The Foreclosure Process
THE CALIFORNIA FORECLOSURE PROCESS:
A. Promissory Notes and Deed of Trust
Real estate loans in California are typically evidenced by a written agreement called a "promissory note". The note spells out the amount owed and the terms to repay it. The note is signed by the borrower(the trustor) and given to the lender (the beneficiary). The security which guarantees that the borrower will repay the note is typically the DEED OF TRUST held by the TRUSTEE. The Deed of Trust is recorded in the county in which the property is located.
B. Default by a Borrower
If the Note is not paid as agreed, or if the Borrower commits waste on the property, the Borrower is in Default and the Beneficiary can take steps to sell the property to collect what was due. The sale is called: FORECLOSURE SALE. Two kinds of Foreclosure Sale in California:
a.) Judicial Foreclosure - can be accomplished using the court system which is very expensive and time consuming. The lender could actually file a lawsuit against the homeowner for not paying back the note. It doesn't have to be today - it could be within next 4 years from now and come after the homeowner.
b.) Non-judicial Foreclosure - this method is under the Power of Sale Provision which allows a Trustee Sale. In California, most lenders foreclose using a Trustee Sale, following the exact steps and timelines to ensure the process is legal and complete.
C. The Power of Sale Provision (the 1st step) requires a lender to send a Notice Of Intent to file a Notice of Default (NOD) and the Notice of Sale (NOS)(2nd step)once 3 calendar months had passed since NOD was recorded, the borrower has not reinstated the debt, the lender may direct the trustee to foreclose on the property. The Notice of Sale is within a 20 day period and is posted on a public place and on the property being foreclosed and is open to anyone who wish to bid.
D. Right of the Borrower to Reinstate the Loan up to 5 days Before Trustee's Sale
E. Equity Redemption at Any Time prior to Trustee Sale; Nothing after Sale
F. The Trustee"s Sale
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