Foreclosure Timeline

  • Decrease font sizeDefault font sizeIncrease font size

The process and period of foreclosing a home varies from one state to another. The foreclosure timeline in California typically spans for more than 90 days from the homeowner experiencing hardship to the bank selling the home at an auction. It begins with the homeowner missing at least three monthly mortgage payments. The lender will then send a notice of default (NOD) to allow the homeowner to bring the loan current up to 90 days. A new law, the California Civil Code Section 2923.5, now allows delinquent loans on one-to-four unit owner-occupied properties that were made between January 1, 2003 and December 31, 2007, to have another 30-day borrower contract period before the lender may record the NOD. This provision expires on January 1, 2013.

When the homeowner still refuses to take action, the lender will file a notice of trustee sale (NTS). The homeowner has 21 days to repay his loan or else, the lender will be forced to sell the home at an auction.

Here’s a quick run through of a foreclosure timeline in California.

California foreclosures are mostly non-judicial that is, the state uses deeds of trust for the purchase of real property. Since it uses the power of sale, a non-judicial foreclosure can also be called “power of sale foreclosure”. It allows the lender (trustee) to initiate the foreclosure process without seeking the approval of the court. In contrast, a judicial foreclosure uses mortgage and thus, requires court action to act on the matter such as in New Mexico, North Dakota, Illinois, Kansas and Wisconsin to name a few that strictly follow a judicial foreclosure system.

There are rare cases in California that follow a judicial foreclosure however. Like in Nevada, Oregon, Utah and Arizona, the Golden State mostly has non-judicial foreclosures.

The entire California foreclosure timeline is divided into three short periods namely (a) the redemption period of the homeowner; (b) the publication period of the Notice of Sale; and (c) the auction sale of the foreclosed property.

The chart below best illustrates the foreclosure timeline in California

 

The Redemption Period of the Homeowner

In the Foreclosure Timeline in California chart above, it begins with the homeowner having the inability to sustain his mortgage payments. This hardship occurs for a number of reasons such as job loss, mortgage payment adjustment, a lower income, business failure, illness, divorce or separation, incarceration, or death of the mortgage payer or co-borrower.

While the first missed payment is already an early sign of imminent default, the lender will start calling the homeowner to remind them of their delinquency. Some lenders however don’t call but will send letters to the homeowners instead to ask them to bring the loan to current or to request them to call the lender and figure out a payment plan. Borrowers who maintain communication with their lender and prove that progress towards repaying their loan is proven may be given more time to regain their finances.

Delinquency is also reported to credit bureaus to heed them of the homeowner’s financial adversity. The bank or lender would continue doing so every 30 days until the homeowner fails to pay on the 90th day (based on the sample timeline above). This is known as the pre-foreclosure period.

 

The Publication Period of the Notice of Sale

When nothing happens, the mortgage account is deemed delinquent and moves from collections to loss mitigation. Since the homeowner is already at risk of losing his home, a loss mitigation specialist will handle his account to help him keep his home through special forbearance, loan modification or short sale among others. Remember however, that the lender will try to recoup the lost value but will still incur some financial losses albeit smaller than the loss in a foreclosure.

There will be a 90-day loss mitigation process until a Notice of Default is finally sent to the delinquent homeowner if he still fails to pay his mortgage. This process begins by filing the Notice of Default to the county recorder then mailing it to the homeowner’s address within 10 business days. The borrower is given contact information so he can bring the loan current and avoid the costly process of foreclosure.

During this period of the foreclosure timeline in California, all junior lien holders receive a copy of the Notice of Default as well.

For 90 days, the lender can do nothing about the property since the borrower is allowed to pay off or instruct the lender to initiate a short sale of the property. The lender however can extend this leeway for more than 90 days depending on his discretion. The rule only states that he cannot do anything with regard to the property within 90 days.

Take note too that some lenders don’t send out the NOD even if the homeowners have missed their mortgage payments for more than 90 days. It all depends on the lender that one has for his mortgage.

In the Foreclosure Timeline in California chart above, the homeowner will receive this notice in June.  If there is nothing that can be done to salvage the property out of foreclosure in the 90-day period, the date of the trustee sale shall be determined in accordance with the California foreclosure law. By adding 20 days to the day when the lender publishes a Notice of Sale in a newspaper, the trustee sale is identified. In the Foreclosure Timeline in California chart above, this occurs on July 21. The advertisement is published every week for three consecutive weeks. It is also recorded with the County Recorder 14 days before the actual auction sale.

 

The Auction Sale of the Foreclosed Property

The auction sale can only proceed if the publication of the Notice of Sale has been met.

The county courthouse will administer the sale for a number of bidders on a given date between 9:00 a.m. and 5:00 p.m. on any business day, Monday through Friday. The house’s legal ownership shall be transferred to the highest bidder during the auction. However, if it remains unsold, it will be taken back by the bank and later sold as a real estate owned (REO) property.

The foreclosure timeline in California tells us how long it will take for a homeowner who is delinquent of his mortgage payments to be evicted out of his home. For homeowners already on the risk of losing their properties, the foreclosure timeline in California will help them plan their next steps within a definite time frame so they could retain ownership of their home.

Are you currently having trouble with paying your monthly mortgage? If you are experiencing financial difficulties and this may lead your property to foreclosure, don’t wait until the last minute. Consult a foreclosure expert today! We can provide you with valuable information to help you save your house from the auction block. Act today or you may realize that it’s already too late. 800-692-1688