Reasons for California Foreclosure Postponement

In California, foreclosure sales may be postponed per CA Civil Code 2924 g (c) (2). The reasons for postponement are included in 2924 g (c) (1).

The primary postponement causes consist of:

CALIFORNIA FORECLOSURE POSTPONEMENT - MUTUAL AGREEMENT

The most typical reason for postponement is simply because the financial institution agrees to postpone the sale. The loan company may be responding to a homeowner requesting a little more time to sell the property, or the loan company may be doing work with the homeowner on a forbearance or mortgage modification. Homeowners should be aware that when they enter a forbearance agreement, the foreclosure method continues; if they miss an agreed upon payment, the property can be sold on the up coming scheduled sale date with no further notice.

CALIFORNIA FORECLOSURE POSTPONEMENT - BANKRUPTCY

When a homeowner files for bankruptcy protection, it puts an "automatic stay" on the foreclosure and on the collection of all other debts. The bankruptcy does not end foreclosure, as several believe. Instead, it simply delays the purchase of the property till the homeowner resolves the debt. In numerous situations, the financial institution will obtain approval from the bankruptcy court to continue the sale. This is known as an "order granting motion for relief from stay." This motion is granted simply because the debt is "secured" by the property, and the financial institution has the right to take the safety (the property) if the proprietor does not make the payments as predetermined. Bankruptcy is only an powerful tool in opposition to foreclosure if the homeowner will have enough revenue to pay their house loan and make up previous due amounts once the bankruptcy program is completed.

CALIFORNIA FORECLOSURE POSTPONEMENT - TRUSTEE'S DISCRETION

This is when the trustee tends to make a decision to postpone the sale. The most common reason is that they are unable to achieve the financial institution for sale instructions.

CALIFORNIA FORECLOSURE POSTPONEMENT - OPERATION OF LAW

This reason is pretty uncommon, but is used when a court orders the postponement of the sale. The most probably reasons are where there is a plausible allegation of fraud against the financial institution, or there are concerns of material fact relating to the lender's right to foreclose. This reason is gaining recognition with mortgage audits to determine compliance with federal TILA and RESPA laws.

Obama's New Plan To Cease Foreclosures

Changes have been introduced March 26th to the Obama initiative to slow or cease foreclosures by means of the 'Making Homes Affordable' scheme.

This follows the apparent failure of the Treasury Department's flagship 'Home Affordable Modification Program' (HAMP), which has so far efficiently processed much less than 1% of the 1.7 million potentially eligible instances. HAMP has had a negligible effect on stopping forecloses in California.

"The new program to cease foreclosures has measures aimed at the unemployed. To qualify, the loan company has to play ball as well by reducing the loan amount by at least 10%; so it is a government backed 'short sale' initiative to a degree. For more info see this Washington Publish write-up."

In several instances in California, a reduction of 10% in the principal financial debt will not correct the unfavorable equity. That is, even after mortgage modification, the mortgage loan financial debt will be higher than the worth of the home.



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