TRUSTEE’S SALES PENDING LOAN MODIFICATION
One of the questions that is frequently asked, is, “If I’m in the middle of a loan modification and have a pending foreclosure, why do I need to file Bankruptcy?” Well the answer is somewhat complicated. In a state like California, where most of foreclosures occur by way of trustee’s sale, as opposed to judicial foreclosure, if you request a loan modification from the lender or its servicing agent, the trustee may continue or postpone the sale date, while your loan modification request is under consideration. That doesn’t mean it puts a permanent stop to the foreclosure process however. While the loan modification is pending approval, a borrower needs to confirm with the lender and the trustee that the sale date has been continued. Many borrowers are falsely misled to believe that the sale date has been continued, only to find out the trustee conducted the foreclosure sale when they get a three day notice to quit posted on their door. The only way to protect yourself is to verify with the trustee in writing that the sale date has been continued. Even if the loan servicer or lender tells you that the loan modification is pending approval, a prudent person will verify it in writing. Documentation that the lender and trustee have agreed to continue the sale date to a date certain is vitally important in the event the servicer does not communicate with the trustee that the sale date is to be continued. If the foreclosure sale is conducted and there is nothing in writing, it’s your word against theirs, and basically, you’ve got an uphill battle to set aside a foreclosure once it occurs. Anyone considering filing bankruptcy to avert a foreclosure sale should plan in advance and prepare to file in case the lender decides to deny the loan modification request, can’t give you a decision, or won’t respond to efforts to communicate regarding the status of your loan modification request or confirm that the trustee’s sale has been continued.