California Loan Modification & Foreclosure Law

Lenders who lend in the state of California have the ability to foreclose on mortgages or deeds of trust using either a judicial or non-judicial foreclosure process.  The foreclosure process usually takes about 4 months of 120 days.

Judicial Foreclosure

In a judicial foreclosure proceeding the lender files a lawsuit against the homeowner so that they can get a court ruling which allows them to foreclose of the property.  This process is only followed when the mortgage or deed of trust does not contain a Power of Sale clause. This clause would give the lender authorization to sell the home in the case of default by the borrower.

For a period of one year after the home is sold using a judicial foreclosure the borrower may use what is called a Right of Redemption.  A Right of Redemption allows the borrower one year in which to regain possession of the home by paying the original purchase price of the home plus interest.

Judicial foreclosures also allow the mortgage lender to file for a deficiency balance suit.  A deficiency balance is the difference between what was owed on the home and what the home sold for.

Non-judicial foreclosure

A non-judicial foreclosure proceeding will be followed when there is a Power of Sale clause in the mortgage or the deed of trust.  Typically the Power of Sale clause will set a time, date and place of sale. These terms are followed in the foreclosure proceedings.  If the Power of Sale clause does not specify the details then the foreclosure proceeds as follows:

1.) The Notice of Sale is recorded in the county recorders office where the home is located. It is filed at least 14 days or 2 weeks prior to the sale date.

2.) The lender is required to send a copy of the notice to the borrower by certified mail, which would contain a receipt included, and needs to be sent within 20 days before the sale date.

3.) The lender is also required to post a notice on the front door of the home no later than 20 days prior to the sale date.

4.) The notice must also be placed at any public place in the county where the sale is scheduled to take place.

The auction is to be held on a business day during the hours of 9 am and 5 pm.  The auction is open to anyone who would like to attend.  The sale of the property can be postponed if necessary however the change is announced at the time and the date that was originally specified on the Notice of Sale.

The borrower has the right to bring the mortgage account current and effectively stop the foreclosure sale up to five days before the sale date.  Please keep in mind that non-judicial foreclosures do not give the borrower the Right of Redemption and the mortgage lenders can't apply for deficiency judgments.