Valid Vendor Services llc

Introduction
This guide contains useful information for homeowners in financial
distress who struggle to pay their monthly mortgage loan payments
(principal and interest, property taxes, and homeowner’s insurance
premiums). Regardless of whether these items are lumped together
into one monthly payment or paid separately, the result is the same.
Homeowners are obligated to make these payments and many face
challenges in doing so.
For example:
• Your monthly mortgage payments may have increased because
of an upward adjustment in the interest rate. Adjustable Rate
Mortgages can and do adjust automatically, as described and
disclosed in your original loan documents.
• You may be unable to meet your monthly mortgage loan
payments because of unforeseen circumstances such as losing
your job, reduction of income, or getting sick.
• You may be going through a “divorce” and your partner wants
to walk away from your home and your monthly mortgage loan
payments.
• Your monthly mortgage loan payments and income may be
unchanged, but the value of your home has decreased to the
point where you owe more than the value of your home.
Regardless of your particular situation, if you are unable or unwilling to
meet your monthly mortgage loan payments, you face the probability
of foreclosure.
When you purchased or refinanced your home, you borrowed money
from a lender. The lender is entitled to repayment according to the 7
financial terms described in your mortgage loan documents.  If you miss
your mortgage loan payments, your lender can cause your home to be
sold to pay off your mortgage loan. This procedure is called foreclosure.
While going through foreclosure is an overwhelming experience, the
last thing you should do is nothing. This guide was prepared to help you
understand the potential alternatives or options to foreclosure so you
can actively participate in finding the best possible solution for your
mortgage loan situation.8
Definitions of Some Terms Commonly Used
Adjustable Rate Mortgage (“ARM”):  A loan with an interest rate that
changes at defined intervals based on increases or decreases in a
specified published index.
Assignee: A person who purchased the interests of and replaced the
lender identified in the promissory note and deed of trust (the mortgage
loan documents) and who becomes the holder of the promissory note.
Recording the assignment from the lender to the assignee is required.
The recorder of the county where the property described in the deed of
trust is located will record the assignment.  
Cash for Keys: Money received from the lender or its servicing agent to
assist you in moving from your home upon
request following the foreclosure sale.
Collateral Action: An action brought in court
by a lender against the homeowner for loss
or damage to the home, whether caused
or suffered by the homeowner (waste) or
damages that may arise from the alleged fraud of the homeowner.
Credit Bid: The ability of the lender to direct the trustee to bid at the
foreclosure sale up to the total debt owed to the lender without
advancing money.
Deed: A document (instrument) by which ownership of and title to a
home is transferred from one person to another.
Deed-In-Lieu: A document (instrument) executed by the borrower
conveying title to a lender in lieu of the lender proceeding with
foreclosing on the borrower’s property.9
Deed of Trust: A document (instrument) when recorded that makes the
property described in the deed of trust the security for the repayment
of the mortgage loan. This document identifies the borrower as the
trustor, the lender as the beneficiary, and a third person as the trustee
authorized by the borrower and the lender to perform defined activities.
Equity: The estimated amount by which the then fair market value of the
property exceeds the total amount of mortgage loans and other liens
recorded against its title.
Equity Purchaser:  An investor purchasing owner occupied residential
property to rent or resell when the home is subject to an active Notice
of Default (NOD).
Eviction: A court supervised procedure initiated by the owner to remove
from the property persons who are in possession of the property.  
FHA: Federal Housing Administration
FNMA: Federal National Mortgage Association (also known as “Fannie
Mae”).
FHLMC: Federal Home Loan Mortgage Corporation (also known as
“Freddie Mac”).  
Fixed Rate Mortgage (“FRM”): A mortgage loan with interest fixed at a
prescribed rate (for example, 6%) for the duration of the loan.
Foreclosure Consultant: A person who for compensation offers to
perform services to assist a homeowner of owner-occupied residential
property subject to an active NOD to (among others) stop or postpone
the foreclosure sale, obtain a delay or forbearance from the lender,
assist the owner when reinstating or curing delinquencies, help
the homeowner to avoid damage to their credit rating, or assist the
homeowner in obtaining any remaining surplus funds or net proceeds 10
from a foreclosure sale in excess of the amounts owed in accordance
with the terms of the mortgage loan.  
Judicial Foreclosure: A foreclosure sale conducted under the supervision
of a court requiring the services of attorneys.
Lender: The person that extends credit (loans money) to the borrower
and that is identified as the lender in the promissory note and as the
beneficiary in the deed of trust (the mortgage loan).  For the purposes
of this guide, the term lender includes the assignee of the lender.
Money Judgment: A court declaring the amount of money owed to the
creditor and obligating the debtor to repay that amount (a judgment
of the court). The judgment typically includes 10% interest until
repayment of the amount occurs.  The judgment may also include an
award of attorney’s fees to the creditor.
Mortgage Loan Modification: A process through which the terms of a
mortgage loan are restructured or modified pursuant to an agreement
between the lender and the borrower (the mortgagee and mortgagor).
Non-Judicial Foreclosure: A non-judicial foreclosure is a privately
conducted but publically held sale of the property described in the
deed of trust (mortgage loan) by the named trustee (or by a substituted
trustee). A judicial foreclosure occurs under court supervision (a state
action).  A non-judicial foreclosure is a procedure followed by the
trustee as described in California law that provides the lender with a
remedy for collecting the amounts owed by a defaulting borrower in
accordance with the terms of the mortgage loan (including the costs of
foreclosure).  The term “foreclosure” as used in this guide means a “nonjudicial” foreclosure.
Notice of Default (“NOD”):  A document known as the NOD prepared
by the trustee at the direction of the lender that upon recording 11
with the office of the county recorder begins the initial three month
“reinstatement” or “cure” period during which no Notice of Sale may be
recorded.
Notice of Sale (“NOS”): Following the expiration of the initial three month
“reinstatement” or “cure” period, the trustee at the direction of the
lender may prepare the NOS and cause this document to be posted on
the property and recorded with the county recorder where the property
is located.  The NOS when posted and recorded commences a minimum
20-day period before the date of the sale can be scheduled at a specific
time in an identified public place within the county or the judicial district
in which the sale is to take place.
Promissory Note: A written agreement obligating the borrower/debtor
to repay the amounts loaned by the lender/creditor (the holder of the
promissory note).  It is also the evidence of the amount of loan (debt)
owed by the borrower to the lender.
Purchase Money Mortgage: A mortgage loan (loan funds) obtained to
purchase the home. The borrower must intend to occupy the home
purchased with the mortgage loan funds. A non-purchase money
mortgage is a mortgage loan obtained to refinance or to add additional
loans to the home and not for the purchase of the home.
Real Estate Owned (“REO”): A property owned by a lender acquired
through a foreclosure sale.  
Redemption Period:  The period of time beginning five days before
and continuing to the date of the scheduled foreclosure sale or the
postponed date of the sale, during which time the borrower is entitled
to stop the foreclosure by paying in full all amounts owing in accordance
with the terms of the mortgage loan.
Reinstatement or Cure Period:  The time provided to the borrower to
pay the delinquent sums owing to the lender to stop the foreclosure 12
sale (to cure the default and reinstate the mortgage loan).  The initial
reinstatement or cure period begins with the three months from the
recording of the NOD to the recording of the NOS and includes the time
following the recording of the NOS to five days before the date of the
scheduled foreclosure sale or the postponed date of the sale.  Upon
reinstatement or cure, the lender is to record a notice rescinding the
NOD.
   
Servicing Agent:  The lender that retained loan servicing (the right
and obligation to continue to collect the mortgage loan payments)
following the sale of the mortgage loan to the assignee (the holder of
the promissory note).  In addition, a licensed agent of the lender (or
an agent expressly exempt from licensing) authorized to collect the
mortgage loan payments (service the loan).  For the purposes of this
guide, the phrase lender or its servicing agent includes the lender, the
assignee of the lender, and the authorized representative or agent that
is servicing the loan.  
Short Sale: A sale of a home where its sales price is less than the total
amount of the balances due on the mortgage loans and the liens
recorded against the title of the home.
Trustee: A person identified or substituted in the place of the person
named in the deed of trust.  The trustee is the person authorized by the
lender and the borrower to proceed with the privately held but publicly
conducted foreclosure sale (in the event of the failure to timely make
the mortgage loan payments or to otherwise comply with the terms of
the mortgage loan).
Underbid: When the amount demanded at the foreclosure sale by the
trustee on behalf of the lender or its servicing agent is less than the total
debt owed by the homeowner.
Upside Down: When the value of the home is less than the amounts
owing pursuant to any mortgage loans or liens recorded against the
property. 13
Waste: An intentional or unintentional act of a borrower of a mortgage
loan that results in physical damage or injury to the property described
in the deed of trust.  A borrower is liable for any waste of the property
created or suffered during the borrower’s ownership.
NOTES: In this guide, the terms “borrower” and “homeowner” and the
terms “property” and “home” are interchangeable.   In addition, the
phrase “promissory note” and “deed of trust” also means the “mortgage
loan”.  
If you face the possibility of foreclosure, you are not alone. Foreclosure
is not a personal attack on you or your home. Thousands of financially
distressed homeowners face similar circumstances.  Although stressful,
a troubled real estate market may be helpful to you. The number of
current borrower defaults (including foreclosures) is overwhelming to
lenders and their servicing agents.  As a result, lenders and their servicing
agents are typically more willing to help struggling homeowners avoid
foreclosure by solving their mortgage loan delinquencies. The federal
government and the State of California each have rules and regulations
that can be helpful to homeowners in solving mortgage loan issues.
It is important to have a general understanding of the foreclosure
procedure so that you are informed and are able to identify your rights.
With this information, you can take a proactive role in finding the best
possible solution for your mortgage loan situation.
Event 1: Missing a Single Payment
The foreclosure procedure may begin when you miss a single
monthly mortgage loan payment (a delinquency).  In some instances,
homeowners (who failed to make a monthly mortgage loan payment
The Foreclosure Procedure Includes Six Events
Facing Foreclosure14
or who anticipate the inability to make such payments) have a very hard
time contacting their lender or its servicing agent. As of September 2008,
a lender or its servicing agent is required to contact the homeowner 30
days in advance of initiating a foreclosure or to demonstrate that a good
faith effort occurred to contact the homeowner.
However, this contact requirement only applies to homeowners who
obtained their mortgage loan between January 1, 2003 and December
31, 2007.  The lender or its servicing agent is not required under
California law to contact or exercise due diligence (act in good faith)
to contact the homeowner who obtained a mortgage loan before or
after this 5-year window.  Some mortgage loans insured or purchased
by agencies or enterprises of the federal government are also subject to
certain advance contact or notice requirements.
The purpose of the advance contact or notice is to provide the
homeowner with information regarding the alternatives or options
that may be available to avoid foreclosure, including referring the
homeowner to independent counseling.  An alternative or option may
include modifying or restructuring your mortgage loan.
Event 2: Notice of Default (“NOD”)
If you and your lender or its servicing agent cannot agree on
alternative mortgage loan terms to avoid foreclosure (a modification
or restructuring), your lender can direct the trustee to record a NOD
against your home  provided that you have been contacted 30 days in
advance of the recording in the manner described in Event 1. The recording
of the NOD officially begins the foreclosure procedure. You will receive a
copy of the NOD by certified postage prepaid mail.
After your lender or its servicing agent directs the trustee to record the
NOD, an initial minimum three month period is required to provide
you with the opportunity of curing the default and reinstating your
mortgage loan.  You should use this time to bring current your delinquent 15
payments (reinstate) or to continue negotiating with your lender or its
servicing agent a modification or restructuring of your mortgage loan.
It may be possible to arrange with your lender or its servicing agent for
a delay in payment (forbearance).
Event 3: End of the Initial Three Month Reinstatement or Cure Period
When the initial three month reinstatement or cure period ends, your
lender or its servicing agent can move forward and direct the trustee to
schedule the foreclosure sale of your home.
By now, you should consider the possibility
of relocating in anticipation your lender or
its servicing agent may require you to move
from your home after the foreclosure sale
occurs and the eviction process is completed.
Some lenders may offer you the opportunity
to remain in your home following the
foreclosure sale on a mutually acceptable basis.  For example, the lender
or its servicing agent may ask you to stay in the home for the payment
of rent.
Event 4: Delay of Notice of Sale
Pursuant to the California Foreclosure Prevention Act (CFPA) residential
loans that were recorded between January 1, 2003 and January 1, 2008
your lender or servicing agent cannot proceed to the Notice of Sale for
at least an additional 90 days after the three month reinstatement or
cure period if the lender or servicing agent does not have an approved
comprehensive loan modification program. To determine if you lender
or servicer has an approved comprehensive loan modification program,
you can visit the web site of the Department of Real Estate at www.
dre.ca.gov, or Department of Corporations at www.corp.ca.gov,  or the
Department of Financial Institutions at www.dfi.ca.gov for a complete
listing of lenders and servicers. The additional 90 day foreclosure
extension afforded by the CFPA is scheduled to be repealed on January