The foreclosure process in California is very complicated. Unlike other states in America, you need a great deal of specialized knowledge to fully understand the process. The difference between the California regulations and others is that they allow both judicial and non-judicial foreclosures.
In California, people often go through non-judicial foreclosure because it does not allow any borrower-friendly option. To make life easier, you should consider working with the Law Offices of R. Grace Rodriguez. We are a certified and experienced bankruptcy law firm, and we can help you through the foreclosure process in California. That said, we will be taking you through the steps required in the foreclosure process in this article.
1. The pre-foreclosure phase
The first step in the entire foreclosure process is the pre-foreclosure phase. It is during this phase that you encounter the power of sale clause which gives the lender the right to put a property attached to a delinquent loan in the market to recoup the losses incurred.
The property law in California states that when a property is purchased in a non-cash sale, buyers can finance the property by using either a deed of trust or a mortgage. So, the power of sale clause is only activated when the borrower has missed more than 4 monthly loan payments. This process is known as defaulting.
Avoiding Foreclosure in the Pre-Closure Phase
During this stage, the borrower will try to exhaust all avenues to avoid foreclosure. This is because a foreclosure on their property will not only destabilize them financially; it will also reduce their credit score. The borrower will try to negotiate for a short sale.
In a short sale, the borrower with the lender’s permission will sell the property with the delinquent mortgage to pay up the balance. After that, the borrower and the lender must sign an agreement that the short sale is now satisfied, and the loan is paid in full. Going through a short sale can take a lot of time. When there are several offers to buy the house, the lender will approve the most favorable one.
2. The foreclosure phase
The foreclosure phase starts 30 days after the lender has made an effort to avoid foreclosure to no avail. If both the lender and the borrower cannot reach a mutual agreement on how they can avoid foreclosure, the lender can proceed to file for a start in the foreclosure proceedings.
When these proceedings have been filed, the lender will get to choose whether they will prefer a judicial or non-judicial foreclosure. Most lenders in California often choose non-judicial foreclosure because it is much faster and cost-efficient than a judicial foreclosure.
During the foreclosure process, the borrower has to advertise the property for around 3 months, and the lender has to approve the offer of a potential buyer.
3. The auction process
If the borrower doesn’t balance the outstanding payment, the lender has the right to send a notice of sale. This notice usually comes 90 days after the default was recorded. This notice of sale must contain the full details of the auction process, such as the time, date, and property in question. Apart from giving the notice of sale to the borrower, it must also be placed on the affected property and other public places.
Based on the foreclosure law in California, the borrower still has the chance of balancing up the payment 5 days before the foreclosure sale takes place.
Going through foreclosure could be a complicated process. You will definitely need legal advice on how to go through it effortlessly. However, to get the best legal backing, it is advisable to work with the Law Offices of R.Grace Rodriguez. Let us help you find a permanent solution and get you out of the burden of foreclosure.