What to Expect With a Foreclosure

Foreclosures aren't one-size-fits-all, and if you live in California, the process will probably go much more quickly than if you own property in other states. For the most part, California lenders pursue non-judicial foreclosures, so they can bypass some time-consuming steps.

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Notice

The opening salvo in the non-judicial foreclosure process is a "Notice of Default." You might miss several mortgage payments – as many as three – before you receive such a notice from your lender. The notice itemizes how far behind you are with your loan payments and lists other costs and penalties you must pay to catch your mortgage up. In California, you have 90 days to come up with the money. If you do so, you can stop the foreclosure process in its tracks.

Trustee's Sale

Most California lenders secure property loans with deeds of trust, not mortgages. A deed of trust involves a third party, called a trustee, who holds title to your home until you pay off your loan. If you default, and after your 90-day notice expires, the trustee has a legal right to put your property up for sale. He'll file a "Notice of Trustee's Sale" with the court and serve you with a copy. The sale of your home can occur 21 days later with no further proceedings or warning. The sale is typically an auction and your home will go to the highest bidder. You don't have the right to bid on your house yourself, but you can catch up with your payments until five days before the sale to save your property. After this deadline, you can only save your house by paying off the entire loan.

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Possession

You don't have to move out of your home just because the foreclosure process has begun. Even after the sale of your home, if you refuse to leave voluntarily, the new owner must take further action through the court to remove you. He must give you a "Notice to Quit" or to vacate the property, and if you don't, he must then file an unlawful detainer lawsuit to evict you.

Judicial Foreclosures

California lenders will use the judicial foreclosure process if your mortgage or deed of trust does not include a power of sale clause, allowing them to simply schedule the sale of your property. Some other states don't allow non-judicial foreclosures, so lenders in these jurisdictions must also use this option. The major distinction between the two processes is that a lender must first file a lawsuit in a judicial foreclosure. The court schedules a hearing, and you have the right to defend yourself. You can file answering pleadings and argue your case in court. If you do nothing, the court will give your lender a judgment for foreclosure by default, and it can schedule the sale of your home by auction. Your lender can also schedule the sale if you fight the lawsuit and lose.

Deficiencies and Redemption

With a judicial foreclosure, your lender has the right to sue you a second time if your house sells for less than the balance you owe on the loan. However, lenders lose this right with non-judicial proceedings. Judicial foreclosures also allow you a period of time after the sale to pay off your loan rather than lose your property – up to a year in California. This right of redemption is not available with non-judicial foreclosures.