Information for Homeowners Facing Loss of a Home

Can a lender sell my property?

If you bought a home and signed a deed of trust giving a lender a security interest in your property, the lender can start a process to take legal action to sell the property at a Trustee's Sale. The legal process can be started if you are in default - if you do not do what you agreed when the loan was given. Usually this happens if you are behind on your payments. It also could happen if you fail to pay your property insurance or real estate taxes on the property or don't maintain the property.

What must a lender do to sell my property?

1. The lender will make a demand that you make your payment. Usually this is required in the agreement.
2. If the lender sends this notice by certified mail, the process of forcing sale of your home can continue even if you refuse to pick up the certified letter.

What can I do to prevent the sale?

1. If you can afford to get up to date on your payments, it is best to do this as soon as possible. If your lender has to take other legal steps, you will end up paying for all of the costs, so it is better to try to stop the process at this point, if you can afford to catch up.
2. If possible, work out a plan to catch up on your payments. Contact the lender to see if you can reach agreement about how much you will pay and when to catch up.
3. Be sure that any repayment agreement is in writing. Send a letter saying that you confirm that they have agreed to accept payments and what amounts and dates the payments will be made. Be sure to make the payments on time that you agreed to make.
4. If possible, get additional funds to be able to catch up on your payments. Some people are able to borrow from relatives. Others arrange roommates or are able to have someone in the family get an additional job to increase income so they can afford to get caught up.
5. If you have a VA loan, it is especially important that you attempt to work with the VA to avoid possibly being responsible for the full loan amount even if your house later sells for less than you owe and to see if you can remain eligible for a VA loan in the future.

What if I don’t get caught up on payments?

1. The lender can start plans to sell the home by recording a Notice of Trustee's Sale & Substitution of Trustee with the County Recorder's office This Notice sets the date, time and location that the Trustee's Sale of your home will take place.
2. You should receive a copy of this Notice of Trustee's Sale and a Statement of Breach by certified mail.
3. This Notice MUST give at least 90 days between the date the notice is recorded and the date the sale will happen.

What can I do if I can’t get caught up on payments?

1. Talk with a lawyer to find out more about your options and get advice. You may be able to hire an attorney to advise or assist you.
2. If you have low income and are eligible for free legal assistance, contact a legal aid organization in your county.
3. If you are not eligible for free advice and do not know a lawyer, you can contact the Lawyer Referral Service of the County Bar Association in your county. There is a small fee for a half-hour consultation.
4. Do not pay money to someone else to negotiate for you with your lender. Some people take your money and make promises that they don't keep.

After I receive notice of a trustee's sale, what are my options?

1. Pay the amount that you owe if you can pay the full amount including back payments, late charges, penalties and trustee fees before the date of the Trustee's Sale.
•  Ask in writing for the "reinstatement" amount and keep a copy for your records.
• Send the amount by certified mail, return receipt requested (arranged at the Post Office) so you can prove that you sent the money and that the lender received it.
•  IF YOU PAY ALL THAT YOU OWE, BE SURE THAT YOU HAVE IN WRITING FROM THE LENDER AND TRUSTEE THAT THE TRUSTEE'S SALE HAS BEEN CANCELLED.
• If you have trouble getting the lender to tell you the exact amount that will be due on the date you can pay it, there are steps you can take to find out this amount and complain if the lender refuses to give you the information you need.
• The Volunteer Lawyers Program or a private attorney can help you if you can afford to pay the money and can't get the lender to tell you the exact amount you owe.
2. Refinance, if you can qualify for the amount you owe including the past due mortgage payments.
• Contact several mortgage companies to see if you can qualify.
•  It can be difficult or impossible to get refinancing if you are behind on your payments (in default) already.
• DO NOT AGREE TO A SHORT TERM LOAN AT HIGH INTEREST WITH PAYMENTS TOO HIGH FOR YOU TO AFFORD.
•  If you are able to refinance, the arrangements need to be made and documents signed and your lender paid before the date that the Trustee's Sale is scheduled to happen.
3. Sell the home yourself before the date scheduled for the Trustee's Sale.
• If your home will sell for significantly more than you owe, this option can allow you to pay off the mortgage and costs and also get some money you can use to arrange another place to live and pay moving costs.
4. File a Chapter 13 Bankruptcy, if you have enough income to pay your regular payments and also pay your back payments during a period of years.
• IF YOU ARE CONSIDERING THIS OPTION, CONSULT WITH AN ATTORNEY WHO IS IN GOOD STANDING WITH THE STATE BAR (CHECK AT 602-252-4804) AND HANDLES CHAPTER 13 BANKRUPTCY CASES.
• If you qualify for this type of bankruptcy, the bankruptcy papers need to be filed with the bankruptcy court before the date and time set for the Trustee's Sale.
• IF YOU FILE A BANKRUPTCY THAT POSTPONES THE TRUSTEE'S SALE AND THE BANKRUPTCY CASE IS LATER DISMISSED, THE TRUSTEE'S SALE CAN TAKE PLACE LATER, AND YOU WILL NOT BE ENTITLED TO BE NOTIFIED AGAIN ABOUT THE TRUSTEE'S SALE.
5. If you cannot use any of the options above -- catch up on your payments or refinance or sell the home or qualify for a Chapter 13 bankruptcy-- the lender can proceed with the Trustee's Sale as scheduled.

What can I do after my home is sold at a trustee's sale?

1. Make arrangements to move.
1. After the Trustee's Sale, the home belongs to the lender or whoever bought it at the sale.
2. The new owner has a right to have you move out so they can use the home.
3. See if you can get the new owner to agree to rent the home to you. Sometimes this is possible.
4. See if the new owner will agree to give you a little more time to arrange to move. There is no legal requirement that the owner do this; but sometimes it is possible, especially if you agree in writing to leave by a certain date and not require them to go to court to evict you.
5. Expect the new owner to give you a Notice to Vacate and then file a Forcible Entry and Detainer action in court to have the court order you to move out.
• This increases costs for the new owner, who can ask that you be ordered to pay them.
• If you receive this notice, we recommend that you go to court at the time set for the court hearing even if you already have moved out.
• If possible, be sure that all of your belongings are moved before the court hearing or at the very latest before the date that the judge orders that the "writ will issue" (usually 5 days after the hearing).
• If you have not moved by the date that the writ issues, the new owner can have the constable or sheriff come to remove you that day and is not required to give you any more time to move.
• If this happens, you may have additional difficulties and expense.

ADDITIONAL INFORMATION