Know Your Leverage Before You Talk to the Bank
California law has improved your position — but the rules have gotten trickier. Before you make any decision, before you call your bank, a realtor, or really anyone, understand the leverage you already hold.
Your Leverage Comes From Time — and Time Is on Your Side
The single most important thing to understand about a California foreclosure is this: the bank's investor cannot get your property back quickly. California is a non-judicial foreclosure state, and the timeline — even before the recent legal changes — runs roughly four months. When you add the federal cooling-off period, AB 2424, and the Homeowner's Bill of Rights, that timeline stretches far longer.
That timeline is your leverage. The further away the bank's investor is from actually recovering the property, the more motivated the bank is to work something out with you on terms that protect your credit and your future.
What Gives You Leverage
You're Still Current
If you are still making your payments, you hold maximum leverage. The bank has no urgency to take the property back, and you have not yet damaged your credit. This is your strongest position — protect it.
California Law Protects You
Anti-deficiency laws, the Homeowner's Bill of Rights, and AB 2424 all extend your timeline and limit what the bank can do. Properly represented, these laws keep the property out of the bank's hands far longer than most people realize.
The Bank Wants to Avoid Loss
If forced into foreclosure, the bank's investor waits months to recover a property that may be worth less by then. That real cost is your negotiating leverage — the bank would rather resolve this with you than take the property back.
Why You Should Understand This Before Calling the Bank
Your bank may tell you to stop making payments so they can "evaluate" you for a loan modification. Be careful. Once you go late, you burn through three or four months of your timeline, damage your credit, and may be told afterward that you don't qualify.
This has happened to our clients. The servicer gets paid while the loan is in default, so keeping you in a modification review can be good for them — even if you had little chance of a decent outcome from the start. Your interests and the bank's may not be aligned.
The moment you stop paying, you start giving away the leverage you have right now. Understand your leverage first.
Next: The California Foreclosure Laws That Create Your Leverage
Now that you understand why your position is strong, let's look at the specific California laws and timelines that make it work — and how to use them properly.
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Every foreclosure is different. Get a free, no-obligation review with John McConnin, California Attorney & Broker.
(858) 324-8855