Understanding the foreclosure process in California is the first step towards better handling your own home foreclosure.
But before we can help you in understanding the foreclosure process in California, maybe we should ask…
What exactly is foreclosure?
When a borrower on a home loan stops making the agreed upon payments, to protect its own interests, the lender will start the legal process known as foreclosure. If the process is completed, the lender will sell the property to a third party or become the new owner itself.
Foreclosure can be a lengthy process and from the start of the foreclosure process to the end any number of things can happen to prolong or stop the proceedings entirely.
Foreclosure isn’t fun but it’s not the end of the world.
Understanding the foreclosure process in California will help you to better navigate through the process more successfully for yourself.
The Two Types of Foreclosure
There are two different types of foreclosure: 1) Judicial Foreclosure and 2) Non-Judicial Foreclosure. First, you must know which type of foreclosure you are currently dealing with which depends on the state in which your property is located. California is predominantly a Non-Judicial state. The main difference between the two is that a Non-Judicial foreclosure does not go through the court system and the Judicial foreclosure does.
Connect with us by calling (818) 392-4845 or through our contact page and will help explain in detail the California Non-Judicial process and to better you understanding the foreclosure process in California.
In either scenario, foreclosure typically doesn’t start until the borrower is 3-6 months behind in payments. Within that time, the lender will send you many late notices that your loan is overdue and must be brought current.
Judicial Foreclosure Process:
- To start the foreclosure process, your lender files a suit with the courts.
- You will receive a court letter demanding payment. You’ll have 30 days to make payment to the court to stop the foreclosure (sometimes can be extended).
- If you don’t make the payment, a judgment will be entered and the lender can request the sale of your property through an auction.
- After the sale, you’ll receive an eviction notice from the sheriff to immediately vacate the property.
Non-Judicial Foreclosure Process:
- The foreclosure process starts when the mortgage lender serves you with a Notice of Default (NOD) demanding payment. They are not required to go through the court system – although the process may be subject to judicial review.
- After the required waiting period of no sooner than 90 days, the lender is required to serve you with a Notice of Trustee Sale (NTS). This sets the auction time and place which is usually about 20 days from NTS date.
- A deed of trust is drawn up and control of your property is transferred to a trustee who can then sell your property for the lender at a public auction.
After the Auction?
If someone bids on the property at the auction, then foreclosure is complete and ownership transfers to the new owner. The loan is then paid off from the sale proceeds.
All parties who have an interest in the property must be notified during both types of foreclosure and are entitled to collect what is due after the auction.
Sometimes, if the proceeds are not enough to pay off the loan, a deficiency judgment can be filed against the borrower. The bank gets a judgement and can come after you to collect what is still owed after the sale.
Some states don’t allow or limit the amount of deficiency judgments and every state is different. Here’s a great resource that lists the state by state deficiency judgement laws.
We hope this article helps you in understanding the foreclosure process in California. However, the best way to deal with foreclosure is to avoid it completely. The worst thing you can do is sit in denial or bury your head in the sand and hope it will go away. It won’t. Instead, communicate. Call up the bank and see if you can work something out. You can also work with a reputable real estate firm like us at Solution Home Buyers to help you negotiate to avoid foreclosure. We are experienced in negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it.
If you need to sell your house fast in Los Angeles, we can help you.
We buy houses in Los Angeles and Surrounding areas like yours from people who need to sell fast.
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Other Foreclosure Resources For Los Angeles California Home Owners: