Rights of Borrower Under California Foreclosure Law
When a borrower stops making payment to the lender holding his loan on his home, the lender has the legal right to terminate the loan agreement. There are all sorts of reasons why a borrower may default on the loan, such as job loss, death or an illness that prevents him from working, among others. The term for this process is called foreclosure. The lender has the authority to sell foreclosed homes through auction to recoup part of the debt owed on the home. Foreclosure laws differ from state to state, but in California, the soonest a home can be foreclosed is in 121 days.
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Notice of Default
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Borrowers generally have up to six months of non-payment or more before a notice of default is sent by the lender to the county in which the home is located. After this notice is sent, the foreclosure process doesn't progress for 60 days. This period of time is known as the redemption period and provides time for the borrower to make good on the mortgage.
Publication Period
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After the redemption period has lapsed, the notice of foreclosure sale must be recorded by the county 14 days prior to the sale.
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Notice of Sale
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The borrower is notified 20 days before the sale of the home takes place. Notice of the foreclosure must be mailed to the borrower, in addition to other creditors with liens on the home, and posted on the home itself. Notice must also be posted at public places throughout the county where the home is located to alert potential buyers about the sale. The sale occurs 21 days following the first publication notice unless arrearages are paid by the borrower to stop the sale of the home.
Foreclosure Guidelines
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Borrowers in California have up to five days to resolve the default and stop the sale of the foreclosed home once all notices have been issued.
Power of Sale: Judicial Foreclosures
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California allows both judicial and non-judicial foreclosures. A judicial foreclosure enables the lender to obtain a court order to foreclosure on a home and auction it off when no power of sale clause is included in the mortgage agreement. In certain circumstances, borrowers can request a deficiency judgment to allow them up to one year to reclaim the home.
Power of Sale: Non-Judicial Foreclosures
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A non-judicial foreclosure is one where a power of sale provision is outlined in the mortgage agreement, pre-authorized by the borrower, to allow the home to be sold by the lender in the event that the borrower can no longer pay the mortgage.
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References
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