In California, homeowners can face two types of foreclosure proceedings, non-judicial and judicial foreclosure. There are some strong differences between the two, which we will explain below.
Out-of-court foreclosure is the most common type of foreclosure in California. Lenders can use the out-of-court foreclosure process where the mortgage note or trust deed contains a “power to sell” clause, which gives the lender the right to sell the home and use the proceeds to pay off the mortgage. The mortgage in the event that the borrower defaults on the loan payment. As the name suggests, a lender does not need to hold a court hearing to conduct the foreclosure process. However, there are strict laws governing the foreclosure process and lenders must provide documentation of mortgage ownership and loan default.
Judicial foreclosure is rare in California. Lenders who do not have the power of the clause in their mortgages must sell the foreclosure to borrowers who are in default through judicial foreclosure, which requires a hearing. If the lender is successful at the hearing, the court orders the property to be sold at auction. The lender may decide to enter a default judgment against the borrower in a judicial foreclosure.
The borrower has the right of redemption from the new owner up to one year after the sale of the property in court foreclosure.
How California Protects Homeowners in the Event of Foreclosure
The California legislature noted a subculture of fraud stemming from the foreclosure economy. Specifically, California Civil Code 2945-2945.11 states: “Homeowners whose residence is previously fenced are subject to fraud, deception, harassment, and unfair treatment by foreclosure consultants from the time a notice is posted. For any foreclosure sale distribute funds to the owner or his successor.
To protect homeowners from unscrupulous “advisers”, the regulation broadly defines those who are considered advisers, including those who request or make statements to homeowners who may, in return, obstruct postponing foreclosures or loans, obtaining deferrals, obtaining concessions from beneficiaries, i.e. or helping homeowners avoid credit deterioration, as well as other preventative or rehabilitative actions.
Given the many ways in which foreclosure advisers can commit fraud against ignorant homeowners, the code gives homeowners the right to require that contracts for consulting services be in writing, as well as the power to enter into contracts with for foreclosure advice. Fraudulent and misleading. . The purpose of the code is to promote fairness; California courts are authorized to interpret the provisions of the articles to achieve this purpose.
Article 2945 of the Civil Code also provides relief for homeowners who are victims of unscrupulous foreclosure consultants. A foreclosure consultant who violates the terms of the code can be fined up to $25,000 or even jailed. In addition, victims’ homeowners can recover three times the damages, three times the amount of compensation awarded to the foreclosure counselor, plus reasonable attorneys’ fees.
California has taken the additional steps necessary to stem the tide of foreclosures. The state has placed a 90-day moratorium on foreclosures. The suspension focuses on real estate with a first mortgage for which a notice has already been filed. In addition, the proposal will require lenders to show that they have installed predatory programs to keep homeowners in their homes.
Legal representation in foreclosure proceedings
California foreclosure laws are complex and it makes sense for borrowers and lenders going through the foreclosure process to seek legal representation. If you have any questions about California foreclosure, speak with a California real estate attorney who will be able to advise you on your specific case.
California state fence laws
Again, California foreclosures are not judgmental, so this article focuses on the events. Lenders generally choose to go to court only if they need to resolve title issues by a court or if they decide to seek a deficit judgment.
Pre-fencing contact requirements under California law
In California, the lender or mortgage manager must contact you in person (the borrower) or comply with legal requirements to try to contact you, 30 days before filing a notice of default. (Filing a notice of default officially starts the foreclosure process.) The purpose of the contact is to assess your financial situation and explore ways to avoid foreclosure, such as with a loan modification. (California Civil Code § 2923.5).
During the first contact, the administrator should inform you that you have the right to request a subsequent meeting, which can be called by telephone. If you request a meeting, the administrator must schedule it within 14 days. The servicer can assess your financial situation and discuss options for avoiding foreclosure during first contact rather than at a later meeting. The servicer must provide you with the United States Department of Housing and Urban Development (HUD) toll-free number so that you can find a HUD Certified Real Estate Advisor.
Notice of the Foreclosure in California
Under California law, you receive two separate foreclosure notices: a Notice of Default and a Notice of Sale.
Notice of Default
To initiate foreclosure, the lender or trustee files a notice of default with the county recorder’s office and sends you a copy within ten business days. A notice of default gives you three months to pay off the loan (apply for it). (Cal. Civil Code. §§ 2924, 2924b).
Notice of sale
After the three-month deadline, the lender or trustee issues and records a notice of sale and mails a copy at least 20 days before the date of sale. (Cal. Civil Code. §§ 2924, 2924b). Although the notice of sale may be recorded up to five days before the end of the three months, the date of sale may not be earlier than three months and 20 days after the date of publication of the notice of default. (California Civil Code § 2924).
The foreclosure sale
The sale is an auction open to all bidders. At the time of the sale, the lender usually makes an offer on the property using a “credit offer” rather than a cash offer. With a credit offer, the lender obtains credit up to the borrower’s debt amount. Sometimes the lender offers the full amount of the debt; sometimes, you bid less. The highest bidder in the sale is the new owner of the property.
For information on foreclosure defense call us at (877) 399 2995. We offer litigation document review support, mortgage audit reports, securitization audit reports, affidavit of expert witness notarized, and more.