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California Foreclosure Process

The California foreclosure process has undergone changes in the past few years as foreclosure rates have skyrocketed and homeowners look for new ways to save their homes. Both judicial and non-judicial foreclosure options are available in California, but the non-judicial process is the one most commonly used.

The timeline for foreclosure in California can run approximately 120 days, and the buyers' rights of redemption vary. If you work with your lender you should be able to stop foreclosure at nearly any point in the process, but you should move quickly in order to obtain the best settlement possible.

Judicial foreclosure in California

Lenders may foreclose on deeds of trusts or mortgages in default by filing a lawsuit to obtain a court order to foreclose. This option is used almost exclusively in cases where no power of sale is present in the mortgage or deed of trust. After the court declares a foreclosure, your home will most likely be auctioned off to the highest bidder. The lender also has the option of seeking deficiency judgment against you. In certain circumstances, you may have up to one year to redeem the property.

Non-judicial foreclosure in California

Non-judicial process comes into play when a power of sale clause is included in a mortgage or deed of trust. A "power of sale" clause exists in a deed of trust or mortgage when it is stated that the borrower pre-authorizes the sale of property to pay off the balance owed on their loan in the event of default on their part.

In such cases, there is implicit permission granted by the clause to the lender allowing them to sell the property. This action may be executed either by the lender or their representative/ trustee.

In order to properly take advantage of a power of sale clause, the following steps must be taken by the lender. If a time, place and terms of sale is specified, those instructions must be followed; if not, the following foreclosure guidelines apply:

At least twenty days prior to sale, notice of sale must be mailed to the borrower by certified post with return receipt requested.
At least twenty days prior to sale, notice of sale must be posted on the property itself.
At least twenty days prior to sale, notice of sale must be published or posted in at least one public place in the county where the property is to be sold.
Fourteen days prior to sale, a notice of sale must be officially recorded in the county where the property is located.

The notice of sale must contain the following:

the time and location of the foreclosure sale
the property address
the trustee's name, address and phone number
a statement that the property will be sold at auction.

Once these conditions are met, the borrower has up until five days prior to the foreclosure sale to stop the process. Once the property is sold to the highest bidder in a non-judicial foreclosure sale, the borrower has no rights of redemption and the lender may not seek a deficiency judgment under California foreclosure process.

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