If you’re falling behind on your mortgage payments in the Golden State, it’s critical to understand the California foreclosure process timeline. It’s equally important to understand that there are ways to stop the progression and protect your credit.
What is a foreclosure?
Foreclosure, as opposed to a short sale is a procedure by which a bank is authorized to force the public auction of a property after the homeowner defaults on four or more mortgage payments. The property secures the borrower’s loan, and if the borrower defaults on the loan, the bank has the authorization to sell the property to pay off the pending balance.
Types of foreclosures
Foreclosure on properties can happen either through a judicial foreclosure or a non-judicial foreclosure. A judicial foreclosure is a type of foreclosure that passes through the court system. It is more expensive and often a slow process that can take many months and even years to complete. Judicial foreclosure permits the bank to seek damages against the homeowner for the outstanding debt after the property is sold at auction. Non-judicial foreclosure is much faster, less expensive, and does not require any court involvement. The homeowner’s responsibility ends once the property is sold. Banks are then not permitted to seek damages for any outstanding debt.
In California, if you are behind on your home loan, your lender will typically use a nonjudicial foreclosure process. That process is also known as a trustee’s sale and it’s used to sell your house. The only time we usually see a judicial foreclosure is when the lender is confident that the borrower has sufficient income or assets to pay a deficiency balance, such as doctors, investment bankers, etc.
Non-Judicial California Foreclosure Process Timeline
Day 1—90. CONTACT THE BORROWER:
Maybe you lost your job, suffered a severe illness, or just fell behind on payments. You can make it up the next month, but it may be tight with the late fees and interest. It’s easy to fall even farther behind, which puts your property at risk.
California Civil Code Section 2923.5(a), requires the lender to makes phone calls, send letters, try to collect payment and explore options BEFORE initiating foreclosure.
The lender cannot start the California foreclosure process timeline until at least 30 days after assessing the borrower’s financial situation. During the conversation; the lender must inform the homeowner of the right to demand for another meeting about avoiding foreclosure within 14 days. The creditor must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.
Days 91 – 180 NOTICE OF DEFAULT
When your home loan is officially in default, the bank files a Notice of Default with the court. The NOD gives the borrower statutory notice within ten days that foreclosure has commenced meaning that you are in a state of default on your loan. The Notice will also include information about your options for getting out of default. The Notice of Default is sent to the homeowner by registered or certified mail within ten days after recordation. Doing so puts the world on notice that the bank intends to sell the property at auction, ultimately, marking the beginning of the formal foreclosure process.
The NOD gives the homeowner three months to get out of default and pay all outstanding debts, along with interest, fees, property taxes, and insurance. Doing so would immediately stop the foreclosure. However, if you don’t have the cash to pay that at once, the home will continue to be in default.
Day 181 – 201 NOTICE OF TRUSTEE SALE
If the borrower does not get out of default and pay all outstanding debts in 90 days, the bank can take the next step by issuing a Notice of Trustee Sale. It officially sets the date, time and place for the foreclosure auction of the borrower’s property. It must also include the total amount of the unpaid balance, reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice.
The bank can delay recordation and issuance of the Notice of Trustee Sale for as long as they wish. The foreclosure sale date can also be any day they desire as long as it is no SOONER than the 20th day after the end of the 90 days period. However, they typically move forward quickly.
The Notice of Trustee’s Sale must:
- Be sent to the homeowner by registered or certified mail as well as first class mail.
- Run weekly in a popular newspaper for three weeks in a row, with the first publication released at least 20 days before the auction.
- Be posted on the property, as well as in a public place. This usually occurs at your local courthouse at least 20 days before the auction.
- Contain the date, time, and place for the foreclosure auction of borrowers property; along with other information such as; the trustee’s name, phone number, property address, etc.
Day 200 — PUBLIC FORECLOSURE AUCTION
The borrower still has the right to redeem the property, but he must pay the entire debt, plus interest and costs before the bidding begins at the sale.
At the Trustee’s Sale, the bank will conduct a Public foreclosure auction where the borrower’s house will be sold to the highest bidder. Potential purchasers must have cash or cashier’s checks for the amount they wish to bid. The highest bidder becomes the owner of the property, and the amount paid at the auction goes to the bank that held the mortgage.
If the bids do not exceed the bank’s demand or if the bank is not willing to accept less than the full mortgage amount at the auction or If there is no bidder, then the bank will take ownership of the property. You will be expected to vacate the property following the foreclosure sale. If you don’t, the new owner will most likely offer you some cash to move out, or take steps to evict you.
The entire non-judicial California foreclosure process timeline can take between 111 to 200 days. That’s less than seven months from beginning to end. This is the “standard” timeline for a non-judicial foreclosure in California from the date you first became delinquent. In reality, those are just the legal minimum times, and the actual process can take significantly longer.
Remember that you can step in at any point along the California foreclosure process timeline to halt the progression. Right up until the auction itself, it’s not too late to save your home.