Understanding the Foreclosure Process in California

Understanding the foreclosure process in California is an important part of navigating your own home foreclosure.

Before we dive in…

Understanding the Foreclosure Process in California

What is foreclosure anyway?

Foreclosure is the legal process that lenders use to take back property securing aย loan, generally after the borrower stops making payments.

Foreclosure is no fun. ย But just know that it’s not the end of the world.

When you know how foreclosure in California works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.

The Basic Stages of A Foreclosure

There are a few stages that are important to any foreclosure process.

Foreclosure works differently in different states around the country.

The two ways different states use to foreclose upon aย property are: judicial sale or power of sale.

Connect with us by calling (805)505-7373 or through our contact page to have us walk you through the specific foreclosure process here locally in Santa Barbara.

In either scenario, foreclosure typically doesnโ€™t go to court until 3-6 months ofย missed payments have elapsed. Usually (but not always), a lender will send outย many notices that you are in arrears โ€“ overdue or behind in your payment.

Under Judicial Foreclosure:

  • Your mortgage lender must file suit in the court system.
  • Youโ€™ll get a letter from the court demanding payment.
  • Assuming the loan is valid, youโ€™ll have 30 days to bring payment to court toย avoid foreclosure (and sometimes that can be extended).
  • If you donโ€™t pay during the payment period, a judgment will be entered andย the lender can request the sale of your property โ€“ usually through an auction.
  • Once the property is sold, the sheriff serves an eviction notice and forces youย to immediately vacate the property.

Under Power of Sale (or Non-Judicial Foreclosure):

  • The mortgage lender serves you with papers demanding payment, and theย courts are not required โ€“ although the process may be subject to judicialย review.
  • After the established waiting period has elapsed, a deed of trust is drawn upย and control of your property is transferred to a trustee.
  • The trustee can then sell your property to the lender at a public auctionย (notice must be given).

Anyone who has an interest in the property must be notified during either type ofย foreclosure.

For example, any contractors or banks with liens against a foreclosedย property are entitled to collect from the proceedings of an auction.

What Happens After Aย Foreclosure Auction?

After a foreclosure is complete, the loan amount is paid off with the sale proceeds.

Sometimes, if the sale of the property at auction isnโ€™t enough to pay off the loan,ย a deficiency judgment can be issued against the borrower.

A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.

Some states limit theย amount owed in a deficiency judgment to the fair value of the property at the timeย of sale, while other states will allow the full loan amount to be assessed against theย borrower.

Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.

Generally, itโ€™s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Central Coast Home Buyers to help you negotiateย discounts off the amount owed to avoid having to carry out a foreclosure.

Experienced investors can help you by negotiating directly with banks to lower theย amount you owe in a sale โ€“ or even eliminate it, even if your home is worth less thanย you owe.

If you need to sell a property near Santa Barbara, we can help you.

We buy houses in Santa Barbara Californiaย like yours from people who need to sell fast.

Give us a call anytime (805)505-7373 or
fill out the formย on this website today! >>

 

Another Foreclosure Resource For Santa Barbara California HomeOwners:

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