Foreclosure Timeline in California
The California foreclosure process can take varying amounts of time depending on the lender and the mortgage situation. Lenders can move quickly, trying to push the nonjudicial trustees sale quickly to recoup the value of the home. Most lenders move a bit more slowly, trying to work with the borrower to make something work for both parties.
Here’s what to expect in the California foreclosure process:
- A Payment is Missed
- Reminders and Limbo
- Notice of Default is Given
- Notice of Trustee Sale is Given
- Foreclosure Completed at Auction
The judicial foreclosure process is a bit different, but California foreclosures generally go through the nonjudicial foreclosure process.
Nonjudicial Foreclosure in California
A Payment is Missed
The California foreclosure process will not begin until a payment is missed on the loan in question. Once a payment is missed or even delayed, the loan can enter the foreclosure process. Technically, even if all but a single dollar is paid on the loan, foreclosure can start. Any outstanding balance can start the ball rolling.
Reminders and Limbo
On the first day that a loan payment is missed, the lender won’t usually issue a notice of default. Lenders can recover more of the value of the loan if it is paid in full as agreed, and can stand to lose money if they go through the foreclosure process. Especially in California, where deficiency cannot be collected from consumers who have a mortgage for their primary residence, you don’t stand to make money on top of a foreclosure—for the most part.
During the period after a payment is missed, most lenders will give a few months before starting the foreclosure process. Policy varies from company to company, but you should expect reminders and a grace period for at least 120 days after a payment is missed. There are laws defined by the Consumer Finance Protection Bureau which usually prevent a notice of default from being served before then. You can still make good on the loan amount during this period and prevent the foreclosure process from occurring.
During this time, you still have the most amount of leverage possible. You should be in constant communication with your lender about your financial situation and why you’ve been unable to make payments. You should work together to develop a plan that allows you to get back on the right side of the mortgage.
Notice of Default is Given
After it becomes clear that the borrower is struggling to repay and probably will not be able to rectify the situation, a notice of default is served. The notice of default must be sent to you within 10 days of the date that it is filed. A notice of default is the first official stage of the California foreclosure process, and gives you at least 3 months to repay the loan and all outstanding fees on it. Once you receive a notice of default, you know that you probably don’t have more than 3 months to repay your loan.
Notice of Trustee Sale is Given
After the 90 days from the date you receive the notice of default, the lender is free to file a nonjudicial foreclosure and a notice of trustee sale. The notice of trustee sale allows the lender to sell the house to the highest bidder to recoup the amount of the loan that you were unable to pay. Once the notice of trustee sale is given, you usually only have a couple of weeks to make good on the loan. The gears are already in motion and can be tough to stop.
Foreclosure Completed at Auction
The notice of trustee sale must be published in a widely circulated paper for at least 3 weeks, and the trustee sale date must be at least three weeks after the date that the notice is given. At the trustee sale, the home of the borrower is auctioned off to the highest bidder, usually starting at an amount that will recover the lost loan for the lender.
Once you’ve reached the auction stage, there is pretty much nothing that a borrower can do to stop the auction from going through. Most homes cannot be redeemed up to five days before the auction starts.
Judicial Foreclosure Timeline
The judicial foreclosure timeline in California is a lot more complicated and confusing. Judicial foreclosures are rare, because they are messier and more expensive than a nonjudicial foreclosure. A bank can recover a bigger amount of the loan, through charging deficiency, but it is also harder for them to win and it takes longer. Most foreclosures in California will therefore use the nonjudicial system to go through a trustee sale.