What is a Foreclosure?
When buying a home, many people take out a home equity loan or borrow from a bank or mortgage company to cover a portion of the purchase price. Often, people combine their mortgage loan with a home equity loan when refinancing. Failure to make loan payments may result in your lender foreclosing on your home. Foreclosure refers to the lender’s ability to force the sale of your home in order to pay the loan.
Types of Foreclosures
Lenders can foreclose on deeds of trust or mortgages using either a nonjudicial or judicial foreclosure process. When a power-of-sale clause in the deed of trust guarantees the mortgage loan by giving the trustee the ability to sell the home to pay off the loan at the lender’s request if the borrower fails to make payments, a nonjudicial foreclosure is used. While a nonjudicial foreclosure is faster and less expensive than a judicial foreclosure, the lender forfeits the chance to collect a deficiency judgment against the borrower. In California, the nonjudicial foreclosure process is the most common.
A judicial foreclosure involves filing a lawsuit to get a court order in order to sell the home. It is used when there is no power-of-sale clause in the mortgage or deed of trust. After the court order the property is auctioned off. While rare in California, judicial foreclosures allow the lender to get a deficiency judgment against the borrower but the borrower does have the right of redemption allowing them to buy back the property from the winning bidder one year after the sale.
The Foreclosure Process
The California timeline can vary but the following can be used as a guide.
At ninety days the lender may start considering foreclosure however you will not automatically lose your home at first lack of payment. It may be helpful to work out a payment plan with your lender to avoid furthering the foreclosure process, also known as the foreclosure avoidance assessment. Your lender must contact all persons on the mortgage loan to assess your financial situation and explore options to avoid foreclosure. At this meeting you must be advised that you have the right to request another meeting about how to avoid foreclosure. This second meeting must be achieved within 14 days. You may authorize a lawyer, HUD-certified house counseling agency or other advisor to talk on your behalf with the lender when meeting to talk about ways to avoid foreclosure. You cannot be forced to accept any plans that your representative and lender come to during the meeting. The lender is unable to start the foreclosure process until at least 30 days after contacting and making the foreclosure avoidance assessment.
If a plan is not worked out to avoid foreclosure your lender can record a Notice of Default at least 30 days after contacting you for the foreclosure avoidance assessment. Your lender must mail a copy of the Notice of Default within ten business days of recording it. This marks the commencement of the formal and public foreclosure process. You will then have ninety days to try to return back payments, if unable to, your home loan will then be in default.
If unable to pay back the amount owed the lender may record a Notice of Sale stating that the trustee will sell your property at an auction in 21 days. This Notice of Sale must be sent by certified mail, be published weekly in a newspaper for three weeks before sale date, be posted on your property and in a public place, and have the needed information of the sale.
At least twenty-one days after the Notice of Sale is recorded the property is sold at a public auction. The successful bidder must pay the full amount bid with cash or cashier’s check. The bidder also gets a trustee’s deed once the sale is complete. Note that the lender also bids at the auction and if no one else bids the property goes to the lender.
Stopping the Foreclosure Sale
Borrowers have until five days before the foreclosure auction date to correct the default and stop the foreclosure. The procedure of stopping is the reinstatement of the loan. Any individual or institution interested in the property has the right to redeem throughout the twenty-one day period following the recording of the Notice of Sale until the nonjudicial foreclosure auction.
After the Foreclosure
Whoever purchases your home at the auction must give you a three day written notice to vacate the property. If you do not abide by the notice, the new owner must go through the formal eviction process in court to reclaim the property.
We can help you with your Foreclosure…
If you are late on your mortgage payment or have recently had a Notice of Default filed against your property, we know and understand how stressful things can get. Life can happen fast and have your stress levels looking a lot like this…
Enlisting the help of experts like ourselves is the BEST next step. We will work with you to either….
1. Purchase the property before the foreclosure date so you can cash in on the equity you have
OR
2. Analyze your circumstances to see what other options may be available.
Do not delay!!
— Your balance owed to your lender could increase —
— Lenders typically are more inclined to work with you if you approach them sooner in the process —
We want to help! Submit your info now and we’ll call you ASAP for a quick phone call –
No Obligation Necessary!!