Foreclosure is the process by which a secured creditor holding a mortgage retakes possession of the real property that is security for the loan typically following a default in payment. A typical foreclosure is done outside of any court proceeding through the services of a title company.
The foreclosure process generally starts with a demand letter from the creditor. The creditor will record and mail a “Notice of Default”, which is the first step in the formal foreclosure process. The borrower is given by law a period of 90 days to make up the late payment(s). If the borrower makes the payment and brings the loan current during that 90-day period, the foreclosure process stops, the loan is reinstated and goes back to normal status.
If the debtor fails to make the payment within that 90-day period, the next step in the process is for the lender to record a “Notice of Trustee Sale”, which sets a date, time and location for a public auction sale of the property. The sale has to be set at least 20 days after recording the Notice of Trustee Sale. Under current California foreclosure law, the borrower has an additional period of time to cure the loan up to 5 days prior to the sale, but if no cure is made, the property is auctioned to the highest bidder in a public location like a courthouse. The trustee then executes a trustee’s deed in favor of the highest bidder, the deed gets recorded and the highest bidder owns the property.
How Public is A Foreclosure Proceeding?
Once initiated, the information is available to anyone. The documents are recorded announcing a foreclosure process. The Notice of Default is sent not only to the defaulting borrower but to all junior lenders on the property. For instance, if you have a junior trust deed on a property, you will receive copies of the notice of default and notice of trustee’s sale. Anyone else who is curious to know if you are being foreclosed against can also go to the county recorder’s office and pull up copies of all recorded documents.
Payment defaults are reported to the credit reporting services, so they will show up on your credit report. Once the trustee’s deed is executed at a foreclosure sale, that deed is then recorded, so that becomes another public document. Also, if you file bankruptcy, all of the bankruptcy filings are public records and available to anyone who wants to go to the federal website or the federal courthouse and look under your name.
What is a Foreclosure Sale?
A foreclosure sale is the event at which title to the real property gets transferred in what’s called a “non-judicial foreclosure”, which is one that isn’t processed through the courts. The foreclosure sale is done by a trustee, who is given the express authority in the deed of trust to conduct a sale following the processing of a foreclosure. The trustee will conduct the sale, award the property to the highest bidder, execute a trustee’s deed and have it recorded.
For more information on Foreclosure Process, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (916) 635-0302 today.