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Foreclosure is the legal process by which a lender takes title to property put up as security for a loan. Foreclosure processes vary greatly from state to state. In California, there are essentially two ways in which a lender may foreclose on a property. The least common process is called a “judicial foreclosure”, which requires the lender to file a lawsuit and obtain a court order allowing the foreclosure to occur. This type of foreclosure is uncommon because is it very expensive and time consuming for the lender. Generally, one will see a judicial foreclosure only in relation to commercial properties and when the lender believes that the borrower has other sources of money which may be available to satisfy the loan (i.e., the lender wants a deficiency judgment).
The far more common foreclosure method used in California is called a “non-judicial foreclosure”. Here, the lender is allowed to foreclosure on a property without the necessity of having to file a lawsuit. The tradeoff is that the lender must follow strict statutory time lines before conducting a foreclosure sale, also referred to as a trustee sale.
The first step of a non-judicial foreclosure is the recording of a Notice of Default (“NOD”), which is public record that the subject loan is in default. The borrower will recognize the Notice of Default as is comes by certified mail and first class post. Usually the lender will send several copies. Occasionally a copy will be posted on the door of the property – although this is not required.
After serving the Notice of Default, the lender must wait 90 days. After that, the lender will publish and serve a Notice of Trustee Sale (“NTS”). The Notice of Trustee Sale gives public notice of the location and date on which the property will be sold by the trustee. The sale is a public auction generally held outside a local court house. The sale must be set at least 21 days after the date of the Notice of Trustee Sale.
Unless the sale is postponed, the trustee designated by the lender will conduct the public foreclosure sale on the date set forth in the Notice of Trustee Sale. If someone buys the property at the auction, the person or entity will take title by way of a Trustee’s Deed. The buyer’s right to the property will be superior to all others. If no one bids high enough to buy the property, title reverts to the lender by Trustee’s Deed. The lender would then list the property for sale as an REO or “Bank Owned” property.
Foreclosure law can be complicated and this discussion provides just a basic overview of the process. If you are facing a foreclosure and wish to save your home, you still have options. We can help! Attorney David Speckman has the knowledge and expertise to examine your situation and give your honest answers about your options. David Speckman is a CPA, real estate broker and has practiced real estate law for nearly two decades. Mr. Speckman has extensive experience helping homeowners stop foreclosures and save their home. Do not delay any longer, call today to schedule a free confidential consultation with Attorney David Speckman.