California Foreclosure Laws - Foreclosures in California

California Foreclosure Laws

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California Foreclosure is Non-Judicial.

California Foreclosure Timeline

Day 1-Day 90
Redemption Period
Lasts 90 days from the recordation of the Notice of Default

Day 91-Day 110
Publication Period
Lasts 20 days from the end of Redemption

Day 111 or more
Trustee's Sale
Held 21 days after first publication

Redemption Period

Once the Notice of Default records the foreclosure time frame begins. California foreclosure law states that within 10 business days a copy of the recorded Notice of Default is sent by certified and regular mail to the borrowers at all addresses provided and any recorded special requests. Within 30 days a copy of the Notice of Default is sent by certified and regular mail to new owners and all junior lien holders to the Deed of Trust being foreclosed. A Trustee's Sale Guarantee Report is ordered from the title company providing all title information. The foreclosure remains dormant for the next 60 days unless the borrower makes contact to cure.

Publication Period

California foreclosure law states that the publication period begins once the redemption period has expired. A Notice of Trustee's Sale is prepared and published in an adjudicated paper of general circulation in the city in which the property is located. The Notice of Trustee's Sale is published one time per week for three weeks. The actual Sale is established by adding at least 20 days to the date that the Notice of Trustee's Sale was first published in the newspaper. The Notice of Trustee's Sale is posted on the property and in a public place. At least 14 days period to Sale date the Notice of Trustee's Sale must be recorded in the county in which the property is located.

Trustee's Sale

California foreclosure law states that on the day that was established for sale of the property, and only after all publication period requirements have been met, the property is sold to the highest bidder for cash for the full amount of the debt plus foreclosure fee and expenses. If no one bids at the Trustee's Sale, the property automatically reverts back to the beneficiary for the debt. A Trustee's Deed Upon Sale is recorded in the county in which the property is located transferring title to the foreclosing beneficiary allowing the marketing of the property to recover their debt.

All sales under a power of sale in a deed of trust will be made between the hours of 9:00 a.m. and 5:00 p.m. on any business day, Monday through Friday, at the time specified in the notice of trustee sale. The sale must be made a public auction to the highest bidder. The trustee has the right to require every bidder to show evidence of ability to pay the full bid in cash, cashier�s check or certain bank checks. Each bid is by law an irrevocable offer to purchase. However, a higher bid cancels an earlier bid. It is unlawful and a criminal offense (a fine of $10,000 or up to one year in jail) to offer anyone consideration not to bid, or to fix or restrain the bidding process in any manner. Debtors may reinstate up to five days before non-judicial foreclosure sale.

Junior lien holders may no longer redeem, so they may try to protect themselves by (1) advancing funds to bring the senior loan payments current, then foreclosing for the sums advanced; (2) bidding at the foreclosure sale so the price will be sufficient to pay off the senior and the junior liens; or (3) acquire the property by bidding at the foreclosure. If the debtor has a right to redeem and does so, the junior who purchased the home must be reimbursed. Junior liens do not reattach the property if a borrower redeems a senior lien whose foreclosure extinguished the junior. This helps borrowers by encouraging the junior to bid up to the property to fair market value at the foreclosure sale, or else lose out, giving borrowers closer to fair value at sale.

Lenders may not seek a deficiency judgment if (1) the foreclosure is non-judicial or if (2) foreclosure is on a purchase money obligation. The same rules do not apply to guarantee or later lien holders. The lenders may seize alternative collateral. If the lender forecloses by filing a lawsuit, then the lender can obtain both a foreclosure sale order and a judgment against the borrower for a deficiency after the court-ordered sale, but only for the difference between the judgment and the fair value of the security.

VA Loans

An appraisal should be ordered through an authorized VA appraiser 60 days from the recording of the Notice of Default. A completed VA567 from should be sent to the local VA office with a copy of the Notice of Trustee's Sale and Trustee's Sale Guarantee once publication of the Notice of Trustee's Sale has begun. A Corporation Grant Deed should be prepared conveying title from the foreclosing beneficiary to the proper governmental agency.

FHA Loans

A Notice to Occupant of Pending Acquisition should be mailed to mortgagee with a copy of the cover letter to the local FHA office. A Corporation Grant Deed should be prepared conveying title from the foreclosing beneficiary to the proper governmental agency. If the property is occupied, an eviction process must be started to convey the title to FHA unoccupied. Once eviction complete, record Corporation Grant Deed and issue title package to FHA for Title Approval Record Corporation Grant Deed and issue FHA 27011 Part A.

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