|
State Foreclosure Information
California
When you develop a definite plan of action with well-timed, well-informed steps, you can stop
the foreclosure process and save your home. We have outlined the foreclose process for the
state of California.
Judicial Foreclosure Available: Yes
Non-judicial Foreclosure Available: Yes
Non-judicial Sale
Typically, a title insurance company is named as the trustee to arrange the sale of the
real estate.
California is famous for its one-action rule, in which a lender must carefully elect one
action to take against the borrower if the borrower defaults. If the lender forecloses the
deed of trust out of court, the lender has chosen one action and may not bring a lawsuit
to recover a deficiency, which would be a second action. If the lender chooses to sue the
borrower and obtain both a foreclosure order, and if the proceeds of the judicial sale of
the real estate are not sufficient to repay the loan balance, then a deficiency for the
balance. Such a suit is permitted as the lender’s one action.
California lenders rarely elect judicial foreclosures.
Preliminary Notice: Non-judicial
Notice of Sale
The notice of sale must contain the name, street address and phone number
of the trustee conducting the sale and the original trustor, along with a statement warning
borrowers that their property is about to be lost at a public foreclosure sale and to contact
a lawyer for an explanation.
The notice must give the street address. If no street address exists, the
notice must state the address of the beneficiary from whom a set of directions to the property
may be obtained if they are requested in writing within ten days from the first publications
of the foreclosure notice.
Advertising
A copy of the notice of sale must be posted in a conspicuous place on the
property to be sold at least 20 days before the sale. If access to the property is restricted
by means of a central guard gate, then the notice must be posted on the guard gate. A copy
of the notice must be posted at one public place in the city where the property is to be
sold (or judicial district in rural areas) at least 20 days before the sale.
Recording
A notice of trustee sale must be recorded at least 14 days before the sale.
Mailing
A notice of trustee sale must be mailed by certified mail, return receipt
requested, 20 days before the foreclosure sale to the borrower, to anyone who requests notice
or recorded a request and to the trustors, beneficiaries or parties at interest.
Sale Procedures: Non-judicial
Time
All sales under a power of sale in a deed of trust will be made between
the hours of 9:00 a.m. and 5:00 p.m. on any business day, Monday through Friday, at the
time specified in the notice of trustee sale.
Place
The sale shall commence at the location specified in the notice of sale.
Manner
The sale must be made a public auction to the highest bidder. The trustee
has the right to require every bidder to show evidence of ability to pay the full bid in
cash, cashier’s check or certain bank checks. Each bid is by law an irrevocable offer to
purchase. However, a higher bid cancels an earlier bid. It is unlawful and a criminal offense
(a fine of $10,000 or up to one year in jail) to offer anyone consideration not to bid,
or to fix or restrain the bidding process in any manner.
Postponement
Sales may be postponed by announcement at the time and location specified
for the intended sale. The borrower may postpone the sale in order to obtain cash, provided
the written request for postponement identifies source from which the funds are to be obtained,
and the postponement is only for one business day. The borrower may obtain one such postponement.
Reinstatement
Debtors may reinstate up to five days before non-judicial foreclosure sale.
Junior
Junior lien holders may no longer redeem, so they may try to protect themselves
by (1) advancing funds to bring the senior loan payments current, then foreclosing for the
sums advanced; (2) bidding at the foreclosure sale so the price will be sufficient to pay
off the senior and the junior liens; or (3) acquire the property by bidding at the foreclosure.
If the debtor has a right to redeem and does so, the junior who purchased the home must
be reimbursed. Junior liens do not reattach the property if a borrower redeems a senior
lien whose foreclosure extinguished the junior. This helps borrowers by encouraging the
junior to bid up to the property to fair market value at the foreclosure sale, or else lose
out, giving borrowers closer to fair value at sale.
Deficiency
Lenders may not seek a deficiency judgment if (1) the foreclosure is non-judicial
or if (2) foreclosure is on a purchase money obligation. The same rules do not apply to
guarantee or later lien holders. The lenders may seize alternative collateral. If the lender
forecloses by filing a lawsuit, then the lender can obtain both a foreclosure sale order
and a judgment against the borrower for a deficiency after the court-ordered sale, but only
for the difference between the judgment and the fair value of the security.
Redemption
A borrower’s right to redemption is terminated when a deficiency judgment
is waived or prohibited. When redemption is permitted, after judicial foreclosure, only
the borrower can now redeem and junior lien holders or "redemptionors" may not.
When the lender is permitted to seek a deficiency, elects to pursue a deficiency and forecloses
judicially, the borrower may redeem 12 months after sale, but a full credit bid by the lender
cuts it to 3 months.
|
