Thank you for your interest and I have some not so good news for you in California in regards to forbearances and Loan (Mortgage) Modifications. The definition of Forbearance is a formal agreement by the mortgage company to "forbear", or stop moving forward with the foreclosure process on a defaulted home loan, the mortgage company will agree to reinstate the loan. Forbearance allows a homeowner to keep their home by temporary increasing their mortgage payments for a period of 6 – 18 months together with a portion of their arrearage paid up front. Once the arrearage is paid the mortgage payment drops back down to their regular monthly payment. Loan Modification requires a bank to rewrite all loan documents. There are 2 main types 1. Increased Payment, Same Term. The arrearage is added to the loan balance and the payments are recalculated. Monthly payments are increased and do not go down. Advantage is that the homeowner does not have to come up with a chunck of the arrearage. Homeowner works on credit and refinances for better rate. 2. Increased Term – Same payment, pretty self explanatory. California issue (not like other states) a. [California Civil Code 2945(c)(1)]b. [California Civil Code 1695 – 1695.17]Law defines consultant as person who offers or performs for compensation any service for a homeowner in foreclosure, which person represents will, in any manner1. Stop or postpone foreclosure sale2. Get mortgage holder agree to a forbearance;3. Obtain an extension of period for owner to reinstate mortgage;4. Obtain a waiver of any acceleration clause, making loam immediately due in full if homeowner is delinquent on payments; or5. Save the owner's residence from foreclosureBasically if a foreclosure consultant contracts with a homeowner to obtain a forbearance and then ends up doing a short sale it is a violation of the law and the homeowner can bring suit within 4 years of purchase. There are very serious fines including mandatory punitive damages equal to at least 3x the owner’s actual damages, including the value of any lost equity. There must be a complete separation between company that tries to negotiate a forbearance deal and the person or company that buys the homeowners property in default if the forbearance can not be obtained.
