How to Stop Foreclosure in California

How to Stop Foreclosure in California
Foreclosure can be a difficult battle to beat in the state of California. Unlike most states, California does not offer much flexibility in negating the terms and conditions of a foreclosure proceeding, and a lender can easily seize control of your home in as little as four months. The best approach to killing a foreclosure is to act as soon as you receive the initial notice and negate the foreclosure before it actually happens.

Gaining an audience and setting up a settlement conference with your lender is the smartest approach in the event of receiving an initial notice to sell. You can easily setup and renegotiate the terms of your existing mortgage with various options available such as a loan adjustment agreement or a remortgage. You can dialogue with your lender about delaying the foreclosure to allow you time to bring your payments up to date or agree to newly adjusted interest rates. The best way to go about a foreclosure is to show lenders your enthusiasm and diligence in working with them to save your home.

You should contact an organization called Hope Now. This non-profit guides home owners through foreclosure proceedings and provides counseling to help negate foreclosure. They will also provide you with contact numbers and referrals to various legal organizations, including civil legal aid that can help you expedite or setup proceedings with your lender and save your mortgage.

Emergency loans can also help you stop foreclosure proceedings by paying your mortgage up to speed. A Loan Now, is a company that provides financial assistance to homeowners who are on foreclosure, by paying their mortgage payments up to date and settling the notice of foreclosure. Loans vary from $40,000 to $75,000 with a minimum requirement of 400 credit score and in default with mortgage payments.

Synopsis of California Foreclosure Laws
Judicial Foreclosure Available: Yes

Non-Judicial Foreclosure Available: Yes

Primary Security Instruments: Deed of Trust, Mortgage

Timeline: Typically 120 days

Right of Redemption: Varies

Deficiency Judgments Allowed: Varies

In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold.

The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee’s name, address and phone number and a statement that the property will be sold at auction.

The borrower has up until five days before the foreclosure sale to cure the default and stop the process.

The sale may be held on any business day between the hours of 9:00 am and 5:00 pm and must take place at the location specified in the notice of sale. The trustee may require proof of the bidders ability to pay their full bid amount. Anyone may bid at the sale, which must be made at public auction to the highest bidder. If necessary, the sale may be postponed by announcement at the time and location of the original foreclosure sale.

Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.