The California Foreclosure Process
California has a slightly complicated set of rules surrounding property foreclosures. However, it is important to note that as a general rule of thumb, California is a consumer-friendly state. It is also a “title theory state,” which means that the property title will stay in a trust until the borrower has paid off the loan in its entirety.
can be both financially and emotionally overwhelming, there are options to help ease the situation.
Homeowner Rights During California Foreclosures
In the state of California, it is your legal right to ensure that all of the processes associated with foreclosure are properly followed. With the help of mortgage delinquency agencies and lawyers you can choose to fight the foreclosure process; however, there is no guarantee that you will be able to stop it in its entirety unless you are able to pay the loan (and other associated home costs) in their entirety or prove that the California foreclosure processes were violated. There are several groups and services that can help you throughout the foreclosure process in California. Non-profit HUD-certified counseling agencies can offer valuable assistance during the foreclosure process in California.
Non-profit HUD-certified counseling agencies can assist during the foreclosure process. However, it is important to note that turning to HUD or another agency does not guarantee that the foreclosure process will be delayed or stopped.
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The California Foreclosure Procedure in a Nutshell
Notice of Default
The primary method of foreclosure in California is “non-judicial foreclosure.” This type of foreclosure features an elected trustee who is appointed when the property is first purchased. The trustee will act as a representative of the lender and file a notice of default. This notice gives the homeowner three months to mitigate the default.
Notice of Sale
If the default is not paid within three months of the notice of default , a notice of sale will be publicly posted for at least 20 days prior to the sale date and published at least 1 time per week for 3 consecutive weeks. The notice of sale includes property information and the sale date.
After the notice, the home is sold at public auction. A homeowner has five business days prior to the sale to attempt to cure the default and stop the sale. A foreclosure auction in California must be held Monday through Friday between 9 a.m. and 5 p.m. where the property will go to the highest bidder or become a real estate owned property of the lender.
Vacate the Property
Since the foreclosure process in California can take months, you will have a little time before you are required to leave your property. However, once the home is sold during an auction and the foreclosure process is completed, you will have to quickly vacate your home. The new owner can serve you with a three-day notice to quit. If you fail to leave after the designated three days, then the owner can get a court order to evict you.
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California Foreclosure Facts
If the lender files a deficiency judgment you will be help responsible for the difference between the sale price and debt owed.
With statutory right of redemption in California, the former owner can reclaim the house if they make a full payment on the unpaid loan. If the lender completed a full price bid, then the former owner will need to pay the costs for three months.
If you do not pay property taxes in California for five years or more, then you could lose your home to foreclosure.
Probate does not stop foreclosure in California as there is no current mandate of loan forgiveness in the event of the borrower’s death. The estate must continue to pay the mortgage to avoid foreclosure.
A foreclosure can decrease your credit score by 85 to 160 points. It can also result in tax consequences that might reduce your tax refund or cost you additional taxes.
If everything is completed on time and without any delays, then the entire foreclosure process can take approximately 120 days; however, the process can also be much longer.
Alternatives to Foreclosure in California
In California, if your home was your primary residence, then it can often be beneficial to sell it in a short sale. A short sale is selling your home for less than what is owed in the mortgage. A short sale can help you to avoid a deficiency judgment.
Filing for bankruptcy in California postpone the foreclosure proceedings and, in the right circumstances, even stop it. This option can be used to halt collection actions, giving you time to make a plan to address your debts.
California has very specific and unique laws surrounding loan modification. Through these laws and the 2013 Homeowner Bill of Rights, lenders must have a loan modification program in place before they can foreclose on a property in California. If the borrower has applied or is being considered for a loan modification, the lender is not able to foreclose on the property. A loan modification can be used to delay the foreclosure process and possibly stop it altogether.
Considered the easiest and most stress-free alternative to foreclosure, selling your house as is provides the homeowner with a fast, simple solution. This methods is selling your house without making any repairs or updates.
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