California Foreclosure Law
Civil Code 2924
Foreclosure Process California
Generally speaking, a lender would prefer to receive payments than receive a home due to foreclosure. Lenders will often accommodate home owners who are having difficulty making payments. The best course of action is to call the lender before missing payments. Lenders may restructure the loan or make alternative payment arrangements.
If a homeowner misses payments and does not contact the lender to make alternative arrangements or restructure the loan, the lender may begin the foreclosure process. The lender files a Notice of Default with the County Recorder’s Office. A copy of the notice is mailed to the property owner.
If a default is caused by a balloon payment not being made when due, then the lender can require payment in full on the entire outstanding loan as the only remedy to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.
Public Sale: A Notice of Sale must be published in a local newspaper and posted in a public place (typically the courthouse) for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current.
If the default is cured by the owner the deed of trust is reinstated and regularly monthly payments resume. It may still be possible for the property owner to work out a postponement on the sale with the lender.
If a postponement is not reached, then the property goes “on the block.” When properties are sold “on the block” at a trustee’s sale, buyers must pay the amount of their bid in cash, cashier’s check, or other instrument acceptable to the trustee.
Caveat Emptor – Buyer Beware: There is a high probability that foreclosed properties may carry the burden of overdue taxes, liens and clouds on title. Be sure to investigate possible outstanding liens and encumbrances prior to submitting a bid at a pubic sale. It is possible that title insurance may not be available following a foreclosure sale or exceptions may be included in a title insurance policy of a foreclosed property.
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