Are there any California freepers knowledgeable about mortgages?

I know a divorced lady who is upside down in her mortgage. Her employer has also been cutting back her hours and she was late last month making her payment.

She financed through a bank that sold her mortgage in the secondary market to Bank of America. Bank of America refuses to talk to her about renegotiating her loan.

The bank won’t file a notice of default until she’s probably 3 months or so behind, then there’s a 3-month period during which the process simply waits. After the 3 months there will be a notice of trustee’s sale recorded and they’ll publish the pending auction sale for 3 consecutive weeks in her local adjudicated newspaper announcing when and where the sale will be held. She can wait and do nothing this entire time, saving up every penny of every pay check and paying zero in mortgages or property taxes or homeowner’s insurance, HOA dues, etc. Then she can file bankruptcy the day before the trustee’s sale and they’re forced by law to postpone the sale until after the bankruptcy courts have worked through her filing. Later, she can deed a fractional interest in her property to another individual who can also file bankruptcy and further delay the foreclosure.

With an aggressive strategy she can live in her home for more than a year without paying a dime of her mortgage. This should be sufficient time to get her financial house in order and find a quality place to rent. It’s not a solution to keeping her house, but if she’s upside down anyway, it’s probably not a big deal to end up walking away, right?

I'm not a lawyer, but she needs one.

In Florida, there are some attorneys who have had success when the paperwork gets lost in all this "mortgage backed securities" shuffle. In a whole lot of cases, the bank servicing the loan can't produce an actual promissory note and the actual paperwork with the borrowers signature. If that's the case, there are additional steps that the owner can do to get free and clear title to the property.

I'm not saying your friend will be that lucky, but it's something to explore.

Other than that, starting to file for bankruptcy can get the lender's attention. It might be possible to restructure the mortgage or get some concessions through that route. If not, bankruptcy is usually the only real way out.

If she's not interested in living there long term, it's best to find another place to live (a rental home or rental apartment) before she gets very far behind on the mortgage and has credit issues. It's a lot easier to find a rental before you default on a mortgage.

Again, I'm not a lawyer, and this isn't legal advice.

Modify or Refinance Your Loan for Lower Payments

•Home Affordable Modification Program (HAMP): HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more. Click Here for more information.

•Principal Reduction Alternative (PRA): PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home. Click Here for more information.

•Second Lien Modification Program (2MP): If your first mortgage was permanently modified under HAMP SM and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage under 2MP. Likewise, If you have a home equity loan, HELOC, or some other second lien that is making it difficult for you to keep up with your mortgage payments, learn more about this MHA program. Click Here for more information.

•Home Affordable Refinance Program (HARP): If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage. Click Here for more information.

“Underwater” Mortgages

In today's housing market, many homeowners have experienced a decrease in their home's value. Learn about these MHA programs to address this concern for homeowners.

•Principal Reduction Alternative: PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home. Click Here for more information.

•Treasury/FHA Second Lien Program (FHA2LP): If you have a second mortgage and the mortgage servicer of your first mortgage agrees to participate in FHA Short Refinance, you may qualify to have your second mortgage on the same home reduced or eliminated through FHA2LP. If the servicer of your second mortgage agrees to participate, the total amount of your mortgage debt after the refinance cannot exceed 115% of your home’s current value. Click Here for more information.

Assistance for Unemployed Homeowners

•Home Affordable Unemployment Program (UP): If you are having a tough time making your mortgage payments because you are unemployed, you may be eligible for UP. UP provides a temporary reduction or suspension of mortgage payments for at least twelve months while you seek re-employment. Click Here for more information.
•Emergency Homeowners’ Loan Program (EHLP), Substantially Similar States: If you live in Connecticut, Delaware, Idaho, Maryland, or Pennsylvania, Click Here for more information about EHLP assistance provided in your state.
•FHA Forbearance for Unemployed Homeowners: Federal Housing Administration (FHA) requirements now require servicers to extend the forbearance period for unemployed homeowners to 12 months. The changes to FHA’s Special Forbearance Program announced in July 2011 require servicers to extend the forbearance period for FHA borrowers who qualify for the program from four months to 12 months and remove upfront hurdles to make it easier for unemployed borrowers to qualify. Click Here for more information.
Managed Exit for Borrowers

•Home Affordable Foreclosure Alternatives (HAFA): If your mortgage payment is unaffordable and you are interested in transitioning to more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA SM. Click Here for more information.
•“Redemption”is a period after your home has already been sold at a foreclosure sale when you can still reclaim your home. You will need to pay the outstanding mortgage balance and all costs incurred during the foreclosure process. Click Here for more information.

More at link:
http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure

HAMP Fact sheet:
http://www.hud.gov/offices/hsg/sfh/nsc/rep/hampfact.pdf

888-995-HOPE
Hearing impaired: 877-304-9709 TTY

Contact one of our expert advisers today. These HUD-approved housing counselors will help you understand your options and design a plan to suit your individual situation. And there is no cost to you for this valuable service
http://www.makinghomeaffordable.gov/pages/default.aspx

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