure, don’t wait until it's too late. California’s new foreclosure laws give you more time, but it's crucial to act quickly. Contact a professional specializing in foreclosure assistance,   who can guide you through your options and help you make the best decision for your circumstances..

Take the first step toward a solution today. Call 818-270-7090 for a free, no-obligation consultation. Together, we can  find the best way to protect your home and secure your future.

Betty Ortiz I Realtor, SRES, ABR, Relocation 

Direct (818)270.7090

HomeSmart Evergreen Realty  - 18860 Nordhoff St, Northridge, CA 91324