things to remember

1) The foreclosure process usually begins after three missed payments. While a foreclosure may be instituted after one missed payment, most lenders will begin a foreclosure by issuing a default notice after three missed payments, or when the borrower is delinquent 90 days.

2) The non-judicial foreclosure process is used when a power of sale clause is included in a deed of trust. This clause states that the borrower pre-authorizes a property sale to pay off home financing if a default occurs. The power to sell the real estate may be executed by the bank or lender or a representative that is called a trustee.

3) California is considered a non-judicial foreclosure state. Therefore, foreclosure sales can be performed without the need to go through the court system. Lenders, however, may also foreclosure judicially in California, if they elect to do so.

4) Once you miss one or two house payments, you will receive notices that you are behind on your payments. However, if you catch up on the payments during that period and continue making payments on time, the notices will cease. 

5) When a lender issues a Notice of Default (NOD), it means that he or she has filed for foreclosure. Once a NOD is issued, it means the foreclosure process has begun. After the Notice is filed, you still have time to reinstate your financing by paying the lender the payments that are outstanding, and the foreclosure costs and penalties. If you do not take this step, your house will be scheduled for a foreclosure sale. 

6) A borrower have a right of redemption if his or her house is foreclosed upon. A borrower has the right of redemption at any time before the finalization of a foreclosure. During this period, you can pay all the payments that are overdue and interests, penalties, and fees that are still due. By taking this step, a borrower is reinstating his or her financing. 

7) In California, a borrower cannot redeem a property after a non-judicial foreclosure is complete. He or she can only do this if the foreclosure was judicial. If the foreclosure was judicial, the foreclosed homeowner must pay the taxes and assessments, the amounts the new owners paid for maintenance, upkeep, fire insurance, and repairs, and the amounts that were paid in liens. 

All these charges must be paid in addition to the amount the new owners paid for the home at the foreclosure sale. Foreclosed homeowners have up to three months after the foreclosure sale to redeem a house from a judicial foreclosure if the proceeds covered the debt. Otherwise, if there was a deficiency, they have one year to redeem their former property.

8) The difference between what is owed on home financing and how much the lender received at a foreclosure sale is called a deficiency. For instance, if you, as the borrower, owed $100,000 on your loan and the lender recovered $50,000 after the foreclosure sale, the deficiency, or what you still owe, is $50,000. In California, you usually are protected against paying a deficiency judgment for a non-judicial foreclosure.

9) Declaring bankruptcy will stop foreclosure process. The moment you file for bankruptcy, an automatic stay goes into effect. This stay prevents collection activities, including foreclosure. By filing Chapter 13 bankruptcy, a borrower can stop foreclosure for a lengthy time period, or even permanently. Chapter 13 enables a property owner six months to create a repayment plan, negotiate a short sale, or check on a loan modification. If a workable plan can be implemented, the foreclosure will permanently stop.

10) California is a title theory state. Therefore, the title remains in a trust until payment is made in full for the loan. The document that secure this title is known as a deed of trust but may be referenced as a mortgage. With respect to foreclosures, California is considered consumer-friendly.

Mortgage And Foreclosure Policies Unique To California

1) The legal instruments that make up a California mortgage include the deed of trust, the note, and in commercial transactions, a security contract. Sometimes the mortgage is included with the security agreement or the mortgage or the mortgage is filed to show the debt owed and terms of repayment, which are established in the note.

2) The length of time for foreclosure in California normally takes 120 days for a non-judicial foreclosure. This process can be pre-empted if the borrower disputes the proceedings in court or files for bankruptcy.

3) In California, the right of redemption is complicated after the foreclosure sale occurs. The foreclosed homeowner can redeem the property by paying for the real estate in full, including costs, after a year. This is allowed unless the lender made a full-price bid on the property, in which case the period for redemption is shortened to three months.

4) A borrower has 90 days after the posting of a Notice of Default (NOD) to cure a default. While this period is called a redemption period, it is not considered an actual statutory redemption. No right of redemption is given if a deficiency judgment on a loan is prohibited or waived.

5) Deficiency judgments are permitted in California in very few instances. A deficiency judgment cannot be obtained if a property is sold in a non-judicial auction sale. Neither can a deficiency judgment be issued for a foreclosure that is associated with a purchase money mortgage.

6) In California, lenders can go to court to foreclose on a home – a process that is known as a judicial foreclosure. The court must issue the final judgment for foreclosure in these cases. If the deed of trust does not display “power of sale” terms, the lender must seek a judicial type of foreclosure. 

The property is sold in a publicly noticed sale. To initiate the process, a complaint is filed in a county court with a lis pendens. A lis pendens is a recorded paper that displays public notice of a foreclosure.

7) Statutes that govern California foreclosure proceedings are located in the state’s Civil Code, Section 2924.

Contact a California Foreclosure Legal Specialist

If you are unsure about your foreclosure rights or have questions about the related terms, you need to contact Equity Legal LLP. Learn all you can about the process to avoid it or exert your property rights.