The pre-foreclosure period begins when you miss your first mortgage payments. This is the time between your first missed payment and when the lender begins taking action. This period varies with each lender and with each borrower. Your lender may take two, three, four, or more months before it commences foreclosure.
Day 1 - Lender Contacts The Borrower
o As of March 2011, there is a new requirement for the lenders that applies to certain owner-occupied residential loans made between 2003 and 2007. For these loans, a lender must contact the borrower by phone or in person to assess the borrower's financial situation and explore options to avoid foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days and give the borrower a toll-free number for HUD-certified housing counselors. After these requirements are met, the lender may continue with the foreclosure process.
If the loan does not fall within the requirements, this step is skipped by the lender.
Day 30 - Notice of Default Is Filed o30 days after contacting the borrower to explore options to avoid foreclosure, the lender may file the Notice of Default, also known as the NOD. The notice of default informs the borrower of the default and formally starts the foreclosure process. The NOD must be filed in the county where the property is located and then mailed within 10 business days to the borrower and others who have requested notice. The form is usually delivered certified mail and many times, in multiple copies. The NOD period lasts a minimum of three months.
Day 121 - Notice of Trustee's Sale Is Filed
oThree months or 90 days after the notice of default is filed, the lender may record a notice of trustee's sale setting forth the date, time, and place of the upcoming trustee's sale. The notice of trustee's sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.he actual Trustee’s Sale can occur no sooner than 20 days after the Notice of Trustee’s Sale is posted on the property, published in a publication of general circulation and mailed to the borrower.
Day 145 - Deadline To Cure Default
oUp to five business days before the trustee's sale, the borrower may reinstate the loan by paying the missed payments plus allowable costs. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the full amount of the loan, plus interest and costs at any time before the bidding begins at the trustee's sale.
Day 152 - Foreclosure
o Although California law allows a trustee's sale to take place 20 days after the posting of the notice of sale, lenders customarily wait 11 more days to help protect against federal tax liens. The trustee’s sale typically takes place at the courthouse steps and the property is sold at a public auction to the highest bidder. Title is transferred to the successful bidder by a trustee's deed. If the property is not bid on, the property reverts back to the bank
** IMPORTANT **
To put this in general terms, once you have stopped making your payments and the lender files the notice of default, the foreclosure can happen as quickly as 110 days, or a little less than four months, and on average it is 121 days.
And please remember, the process we are covering is specific to each loan and we are giving the general terms. Each foreclosure may differ depending upon a wide variety of factors. Therefore, anyone with specific legal questions should seek the advice of an attorney or qualified professional.
Borrower has the right to reinstate the loan up to five (5) days prior to the Trustee Sale date.
The Internal Revenue Service (IRS) has up to 120 days after the Foreclosure sale to redeem the property.
If the first mortgage forecloses and the second lien (junior lien) is a "recourse" loan, they will pursue the homeowner for the full balance of the loan, after the foreclosure.