How to Foreclose on a Home

If you have to foreclose on a home, the process is somewhat complicated and the steps must be followed exactly, or the whole process will have to be repeated.

Difficulty:

Moderately challenging

Instructions

1. Suffer a default. A default is a failure by the borrower (you) to perform a promise contained in the Note or Deed of Trust.

2. File a Notice of Delinquency. This is written notice to any holder of junior deed of trust (any deed of trust filed after the first deed of trust) or mortgagor (person who holds a mortgage) who has requested it, and may be given once the loan has been delinquent for four months, unless the lender has already recorded a Notice of Default.

3. Contact a Foreclosure Trustee to conduct a Trustee Sale. This is typically a title, escrow or foreclosure service company that is named in the Deed of Trust to conduct a foreclosure.

4. File a Notice of Default (NOD). This begins the foreclosure process. The NOD must be: 1) acknowledged (signed by the beneficiary or trustee); 2) recorded in the county where the property is located; 3) mailed (registered or certified), with copies going to the trustor, successors and beneficiary of junior deed; and 4) mailed to any persons who requested notice (co-signors, guarantors).

5. File a Notice of Sale (NOS). This establishes the foreclosure sale date. The foreclosure sale date must be at least 21 days after the date the NOS is recorded. The NOS can only be filed 90 days (three calendar months) after the NOD is recorded.

6. Send copies of NOS to everyone who received a copy of the NOD.

7. Publish the NOS in a newspaper available to the public three times within 21 days. Typically the foreclosure trustee will handle this unless you are handling the complete process yourself (which is not advised due to the seriousness and complexity of the nature of foreclosure).

8. Post the NOS at the property.

9. Mail the NOS by registered or certified mail to the borrowers.

Tips & Warnings

• Defaults are classified as monetary and nonmonetary. You can foreclose for failing to pay the mortgage or failure to do something else not related to money, such as not adhering to ruling and regulations agreed to.

• The lender has the right to substitute trustees, so if one trustee is designated when the instrument is drawn up and something happens to that trustee, or if you just want to change trustees, you can do so.

• Only the beneficiary (lender) or the trustee (third party) may postpone the sale for any reason. The trustee must publish the new NOS three times within the 21 days from the recording of the new NOS.

• In order for the trustor (you) to redeem the loan after the foreclosure, you must pay off the entire balance - plus all costs if it was a judicial or court foreclosure.

• The property is purchased by cash, or cashier's check to the highest bidder.