California Foreclosure Law

Judicial and non-judicial foreclosure

California foreclosure law is very clear regarding how a lender must proceed with a pending foreclosure. There is a strict timeline as well as mandatory steps your lender must take to validate their actions, and it will help if you understand the process.

Homes mortgaged in California are generally subject to a deed of trust, involving the borrower, the lender, and a third party trustee who holds the right to foreclose. If a power of sale clause is included in the deed of trust or mortgage agreement , the trustee has the legal right to collect the debt by means of non-judicial foreclosure and the subsequent sale of the house. (If there is not power of sale clause, a judicial foreclosure may be indicated.)

Foreclosure begins when the buyer defaults on the loan. The bank can assume default as soon as one week after the first missed payment. From the start of a non-judicial foreclosure process to the end is generally somewhere around 120 days. The trustee in charge of enforcing the terms of the deed of trust is required by California law to follow certain steps according to a strict guideline.

First, the trustee files a notice of default. The letter must be sent to the buyers as well as any additional lien holders, and filed in the appropriate county in a timely manner. This usually takes up to thirty days, and then an additional sixty days is given to the buyer to attempt to make good on their loan.

After the full 90 days have expired, the trustee may file a notice of sale, which must also be recorded in the county and published as well as mailed to the borrower and all other interested parties. Around thirty days later, the trustee is permitted by law to sell the property at auction.

A judicial foreclosure can move more slowly than a non-judicial one depending on the scheduling determined by the courts. The trustee must obtain a court order to legally foreclose, and the sale of the house must be carried out under court supervision.

Judicial process is generally used when there is no power of sale clause in the mortgage agreement, allows a deficiency judgment to be obtained against the buyer for the balance owed on the loan, and allows a certain redemption period after the sale.

Each succeeding action, whether judicial or non-judicial, can carry with it the risk of damage to your credit report. Dealing with the situation is imperative if you want to escape with your credit intact, let alone your home. Keeping open communications going is key to keeping your home and you can often reach a quicker solution if the problem has not been allowed to progress.

No matter what process is being followed, you will want to act quickly in order to secure the most favorable resolution to your home loan problems. Informing yourself about California foreclosure law can help you know your rights and if they are being violated. Knowledge is your best defense against being taken advantage of.

California foreclosure process

Understanding the timeline for foreclosure

How to avoid foreclosure

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