When a California homeowner has financial problems, they may find it difficult to make mortgage payments. In some cases, a cash-strapped homeowner may decide to sell their home as a way of getting out from under oppressive debt. This option could work; however, there are conditions under which it may not be possible.
A homeowner who is behind on mortgage payments can attempt to sell their home up until the lender decides to foreclose. In many cases, this is around the 120-day mark of delinquency. After that time, selling the home may not be possible and foreclosure can represent the loss of the home and significant damage to the homeowner’ credit score.
Another issue that may prevent a sale to avoid foreclosure is the appraised value of the residential property. If a home is underwater, which means that the value of the home is less than the balance of the mortgage, a homeowner will have to seek approval for a short sale from the lender. This means that the home can be sold for less than the value of the mortgage with the lender absorbing the difference. Many banks are unwilling to approve a short sale or may add so many conditions that it is not financially feasible for the homeowner to comply.
To prevent foreclosure, some homeowners may try to work with the lender to receive a forbearance to catch up on payments. Another option is a loan modification, which eases the terms of the loan to make payments more affordable. A homeowner in financial difficulty may benefit from seeking the advice of an experienced real estate attorney who could recommend the sale of a home or taking some other type of corrective action.