The Foreclosure Process in California
by Scot Campbell, Realtor 714-960-0700

If you were just served with a NOTICE OF DEFAULT or a NOTICE OF TRUSTEE'S SALE, obtain expert advice NOW.  Do Not Wait as time is your enemy.  


  

  

    
      
In California, lenders may
      foreclose on deeds of trusts or mortgages in default using either a
      judicial or non-judicial foreclosure process.  The Non-Judicial
      Foreclosure aka TRUSTEE'S SALE is by far the most common method used by
      lenders.

      

      Judicial Foreclosure

      The judicial process of foreclosure, which involves filing a lawsuit to
      obtain a court order to foreclose, is used when no power of sale is
      present in the mortgage or deed of trust. Generally, after the court
      declares a foreclosure, your home will be auctioned off to the highest
      bidder.

      

      Using this type of foreclosure process, lenders may seek a deficiency
      judgment and under certain circumstances, the borrower may have up to one
      (1) year to redeem the property.

      

      Non-Judicial Foreclosure

      The non-judicial process of foreclosure is used when a power of sale
      clause exists in a mortgage or deed of trust. A "power of sale"
      clause is the clause in a deed of trust or mortgage, in which the borrower
      pre-authorizes the sale of property to pay off the balance on a loan in
      the event of the their default. In deeds of trust or mortgages where a
      power of sale exists, the power given to the lender to sell the property
      may be executed by the lender or their representative, typically referred
      to as the trustee. Regulations for this type of foreclosure process are
      outlined below in the "Power of Sale Foreclosure Guidelines".

       

      
      
The Non-Judicial Foreclosure
      also known as a TRUSTEE'S SALE is the easy and preferred method of
      foreclosure in California. It's fast and inexpensive. In a Deed of Trust
      the borrower (Trustor) gives the Trustee (typically a title company) the
      right to sell the property if the Buyer defaults.

      

      
      

      
If the borrower is not making
      payments and the lender decides to foreclose, the first step is a Notice
      of Default. It states the amount in default. 90 days is given to cure
      the default by catching up on all late payments, penalties, and costs.
      
      

      
 

      
After the 90 days expires, the
      lender files a 21 day Notice of Trustee's Sale, at which time an
      auction is held, usually at Court, with limited publicity resulting in a
      greatly depressed price. After it is over, the former owner must be
      evicted if he refuses to leave.
      
      

      
 

      
The Borrower can still catch
      up on all late payments until 5 business days prior to the sale. Within
      the last 5 days, the only way to stop a sale is by payment in full of the
      entire balance.
      
      

      
 

      
Most lenders prefer NOT to
      foreclose. Banks are in the money business, not the real estate business.
      They try to avoid foreclosure, because it is bad for their books if their
      ratios of REO (real estate owned) and bad debts climb.
      
      

      
 

      
By State law there is never
      personal liability for a purchase mortgage for a personal residence.
      The owner can "walk away" from the property with immunity from
      personal liability regardless of the method of foreclosure.
      
      

      
Lenders may not seek a deficiency judgment
      after a non-judicial foreclosure sale and the borrower has no rights of
      redemption.

      

      
NOTE:  Above information is deemed reliable,
      but not guaranteed.  If you are in foreclosure seek EXPERT advice
      NOW.