Foreclosure is a legal procedure which must follow a pre-determined order of events and time-line. The shortest possible foreclosure in California takes about 121 days, but often takes much longer.
First, California is a non-judicial state, meaning that a court and a judge is not involved. Actually, the procedure for California, a non-judicial state, is fairly straightforward. To simplify, it works like this:
After the homeowner has stopped making payments, the lender, either of the primary loan or any secondary loan, may begin the foreclosure process.
These days, many lenders are waiting months to begin the process; however, some lenders always start the moment it is legally possible after just one missed payment. If a homeowner is to miss a mortgage payment it is ALWAYS advisable to call the lender to try and negotiate forbearance or a different loan. NEVER just miss payments saying nothing to the lender.
The first legal notice is the Notice of Default [NOD], sent to the borrower and recorded on the title of the property with the County Recorder. Now, the NOD makes the situation of the homeowner public knowledge. In this day of electronic data-gathering, many individuals and entities are collecting and acting upon this information. As mentioned in a previous post, Losing Your Home? Avoid These Scams, scam artists are everywhere. Be careful. Seek out the counsel of a reliable real estate professional or an attorney.
Following the legal procedure, now the lender must wait for 90 days. This 90-day period is known as the Redemption Period because the homeowner can bring his payments current or “redeem” his loan at any time.
After the Redemption Period, comes the Publication Period, which lasts for 21 days begins. During this time, the lender advertises the coming sale in various newspapers following set rules. At the end of this period, the Trustee’s Sale is held. If no one bids over what is owed the lender, then the lender “takes back” or repossesses, “repos” the property.
At this point, the homeowner should have vacated the property. Those who fail to leave will then face eviction, another legal procedure which can result in the Sheriff appearing at the homeowner’s door and forcing the occupants to move while removing all personal possessions to the curb. This is not pleasant.
It’s interesting and vital knowledge for homeowners that this is the fastest possible scenario for a foreclosure in California. Frequently, though, the procedure is held up, delayed, or postponed for many reasons. The main reason a sale is delayed or put off occurs because the home has a “short sale” offer and the lender wants to consider it. Should that offer fail to please the lender or if the buyer fails to follow through, then the lender can proceed to sale. Other reasons might include possible negotiations with the delinquent homeowner. These days many lenders delay as a matter of course simply because they are overwhelmed by the sheer numbers.