Foreclosure in California
California is a title theory state where the property is in trust until payment in full happens for the underlying loan. If you or your family need advice from a bankruptcy attorney regarding a possible foreclosure of your home, the office of Christopher Hewitt has been serving Riverside Country for almost 20 years. The document that secures the trust is a Deed of Trust, commonly referred to as a mortgage. California is a non-judicial foreclosure state, so a lender doesn't have to take you to court to foreclose on your home. After all the proper notices are given, they foreclose through the deed of trust at a trustee auction. Deeds of trust have a power of sale clause that allows a trustee to sell the property to satisfy the defaulted loan.
Non-Judicial Foreclosure: California primarily follows a non-judicial foreclosure process, meaning that foreclosures can occur without court involvement. This process is generally faster than judicial foreclosure.
Deed of Trust: California typically uses a deed of trust instead of a mortgage for home loans. In a deed of trust, the lender holds legal title to the property until the borrower repays the loan. If the borrower defaults, the trustee can initiate foreclosure.
Recording: The deed of trust is a recorded document. It is typically recorded in the county where the property is located to provide public notice of the lender's security interest.
Disclosures in Loan Documents: Lenders are required to provide borrowers with various disclosures related to the terms of the loan and the foreclosure process. Borrowers should carefully review these documents and seek legal advice if needed.
Power of Sale: A significant feature of the deed of trust in California is the "power of sale" clause also known as “one action rule”. This provision allows the trustee to sell the property at a public auction without court involvement in the event of a borrower default, as long as the deed of trust includes such a provision.
Trustee's Role: The trustee in a deed of trust has a crucial role in the foreclosure process. If the borrower defaults on the loan, the trustee can initiate the non-judicial foreclosure process, which is a quicker method compared to a judicial foreclosure.
Notice of Default (NOD):The foreclosure process in California typically begins with the issuance of a Notice of Default (NOD) after the borrower misses several mortgage payments. The NOD is recorded, and the borrower has a specific period to cure the default.
Right to Reinstate: California law provides the borrower with a right to reinstate the loan by bringing the delinquent payments current within a specified period, usually 90 days after the NOD is recorded.
90-Day Notice: Once the NOD is recorded, the borrower has a 90-day reinstatement period, during which they can bring the loan current by paying the overdue amount, plus any associated fees.
Notice of Sale: If the borrower does not cure the default within the 90-day period, the lender can issue a Notice of Sale, which sets a date for the foreclosure auction. This notice must be published, posted, and mailed to the borrower.
Foreclosure Auction: Foreclosure auctions in California are typically conducted as public auctions on the courthouse steps. The property is sold to the highest bidder, often the lender, who may then list it for sale on the open market.
Right of Redemption: California does not provide a statutory right of redemption for homeowners after the foreclosure sale. Once the property is sold at auction, the borrower generally loses the right to reclaim it.
Deficiency Judgment: In California, lenders cannot seek a deficiency judgment after a non-judicial foreclosure on a residential property. This means that if the sale proceeds do not cover the outstanding loan amount, the lender generally cannot pursue the borrower for the deficiency.
Tenant Protections: California has specific laws to protect tenants in foreclosed properties. In many cases, tenants have the right to remain in the property until the end of their lease or, if there is no lease, with a 90-day notice.
In California it typically takes at least 120 days to get a foreclosure to go through. They have to record a default in the county where the home is. This typically occurs after a homeowner is in serious default (typically 4-6 months). Foreclosure cannot then move forward for at least 60 days and then the borrower must receive a 20 day notice before any sale, mailed to the borrower.
There could be many reasons that you're facing foreclosure, however if accrued debt from credit cards, auto loans and other forms of high interest debt are forcing you to become overstretched in your budget and stopping you from paying your mortgage, you may consider filing for bankruptcy. Our firm specializes in Chapter 7 and Chapter 13 bankruptcy in the Riverside federal court district and we have filed thousands of bankruptcies in the past couple of decades. Bankruptcy will not allow you to get out of paying your mortgage but it will free up money that you are using to pay back other creditors to ensure you can save your home from foreclosure. California offers very generous exemption laws for homes meaning that you can have a lot of equity in your home and still file for bankruptcy.Automatic Stay
If you are facing foreclosure and you decide that bankruptcy is the right thing to do, as soon as your petition is filed in the court you are given an automatic stay. An automatic stay immediately halts ongoing foreclosure proceedings. This legal provision provides the debtor with a respite from creditor actions, including foreclosure, offering a temporary freeze on any attempts to seize or sell the property. During the automatic stay period, the debtor gains valuable time to reorganize finances, explore alternatives, and potentially negotiate with creditors to address the underlying issues leading to the foreclosure.
If you are facing an urgent and imminent foreclosure, you can visit any of our offices located in Palm Desert, Riverside or San Clemente California. I can offer a free consultation over the phone at any time and with my extensive experience in bankruptcy I can provide you with fast and easy options for your particular situation. I am easy to talk to and have a lot of experience in handling foreclosures and will be able to tell you what to expect and advise you the best way forward to keep your home and your peace of mind so feel free to contact me anytime.