Q: If I have a hard money lender and about to be foreclosed on is there any legal way or loop hole to get out of loan?

A: Thank you for asking the question!

1. Is the loan valid? The first step is to evaluate if the loan is invalid by lender's fraud, misrepresentation, discrimination, or failure to follow the required procedure at the time of loaning. Was the loan predatory? and so on ...

2. Loan modification

You can Apply for the loan modification with the bank. You need to submit your loan modification request to the lender. Then, you will be given few weeks until the bank finishes the review of your application. During this time, the bank is not allowed to accrue interest for your non payment. You can do the loan modification yourself and you don't have to pay anyone for that. You can also have a certified officer from HUD to do that for you. Also, a foreclosure attorney can do that for you. None of these people are allowed to receive any money until they complete the performance thoroughly.

Loan modification may provide you different options. E.g., forbearance, refinance, etc.

3. Deed in lue (DIL)

DIL is when the lender accepts the deed instead of the remaining balance of the loan. This is a concentual agreements and the borrower cannot compel the lender to accept it.

4. Short sale

It is usually in favor of the barrower where the equity in the property is less than the remaining balance of the loan. The borrower may attempt a short sale on the market that the lender agrees to execute a deed of reconveyance for each deed of trust in return for payment of less than the full balance due on the obligation.

5. Refinance

You may be able to refinance your loan if you have a steady income.

6. Bankruptcy:

It may help you shield your home equity up to a threshold. It does not work out all debts. You will have to pay the debt according to bankruptcy instruction for years under supervision of trustee.

The first step to start is usually the loan modification. Make sure that you document every single conversation written or oral with the bank with dates and time and subjects of the conversation (if you do that yourself). Try to attempt several times. They must give you a result of their decision with the reasons. If they deny your application without giving you any explanation, then you can hire a foreclosure attorney to stop the foreclosure because of your legal rights. Also, anytime you reach to agreement with the lender, the settlement agreement needs a legal review that can be done by a foreclosure attorney.

This is merely discussion of general laws and not a legal advice. For a comprehensive legal advise, more specific facts and investigation are needed. I recommend you consult with an attorney in more detail.

Please let me know if you need further assistance.

Wish you luck.

A: I understand that you are in a difficult situation with your hard money lender and contractors, and are looking for potential legal options to avoid foreclosure and keep your home. While I can provide some general information, please know that this is a complex legal matter and you should absolutely consult with a qualified real estate attorney licensed in California to assess the specifics of your case and advise you on your options.

In general, under California law, it can be very difficult to get out of a hard money loan once you have signed the agreements and the loan has funded. These loans are less regulated than traditional mortgages. However, there may be some potential avenues to explore with an attorney depending on the circumstances:

- If the hard money lender engaged in fraud, deception, or illegal practices, you may have grounds to challenge the validity of the loan. An attorney can review your interactions with the lender and loan documents to assess this.

- If the contractor liens are invalid, an attorney may be able to help you get them removed. Contractors are required to follow certain procedures to file a valid mechanics lien.

- Depending on the equity you have in the property, bankruptcy may be an option to stop the foreclosure and restructure your debts. However, this has major downsides that an attorney can explain.

- As a last resort, you could try to sell the property before the foreclosure sale to pay off the loans. A short sale may be possible if the sale proceeds aren't enough to cover your debts.

Again, these are just some general possibilities, not legal advice for your situation. Foreclosure and lien law is highly complex with many technical requirements. Consult an attorney as soon as possible to explore your options - many offer free initial consultations. I'm sorry you're facing this stressful situation and I hope you're able to find a positive resolution.