Foreclosure Information
A foreclosure is a process in which a lien
holder (for example, your mortgage company) can forcibly
sell or take possession of a home, condo, or other real
property.
If you don’t take action quickly to resolve any delinquent
payments, your lender will follow the applicable laws and
the terms of your loan contract to take over your home,
remove you from the premises, and sell it. They have a
variety of methods to foreclose on properties. The preferred
methods in California are judicial and non-judicial
foreclosure proceedings.
Non-Judicial (Trustee Sale)
A non-judicial proceeding typically involves selling the
property by way of a trustee sale. This proceeding is
typically quicker than a judicial foreclosure, but the
lender is not able to obtain a “deficiency judgment” against
the homeowner. A “deficiency judgment” is a court order that
says that the homeowner owes the difference between what was
owed and what the property sold for, plus any expenses
incurred by the lender.
In California, a trustee sale is the
preferred method of foreclosure and the lender must comply
with certain legal procedural requirements to validly
perform a trustee sale. They must record a notice of
default and wait 3 months before scheduling the sale by
recording a notice of trustee sale. They are also
required to provide these notices to the homeowner in a
variety of methods. The tricky area is that once a
trustee sale has been scheduled for a period of one year,
they can continually postpone the sale by merely announcing
at the auction publicly the new sale date and time.
They are not required in most cases to send a new written
notice of the new sale date.
Judicial Foreclosure
In a judicial foreclosure, the lender can obtain a
deficiency judgment for the difference in value, but the
process can take up to or over a year to complete and the
homeowner may have a right to redeem the property in the
future. In order for the lender to use the non-judicial
foreclosure process, there are certain contract provisions
that must be in your loan documents that give them that
right.
There are legal steps you can take to stop or delay the
foreclosure process. An experienced attorney can advise you
on your legal rights and ways to stop, delay, or avoid the
foreclosure process.
Alternatives to Foreclosure
Reinstatement- you have the right up until just before your home is sold to reinstate the loan by paying all the back owed amounts due and the lender cannot sell the home at that time.
Loan modification- your lender must voluntarily agree to enter into a modification of your loan terms to get you current and provide reasonable payments going forward. This must be done in writing and typically must be recorded with the county recorder's office.
Short sale- you can sell your home for its fair market value to a new buyer and the bank agrees to let you sell for that amount without holding you personally liable for any difference between what you owe and the sales price.
Deed in lieu of foreclosure- your lender may agree to let you move out within a certain time frame and agree to not hold you liable for any amounts owed on your loan.
Bankruptcy- this is discussed more under our bankruptcy section, but a bankruptcy filing can place a court hold on foreclosure and eviction proceedings; however, it is temporary and not a guarantee of keeping the property. It can help eliminate other debt and put some pressure on the lender while giving time to pursue workout options.
Lender lawsuits- if a homeowner has valid claims against the lender, a lawsuit can be initiated against the lender and we can seek to obtain a court order prohibiting the sale of the home. There is no guarantee that the court will grant the order or that the lender will agree to workout some kind of settlement to keep the home, but it can be a way to buy additional time to further pursue a workout.
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