Within six months, many California homeowners shall be substantially late on their mortgage payments, and will receive an NOD or Notice of Default. At that time, they will need to make a decision on whether they should do a short sale on their property. Homeowners may feel stressed and too depressed to take action at that time, but home owners should know that they will often have better financial results if they sell the home short instead of letting the bank take it. Here is the process: #foreclosure
California Foreclosure Process: Day 1, Missed Payment | Blog Video
The first step along the California foreclosure timeline is a missed payment. Maybe the homeowner lost their job, suffered a serious illness, or just fell behind. Oftentimes, when a payment is missed, or even several mortgage payments, there is a grace period in which the bank will send a reminder and assess a late fee before taking further actions. #shortsale
The homeowner may be able to make it up the next month, but it can be difficult with late fees and interest. It’s easy to fall even further behind, which puts the home at risk. The exact point at which the loan is considered “in default” depends on the terms of the specific loan. #california
For most mortgages, it happens at 90 days late.
Day 120, Notice of Default
When the home loan is in default, the bank files a Notice of Default with the court. They notify the homeowner within 10 days with an official legal document informing of the state of default on the loan. It includes information about options for getting out of default, such as paying all the back payments, with interest and fees, to get out of default. The homeowner also needs to keep up the insurance and property taxes.
Due to federal mortgage servicing laws, defined by the Consumer Finance Protection Bureau, the loan servicer must wait 120 days before making a first official notice, or before they file a judicial or nonjudicial foreclosure.
If the homeowner doesn’t have the cash to pay all of that at once, the home will continue to be in default.
Day 180, Notice of Trustee Sale
After the homeowner has received a Notice of Default, they have 3 months in which to attempt to get the loan current by paying all back payments, interest, fees, property taxes, and insurance. After 3 months, the bank can officially set a date for the auction of the home. The homeowner is notified through a Notice of Trustee Sale, typically sent via certified mail.
California Foreclosure Process: Day 200, Auction
After sending the homeowner a Notice of Trustee Sale, the bank sets a date for the auction. It must wait at least 20 days after the Notice of Trustee Sale is sent to the homeowner. The sale may be postponed by a court or by the bank for up to a year, after which point they’ll need to send a new Notice of Trustee Sale in order to send the house to auction. At the auction, the home will be sold to the highest bidder.
Nonjudicial Foreclosures in California
The majority of California foreclosures are nonjudicial, meaning the bank does not have to go through a court to foreclose. If the home is sold in a nonjudicial foreclosure, the homeowner’s responsibility ends once the home is sold. The homeowner may have to pay fees relating to the sale, but won’t owe any more money on the mortgage even if the home sells for less than the amount owed. The loser of the home may, however, still owe a second mortgage that was not used to purchase the house (for example, a home equity line of credit).
Total Time for California Foreclosure: 200 Days or so
It’s usually possible for a bank to complete a foreclosure in California in just 200 days from the date it first became delinquent. In reality, those are just the legal minimum times and most foreclosures take much longer.
How to Stop Foreclosure in California
Get caught up on the mortgage, file bankruptcy or do a short sale.
Short Sale Update — Short Sales Now Shorter!
One way to avoid a foreclosure is to sell the home, even if the seller owes more on the property than what it’s worth. This is called a short sale. Short sale rules are changing. Short sales have been known for taking anything but a short period of time, but that has changed recently because sellers are being given less time to get the home sold. Recently, banks have been sticking to their own strict timetable in which they may allow the seller to list the home for short sale, get an offer and get escrow closed. If the seller does not succeed in closing escrow and selling the home in that time period allowed by the lender, then the seller may not have another opportunity to short sell. The buyer’s agent must be diligent to place serious offers only. The listing agent should talk to the buyer’s agent to ensure that the short sale addendum is signed. The seller is usually only given about 4 months to short sell. That is why the listing agent should suggest that the seller not accept an offer unless the buyer is a sure thing. Short sellers may only have one shot, and only if done early enough in the process.
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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE 01889449 We are not associated with the homeowner’s association or developer. For more information, contact 213-880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.