What is the Process & Timeline of a Foreclosure in California?
When a home owner (borrower) does not meet the terms of the loan by going default on his or her loan, the lender starts the foreclosure process by filing a Notice of Default (NOD) on the property through the county.
The NOD will list the amount delinquent and the due date the borrower must pay off the default by. This notice will be mailed to the borrower. The borrower has 90 days to bring their account back into current status by paying off the default amount and any additional fees brought on by the delinquency - this period of time is known as the "Reinstatement Period".
If after the Reinstatement Period, the borrower has not brought their account current, the lender may file a Notice of Trustee Sale (NOS) with the county. The auction date or sale date can be set for just 14 days after the NOS is recorded. The lender may postpone the sale date due to a number of reasons, some of which may be: property is currently in escrow and being negotiated as a short sale, property is listed for sale and offers are being presented, etc.
The borrower may also pay off the default amount plus any additional fees brought on by the delinquency and foreclosure up to 5 business days prior to the sale date in order to stop the foreclosure.
Should the borrower not bring the account current, the home will be sold at auction (usually on the court house steps). Once the sale is complete, title will transfer to the highest bidder and the borrower will not have the right to redeem the property after the sale.
Buying & Selling a Pre-Foreclosure or Foreclosure
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Short Sale:
A short sale is when a home owner is selling their home for less than what they owe on the mortgage. They must sell the home "subject to lender's approval". Depending on the lender and how many loans are on the property, this process can take anywhere from 45 days to 9 months.
Public Auction:
Buyers can bid on the property at public auction (usually held on the court house steps). In this scenario, buyers are usually required to pay in cash and have limited time to research the property condition and title. Though there are good deals to be had at auction, it is best to do your research beforehand!
Bank Owned / REO's:
If a lender forecloses on a property, they will enlist the help of a Realtor to sell the home on the open market. The lender will make sure the title is clear and sometimes complete repairs and/or maintenance on the home prior to listing it for sale.
For more information on the foreclosure process, time line or for options as a seller or buyer, please call or email us!
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