Foreclosure Attorney in California
Most western states have a “non-judicial” foreclosure system in which a foreclosure trustee sends a series of legal notices to the homeowner, and then subsequently forecloses on the property, without any court intervention. Once the non-judicial foreclosure sale takes place, it terminates most legal rights the homeowner has in the property, and the property is transferred either back to the lender, or to a 3rd party purchaser. Foreclosure becomes likely when a homeowner falls behind on their mortgage payments, the more payments they are behind, the more likely a foreclosure will take place.
What Causes Foreclosure?
Lenders, and in many cases the mainstream media, would like you to believe foreclosure is caused by “irresponsible” homeowners. This is simply NOT true. Many circumstances beyond the homeowners’ control typically contribute to a homeowner falling behind on mortgage payments, these factors often include:
Loss of Job or Income
Your Foreclosure Lawyers, We Can Help!
If you are facing foreclosure, you are not alone. Over 4.8 Million homes are in foreclosure at any given time in America today, and help is available. With proper legal counsel, many homeowners are able to avoid foreclosure or workout a favorable arrangement with their lender. The foreclosure attorneys at LA Legal Law Firm are ready to assist you. We have the experience and knowledge necessary to save your home and a proven track record of happy clients and success stories. LA Legal Law Firm offers free foreclosure consultations to prospective clients, so contact us today or email us.
The Foreclosure Process
First and foremost, foreclosure is a process. It’s the process your lender must go through to enforce its right to force the sale of your home to collect an outstanding debt.
How did your lender get this right? You gave it to your lender when you signed the mortgage or deed of trust for your home loan. A mortgage or deed of trust was one of the many documents you signed when you originally took out your loan to purchase your home. In this document, you gave to your lender a security interest in your house to guarantee repayment of your mortgage. Once you stop paying your mortgage, your house can be sold without your consent so that your lender can recoup the amount they loaned to you.
How do Foreclosures Work?
The process of foreclosure differs from state to state. If you’re facing foreclosure, before you decide what to do, you need to figure out how your foreclosure will proceed in your state. Here are the big issues you should consider first.
How much time will you have before your house is sold?
If you know that your house can be sold at auction in as few as 30 days after you first get notice of the foreclosure, you’ll need to act differently than if you can count on three or four months in which to negotiate with your lender or try other strategies.
Fortunately, even in short-notice states, you can pretty much count on learning about the intended sale in time to use one of the strategies explained in other articles on this website.
Will your foreclosure go through court?
In a little fewer than half the states, foreclosures are judicial, meaning they go through court; in others, your house can be sold without a judge’s approval in what is called a power of sale or nonjudicial foreclosure. If you know that you won’t lose your house unless a judge gives an official go-ahead, your strategy will likely be different than if your foreclosure will be proceeding without judicial oversight. This is because court foreclosures usually take longer than nonjudicial ones, and it’s easier to raise the common defenses to foreclosure when you automatically get face time with a judge.
Will you be liable for a deficiency judgment after foreclosure?
If your house sells for less than you owe on it, in many states the lender can sue you for at least some of the difference. Homestead laws (state laws that protect your home equity from creditors) don’t help you, because mortgage debt has priority over any homestead rights your state’s law provides.
To learn more, and find the governing law in your state, see our page on Mortgage Deficiency Laws.
Your Options When Facing Foreclosure
Here’s an overview of your main alternatives when you think foreclosure is on the horizon:
Check your eligibility for assistance under one of the federal programs by visiting www.makinghomeaffordable.gov.
Reinstate the existing loan by making up the missed payments, plus costs and interest.
Negotiate a workout (such as a loan modification, forbearance, or repayment plan) with your lender with the help of a free HUD-approved housing counselor.
Most Common Type of Foreclosure Procedure in California
In California, most foreclosures are nonjudicial, which means they happen outside of court (as opposed to judicial foreclosures, which go through the court system). Since most foreclosures in California are nonjudicial, this article focuses on that process.
California law requires the foreclosing party to contact the borrower before the foreclosure officially starts and to provide two separate foreclosure notices: a notice of default and a notice of sale.
Pre-foreclosure outreach requirements. In California, the lender or mortgage servicer must personally contact the borrower (or satisfy the legal requirements for attempting to contact the borrower) 30 days before recording a notice of default (which is the official start to the foreclosure process) to assess the borrower’s financial situation and explore options to avoid foreclosure. Cal. Civ. Code § 2923.5.
Notice of default. To start the foreclosure, the lender or trustee (the third party that manages nonjudicial foreclosures) records a three-month notice of default in the county recorder’s office and mails a copy to the borrower within ten business days following recordation. Cal. Civ. Code §§ 2924, 2924b.
Within one month following recordation of the notice of default, the lender or trustee must mail a copy of the notice to each person who requests notice and to each borrower at his or her last known address if different than the address specified in the deed of trust. Cal. Civil Code § 2924b(c)(1) and (2).
Notice of sale. The lender or trustee then records a notice of sale and mails a copy to the borrower at least 20 days before the sale date. Cal. Civ. Code § 2924, 2924b. The sale date cannot be earlier than three months and 20 days after the recording date of the notice of default. Cal. Civ. Code § 2924.
The notice of sale must also be:
Special Foreclosure Protections in California
California law extends legal protections against foreclosure similar to those provided under the federal Servicemembers Civil Relief Act to:
reservists who have been called to full-time active duty. Cal. Mil. & Vet. Code §§ 400 to 409.13. (Learn more about the Servicemembers Civil Relief Act.)
Reinstating the Mortgage Before the Foreclosure Sale in California
“Reinstating” is when you catch up on the missed payments (plus fees and costs) in order to stop a foreclosure.
Borrowers in California can reinstate the loan at any time up to five business days before the foreclosure sale. Cal. Civ. Code § 2924c.
Right to Redeem After Foreclosure in California
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure. In California, foreclosed homeowners cannot redeem the home following a nonjudicial foreclosure.
California’s Anti-Deficiency Law
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
In California, a lender cannot get a deficiency judgment after a nonjudicial foreclosure. Cal. Code Civ. Proc. § 580d.
Notice to Leave After the Foreclosure Sale
After a California foreclosure sale, the purchaser must give the homeowner a three-day notice to quit (move out) before starting a formal eviction action in court.