california foreclosure

[Bernard Alvarez]

interest only loan expires in May. can continue to make payment on home and rental but not making money. both are upside-down. want to stay in house. will continue to pay until i get the feeling they are trying to 'stick' me' while we negotiate. then i will walk away. will not go any more negative with high interest rate. Question: how do i know they are foreclosing under CALIF law?? or can they just show up and evict? what are they required to do about notifying me? i understand they do not(?) need a court order. do they need the sheriff? do they have to notify me with time, etc? also will any payments after expiration of loan be 'principal only'??.. i am 74 and wife is 84...what are my rights?.. thanks..

[Mike G.]

You will have to be delinquent three months before you get the first Notice of Default. The lender then has to wait at least 90 days before filing a Notice of Sale. During this time, you will likely receive numerous mailings telling you that you are delinquent and that the Notice of Default has been filed. Once the Notice of Sale is filed, there must be at least 21 days prior to the trustee sale. So, there is basically a little over 6 months of nonpayment before the house would get sold at a Trustee Sale (AKA courthouse foreclosure auction). In today's reality, it's likely to be a lot longer, but you can't really count on that. But once the house is sold at the Trustee Sale, you do not have a lot of time to move out.

Some things to consider before you get to this point:
- Try contacting your lender to see if you can modify the loan into something more reasonable for you so you don't have to lose the property.
- List the house for sale as a short sale - maybe the bank will agree to let you sell the house for less than what you owe.
- Talk with the bank about the possibility of giving them a deed-in-lieu-of-foreclosure.
- Look for an investor to buy the Note at a discount from the bank, and then agree to give the investor a deed-in-lieu-of-foreclosure.

Note that I am not a lawyer and what I have said here is just my understanding of things; I recommend contacting a real estate attorney to discuss your options. Better to be prepared ahead of time so you can make a calm, well-reasoned decision.

Also, I don't know the details of your loan, but I highly doubt that you would have a loan that goes from "interest only" to "principal only".