Non-Judicial Foreclosure Process
Here is a brief description of the non-judicial foreclosure process:
- Initial Contact From Lender (Foreclosure Avoidance): The lender MUST contact you to assess your financial situation and explore your options to avoid foreclosure. The lender:
- Cannot start the foreclosure process until at least 30 days after contacting you to make this assessment (or after they have completed certain ‘due diligence’ steps to contact you); and
- Must advise you during the first contact that you have the right to request another meeting about how to avoid foreclosure. That meeting must be scheduled to take place within 14 days.
- Notice Of Default and Election to Sell: If you and the lender have not agreed on a plan to avoid foreclosure, the lender can record a “Notice of Default and Election to Sell” in the county where your home is located. This marks the beginning of the formal foreclosure process and puts the world on notice that the bank intends to sell the property at auction. The lender sends you a copy of this notice by regular AND certified mail within 10 business days of recording it.
Please Note: Since the Notice of Default is recorded as a public document, it can be viewed by anyone and everyone. This can lead to an avalanche of letters, postcards and solicitations from unprincipled loan modification companies, unskilled brokers, unsavory investors and even unscrupulous lawyers all pitching you the “silver bullet” to cure your mortgage problems, for a price of course. Many of these people are violating the law and simply have no intention of helping you. Be very cautious about loan modification companies, trustee postponement services, loan audits, class action and mass joinder scams. Contact us with questions or concerns. Read more on our Frauds/Scams page.
- Notice Of Trustee Sale: After 3 months have passed since the recording of the Notice of Default, the bank can take the next step by recording the “Notice of Trustee’s Sale,” which sets the actual date for the public foreclosure auction. That date can be no SOONER than the 20th day after the Notice of Trustee’s Sale is recorded.
The Notice of Sale must:
- Be sent to you by certified mail.
- Be published weekly in a newspaper of general circulation in the county where your home is located for 3 consecutive weeks before the sale date.
- Be posted on your property, as well as in a public place, usually at your local courthouse.
- Have the date, time, and location of the foreclosure sale; the property address; the trustee’s name, address, and phone number; and a statement that the property will be sold at a public auction.
- Public Foreclosure Auction: On the date set forth in the Notice of Trustee Sale, the property can be sold at the public foreclosure auction. Potential purchasers at the auction (typically investor-buyers) must have cash or cashier’s checks for the amount they wish to bid. The high bidder becomes the owner of the property, and the amount paid at the auction goes to the bank that held the mortgage. If the high bid is MORE than the amount of the outstanding mortgage, the overage goes to any other mortgages or other liens on the property. If there is still money left over, it would go to the prior owner. If there is no bidder or if the lender is not willing to accept less than the full mortgage amount at the auction, the lender would be considered the high bidder (i.e. the lender gets to ‘bid’ the amount it is owed on the mortgage without having to bring cash to the auction). If that occurs, the lender takes ownership of the property itself and the property becomes an “REO” (real estate owned by the lender). This entire non-judicial process can take as little as 111 days – that’s less than four months from beginning to end. Please note, however, that this formal process does not commence until after the borrower has been in default for at least a few months.
Your last chance to cure a default and secure reinstatement of your mortgage:. You can cure your debt up until 5 business days before the scheduled foreclosure auction date . After that, you will no longer be able to reinstate your home, and the foreclosure auction will proceed.
Timing is important. It is crucial that reinstatement is carefully handled, especially if you are in immediate danger of losing your home to a foreclosure auction. You will need to notify your lending institution that you intend to cure the debt, receive a current reinstatement amount, and arrange the timely delivery of the funds. Our Irvine reinstatement Attorney/Realtor can help communicate with your lender and facilitate each stage of the reinstatement .
Alternatives to Reinstatement
For reinstatement to be practical, you will need to have a surplus of funds to make the payments you missed as well as the interest and fees that have since accumulated. You will also need to have reliable income to resume making regular payments. If the hardship that led to your inability to pay was only temporary in nature, this may not be an issue.
If you do not have the financial resources to cure the default, there are other strategies that can help you avoid an imminent foreclosure. Filing for Chapter 13 bankruptcy will freeze all foreclosure proceedings through the automatic stay. In a Chapter 13 bankruptcy, you may be able to cure your default over a 3 to 5 year period pursuant to a Chapter 13 repayment plan and keep your home.
At the conclusion of this process, you are typically permitted to discharge unsecured debts, including credit card debt and medical debt. While you cannot discharge mortgage-related debt, Chapter 13 bankruptcy does give you critical time and flexibility that you will need to reorganize your finances and catch up on payments.
Our Irvine reinstatement Attorney/Realtor at Lawyers Realty Group can assist you in exploring all of your foreclosure avoidance options. We can assess the implications of curing your debt and advise on the safest, most efficient, and most cost-effective means of keeping your home.