What to do if you receive the summons
First of all you must understand that a summons is only a direction from the court asking you to respond to the claims made by the lender in the lawsuit. It is not an order in favor of the lender to foreclose. The court will pass the order only after hearing you. But to be heard, you must file your response within the specified time period. Unless you are an attorney, do not attempt to answer the summons by yourself. Consult with an experienced attorney. The attorney can review the facts of your case and draft a detailed response to the lawsuit and challenge the lender’s claim.
Extension of Time
You can request the court to extend the time to file your reply. You can do this by submitting the appropriate form to the court. The form is available with the court clerk. You should return the completed form to the court along with the filing fee, if any and serve a copy of the completed form to the lender. A judge will then decide whether or not to extend the time. If your request is granted, the judge will specify the new time period within which you must respond to the summons. Alternatively you could contact the lender’s attorney and request for an extension. If the attorney agrees for an extension, you should get it in writing and file it in the court.
Home Affordable Foreclosure Alternatives (HAFA)
To deal with the increasing number of foreclosures, the government has started a new program called the Home Affordable Foreclosure Alternatives (HAFA). This program provides incentives for lenders to permit short sales or deeds-in-lieu as options for homeowners who wish to avoid foreclosure. Lenders are provided with a servicing bonus of $1000 and a relocation bonus of $1500 per homeowner.
To avail the benefits of the HAFA, you must meet the Home Affordable Modification Program (HAMP) eligibility criteria. The property being foreclosed must be your primary residence and the mortgage must be a first lien mortgage. Your unpaid balance should not exceed $727,750 and your mortgage payments should be more than 31 % of your gross income.
If you receive a notice from your lender that you qualify for HAFA, you must respond to the notice within 14 days. If you do not meet the HAMP eligibility criteria, you must be considered for HAFA within 30 days. The HAFA program started on April 5, 2010. If you want to take advantage of this program, your HAFA agreement must be signed by December 31, 2012.
Full and Final Settlement
Under the HAFA, the lender must accept the proceeds of the sale as full and final settlement of the mortgage and waive the right to collect the balance from you.
Most foreclosures in California are non-judicial foreclosures. In a non-judicial foreclosure, the lender sells the property without court intervention. Once you receive a foreclosure notice, you have until 5 days prior to the sale to pay off the arrears and prevent the foreclosure. The sale is by public auction held on any business day between 9am to 5pm. You can request the sale to be postponed by 1 day. Alternatively, you can enter into negotiations with the lender and request an extension of time to clear the dues.
In case of judicial foreclosure, the lender must file a lawsuit and you will receive a summons from the court specifying the time limit within which you must respond to the lawsuit failing which a default judgment will be passed against you. If you want an extension of time to respond to the lawsuit, you must make an application to the court that issued the summons and serve a copy of the application to the lender. A judge will hear your application and decide if an extension must be granted. You can also contact the lender’s attorney and request for an extension. If the attorney agrees, you should get it in writing and file it in the court.