California Housing Foreclosure Process
According to a September 2010 report by DQ News, foreclosed homes represented 35.9 percent of properties sold in California during August 2010. Since the mortgage crisis of 2008, the number of California foreclosures has risen, peaking at a historical high of 58.5 percent of properties sold in February 2009. The foreclosure process in California requires lenders to follow a defined time line of actions and typically takes 120 days or more to complete.
Other People Are Reading
-
Title Theory State
-
California is defined as a "title theory" state, which means the lender holds the title (the legal document that defines ownership) of a property until the borrower pays back the loan completely. Upon repayment of the loan, the lender transfers the title to the borrower. Prior to full repayment, the legal system considers the lender the owner of the property specified by the mortgage agreement.
Non-Judicial Foreclosure
-
The majority of California foreclosures follow a non-judicial process, which does not involve the court system. Lenders can use a non-judicial foreclosure process when a loan agreement includes a power of sale clause, which the majority of California mortgage contracts contain. The power of sale clause stipulates that when the borrower defaults on the loan, the lender has the legal right to sell the property.
-
Notice of Default
-
Mortgage terms define a loan as in default after the borrower fails to make payments according to the agreement. The majority of mortgage contracts define a default as 30 days after the due date of a payment. Once a default occurs, the lender must record a "notice of default" with the county registrar in the location of the property. The lender also notifies the borrower in writing of the notice of default filing, putting the borrower on notice that additional action could follow.
Notice of Foreclosure Sale
-
A minimum of 90 days after delivery of the notice of default, the lender can proceed with the foreclosure process by delivering to the borrower a "notice of foreclosure sale." This notice of sale informs the borrower that the lender intends to sell the property and details the time, date and location of the sale. The lender must set the sale date at least 20 days in advance of the notice delivery. The law requires the lender to mail the notice of sale to the borrower, post the notice at the location of the property involved in the default loan and post the notice in a public place within the county (typically a newspaper advertisement). The borrower can rectify the default within five days of the notice delivery by paying the outstanding balance.
Foreclosure Sale
-
After the 20-day notice of foreclosure sale expires, the lender can sell the property. The law requires the sale to occur Monday to Friday, from 9:00 a.m. to 5:00 p.m. The sale must occur at the exact location, time and date specified in the notice of foreclosure sale. The law allows the borrower to postpone the sale by one day, at which time a trustee auctions the property, awarding ownership to the highest bidder.
-
References
Resources
- Photo Credit home sweet home image by David Dorner from Fotolia.com
