HUD Articles
All Things Real Estate: Paying mortgage only way to keep house from foreclosure
February 01, 2020
By: Tim Jones
Q: I went to a wealth seminar that, in part, talked about how to protect your property from foreclosure. One of the things the speaker stressed was the need to file a homestead on your property. They said you can stop a foreclosure by filing a homestead on your house. I’m currently several months behind in my house payments and I want to try to stop the foreclosure and keep my house, so I need to file my homestead right away. Is this something I need a lawyer for?
A: Nope, you can do it yourself. But first, let’s back way the heck up.
It’s interesting that it was a “wealth seminar” that didn’t seem to have enough confidence in their material to get you money to pay the mortgage rather than risk foreclosure.
But moving on, I hope you didn’t pay a lot of money for this seminar. If you paid anything, you got ripped off. Almost all of the information in your email is wrong, at least in California.
The term “homestead” means vastly different things in different states. In some states, it implies that you found a piece of ground and lived there for long enough that the law will now consider it your property. In other states, a homestead may protect you from foreclosure, but I don’t know for sure.
What I do know for sure is that it won’t protect you here in California.
So let’s talk about homesteads.
We have two types of homesteads in California.
One is automatically attached to your primary home as a matter of law. There’s no need to file or record anything. It does nothing to protect you from your mortgage holder foreclosing on your home.
The limited protection it affords only comes into play if a judgment creditor records a lien on your home and then tries to foreclose. The judgment creditor could be your credit card company, somebody who successfully sued you or anybody else you owe money to. They can get a judgment and turn that judgment into a lien on your house. The judgment creditor can then foreclose and sell your house.
But, with the statutory homestead protection, a certain amount of money above and beyond what it takes to pay off the mortgages is protected. That amount can vary from $75,000 to more than $175,000, depending upon age, marital status and disabilities.
Any money over the homestead protection amount will go to the judgment creditor. So if the equity in your property is low, the judgment creditor probably won’t foreclose anyway. But you automatically have this protection on your primary residence.
Recording your own homestead certificate offers the same protection if you voluntarily sell your home. The statutory protection applies when a judgment creditor forecloses, while the voluntary homestead protects you if you choose to sell the house.
With the latter, you must reinvest the protected money into a new home within a certain period of time, which is going to be difficult with a recent foreclosure on your credit report.
But remember, none of this has anything to do with your mortgage company! They can foreclose and you can get zip.
Look, the only real way to keep your house out of foreclosure is to pay your mortgage. That might mean getting the bank to restructure your loan, though it’s a long shot.
Filing bankruptcy delays the foreclosure for a few weeks, but that’s about all.
There’s no magic process that lets you fail to pay your mortgage and still keep your house, at least not in California. But that doesn’t seem to stop people from charging admission to seminars that sell little more than false hope.
Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column, you can send an email to AllThingsRealEstate@TJones-Law.com.
