| Foreclosures |
| In California, lenders may foreclose on deeds of trust or mortgages by using either a judicial foreclosure or a non-judicial foreclosure. Whether your lender decides to foreclose by judicial or non-judicial means, they are required to record a Notice of Default (NOD) at the county recorders office where the home is located. |
| Judicial Foreclosure |
| A judicial foreclosure is a considerably expensive formal court proceeding whereby the lender files a lawsuit in order to obtain a court order to foreclose on the property. The lender typically tilizes this proceeding when the deed of trust or mortgage does not contain a power of sale clause or to seek a deficiency judgment against the borrower. |
| Non-Judicial Foreclosure |
| A non-judicial foreclosure is the one most used by lenders because it does not require them to go through the courts. A non-judicial foreclosure is used in when a power of sale clause exists in a deed of trust or mortgage. This clause authorizes the sale of the property to pay off the balance on a loan in the event of default. |
| Non-Judicial Foreclosure Timeline |
| Collections Stage (30-90 days) |
| - This period starts when you miss your first payment.From day 16 to 30, your bank starts assessing late charges. By day 45 to 60, if you still haven't caught up, you will receive a letter Notice of Intent to Accelerate (NOI) informing you that the mortgage terms have been violated. |
| NOD - Notice of Default (90 days) |
| - Your lender files a Notice of Default (NOD) at the county office where your property is located. A “Constructive Notice” is given to the public at the time or soon after the recording. After the NOD is recorded, you will receive the notice in about 10 days. Within the next 30 days, the trustee also informs all the other creditors collateralized by your property of the notice. A Reinstatement Period is also initiated at the time of the NOD. This gives you up to 90 days to settle the amount you owe. |
| NOS - Notice of Trustee Sale |
| - A Notice of Trustee Sale (NOS) is posted on your property 21 days before the auction date, advertising it to the public. The notice stays up for at least three weeks and includes the time, date, and location of the auction. You can still settle your payments and reinstate the loan 5 days before the auction date. |
| Trustee Sale (Auction date) |
| When your home gets auctioned off, you will be given 10 days to leave the property. Most lender will offer "Cash for Key" option. On the 11th day, a sheriff will come to move you out. |
| Deed in Lieu of Foreclosure |
| A "Deed in Lieu of Foreclosure" occurs when the borrower deeds the property securing the loan to the lender to satisfy the loan that is in default, rather than go through the foreclosure process. This offers advantages to both the borrower and the lender. The biggest advantage to the borrower is that it immediately releases the borrower from most or all of the personal indebtedness associated with the defaulted loan while allowing the borrower to avoid the public notoriety of a foreclosure proceeding. Furthermore, the deed in lieu of foreclosure affects the borrower’s credit less than a foreclosure does. The lender, on the other hand, save the time and cost of going through with a foreclosure. |
