Foreclosure Law in California

Buying a home is a big step in anyone's life. When people buy a home, they don't expect that the day will come when they are unable to make the mortgage payments on the home. For some people, unexpected events like a job loss or high medical bills might lead to missed mortgage payments. When those missed payments begin to mount, the lender might opt to pursue foreclosure.

Types of Foreclosure in California

With very few exceptions, foreclosures in California go through the non-judicial process. A lender's right to sell the home when the borrower defaults on the payments is covered in a “Power of Sale” clause in the mortgage contract. When a lender opts to pursue foreclosure in California, one must do so in accordance with the guidelines set by the state.

When a home will be sold at a public sale in accordance with a non-judicial foreclosure, the lender must notify the borrower at least 20 days before the sale. The notification must be done via certified mail with a return receipt requested. A notice must also be posted on the property at least 20 days before the sale. Additionally, a notice of sale has to be posted in a public place in the county in which the property will be sold. At least 14 days before the sale, a notice of sale must be recorded in the county in which the property is located.

In California, a borrower has up until five days prior to the sale to cure the default. If the borrower cures the default, the process stops. State law also allows a borrower to request a meeting with the lender to discuss how the foreclosure can be stopped, such as through foreclosure alternatives.

While California does allow for judicial foreclosures, the judicial method isn't used as often as non-judicial foreclosures. The judicial process is reserved for homes without a “Power of Sale” clause in the mortgage. It moves forward in a similar manner as a non-judicial method, but the process takes place in court. The lender has to file a lawsuit and the court has to issue an order to foreclose. From there, the public auction can take place.

Redemption and Deficiency Judgments

In California, non-judicial foreclosures have no redemption period so a person who loses a home to this method can't reclaim the property. There is also no deficiency judgment allowed for non-judicial foreclosures, so lenders can't sue homeowners to recoup lost money.

When a homeowner loses a home to a judicial foreclosure, there is a one year redemption period. Lenders can also seek deficiency judgments within that same time frame.

With the option of asking the lender for a meeting to discuss foreclosure alternatives in California, it is vital that anyone who is serviced with a foreclosure notice speak to a lawyer who is familiar with foreclosure law. This can help the homeowner to discover all the possible methods the state allows to stop foreclosure.