California Foreclosure Process
Start of foreclosure process. Initial notice recorded after borrower fails to meet the terms of their loan.
CC 2924c.(a)(1)
Sets auction date. Can be recorded 3 months after Notice of Default
CC 2924 c. (b)(1)
Initial auction date can be just 20 days after Notice of Trustees Sale is recorded.
CC 2924 f. (b)(1)
Auctions can postpone for up to one year.
CC 2924 g. (c)(1)
Transfers property to winning bidder. By default this will be the lender if no bid higher than the lender's opening bid is received.
CC 2924 h. (c)
Properties are considered to be in Preforeclosure from the filing of the initial Notice of Default until the property is sold at auction. During this period investors can purchase the home directly from the owner, Realtors can list the home, and Lenders can help them refinance.
Auction properties have had a Notice of Trustee Sale filed setting an auction date, and have not yet been sold or cancelled. Investors can purchase the home at auction; and Realtors® and Lenders can monitor their client's properties, to ensure their listing and loan activities are completed before the auction.
Bank owned properties received no bid at auction, resulting in the bank taking ownership. These properties are commonly referred to by the banks as REO's (Real Estate Owned). Investors can purchase these properties directly from the bank; and Realtors® can solicit the listing, since banks will almost certainly market the property for sale.
| Opportunity | Traditional Financing | Subject-To Financing | Title Insurance | Inspections | Eviction Required | Overall Risk |
| Preforeclosure | Yes | Yes | Yes | Yes | No | Low |
| Auction | No | No | No | No | Maybe | High |
| Bank Owned | Yes | No | Yes | Yes | No | Very Low |
Comments
can the home equaity loan write off y our loan before your first has closed foreclosure
Yes. Wasn't uncommon at all in the 90's for 2nds to be written off without the 1st ever foreclosing.
Yes, Home Equity loans - commonly called HELOC loans are generally charged off at about 5 months of non-payment. You can get it out of the charge off department by making a full payment or two (to the HELOC loan) if you are trying to negotiate a short sale. This is important because before a charge off the HELOC will generally accept far less on a short payoff - than after the loan has been charged off. After charge off the owner of the HELOC loan will often want 30% or more of the face value of the note in order to settle the debt! With a HELOC - there is a personal liability component to the loan, and when the home forecloses, the loan is no longer secured by the home, but it is still secured by you! These loans are typically "charged off" by your lender and sold to an aggressive collection company for pennies on the dollar - they can come after you with an aggressive collection action. Also, there are potential tax consequences. There is State and Federal debt forgiveness laws - but if you pulled monies out and went shopping, buying cars, and education or another home with the money instead of improving the home - those amounts are taxable. Thus, filing Bankruptcy is a valid option because debts forgiven in a chapter 7 Bankruptcy are not taxable. And to get the Best result - short sale during/after the bankruptcy and avoid the damage to your credit from a foreclosure and stay in the property longer so you will be able to save sufficient monies to get a truly fresh start. REThink Short Sale Solutions offers these services, and has expertise in working with her teams of Bankruptcy Attorneys to achieve the optimal, protected result for you.
1.) If an investor purchases an existing NOTE, does that new Note holder inherit [any] liability re: the initial Note?
(eg. If a forensic loan audit uncovers evidence that there may have been RESPA violations or some other 'issue' in the initial acquisition of the original Note, is the new Note holder held liable for any/all potential issues?)
2.a.) Does it make any difference if the Note is purchased at a discounted rate?
(eg. $200,000. Note purchased by an investor for $150,000.)
2.b.) Are there tax implications re: that difference between the $200K Note amount vs. the $150K purchase amount?
my daughter is facing foreclosure. Her mortgage lender was bought up by a large bank. If she has a business checking account at that bank (unrelated to the home) can they attach her checking account to pay for the losses on the mortgage?
If the bank bought back the property at auction, how long will it take to list the property again on the MLS? Is there a redemption period of a few months?
We have seen properties list on the MLS within weeks of the trustee sale and others take months. It depends on the occupancy status (did they have to evict current tenants?) and the condition of the property. There are other issues like curative title work and establishing the list price that can also delay the property from being listed for sale.
In California, how long can we stay in the home after our home has been foreclosed upon? And if it takes an eviction process how long does that normally take?
same question as above.
You can read about the changes that took affect last year by going tohttp://www.foreclosuretruth.com/blog/sean/auction-investors-reo-brokers-and-renters-take-note-significant-change-eviction-notice-req/
The Founder of ForeclosureRadar, Sean O'Toole, had a great post on his blog about this topic. You can use the following link: http://www.foreclosuretruth.com/blog/sean/auction-investors-reo-brokers-....
In California they are required to give you 90 days notice. The lender (or investor if purchased by a 3rd party) may offer you a cash incentive to vacate. This is typically called a cash for keys. Depending on your specific situation it may be in your best interest to accept the cash for keys if offered so that you can get this chapter of your life behind you. It takes an emotional toll when you are living in a house knowing that the days are ticking by when you will be evicted. In some cases you need this time to get the money saved to move or you have other circumstances that prevent you from moving but for the most part it is better to restart your life now than wait for an additional few months.
Ok, so the sale date on my house in the 22nd of April. How long after will I have until I have to move. I am in california
I just received a letter saying the bank owns the house as of May 8, 2010. Do I have to move out by then? Or is there a grace period?
You may have received a notice stating that the trustee sale is scheduled for May 8, 2010. This means that the property will be sold on May 8th (unless the lender decides to postpone the sale). The foreclosing lender has the right to make the first bid which is the opening bid and then other investors could bid on that property. If no other investors bid above the bank then the property officially becomes bank owned on that date. If a 3rd party investor is the high bidder then they own the property. At that point you will be contacted by the bank or the investor. Depending on the laws in your state and whether or not you are an owner or a renter they may or may not have to give you a grace period. Typically they will want you to move and leave the property in good condition so they will negotiate with you and may offer you a cash incentive to move by a certain date. This is often called cash for keys. If you cannot come to an agreement they will be forced to evict you.
This way too complicated. What happens when a spouse dies and the survivor files bankruptcy and the bank gets relief from the automatic stay and relief is granted ?
To get the Best result - short sale after Relief of Stay has been granted by the Bankruptcy court - and you are going to have to move very very fast! The short sale will, if negotiated successfully, interrupt the foreclosure cycle again. I just did one where the Borrowers Bank received Relief of Stay from the Bankruptcy Court and scheduled the Trustees sale to be held only 2 weeks later! I interrupted the foreclosure action with a short sale offer and complete package and got the foreclosure postponed an additional 2 months in order to give us time to get the short sale offer approved - and closed! It ultimately boils down to what is best for the Bank - if the Bank is going to net more on a short sale than on a foreclosure, a successful short sale can be negotiated out of a special Bank department by someone who knows the ropes. After Relief of Stay has been granted, the Foreclosure sale will pick up right where the foreclosure process was interrupted when the Bankruptcy was filed. There are significant Bankruptcy/Real Estate Legal and Title issues - so this is not territory for someone without direct experience and successful strategies to work within a bankruptcy/short sale/pre-foreclosure environment. REThink Short Sale Solutions offers these services, and has expertise in working with Bankruptcy Attorneys to achieve the optimal, protected result for you and your clients.
Once relief from the automatic stay is granted, the trustee sale can proceed on the scheduled date. The sale may still be postponed for other reasons, but not due to the pending bankruptcy.
The sale date/auction of my property is 6-2-2010,I would like to "relocate" asap. May I contact the buyer or bank,after that date to start to process of surrendering my property and "cash for keys/relocation funds" if available?
Don't be too anxious to move or they won't offer you much. The point of cash for keys is to give occupants that won't willingly move an incentive to do so.
I am in forclosure in CA, what charges will I encure when all is said and done and the forclosure is complete?
The trustee charges the lenders for their services and those fees are added to the loan balance. If the foreclosure is completed those fees will be written off by the lender as part of their loss on the loan. In CA the lender has no further right to come after you beyond foreclosing (assuming they do foreclose).
That depends! If you had a HELOC - there is a personal liability component to the loan, and when the home forecloses, the loan is no longer secured by the home, but it is still secured by you! These loans are typically "charged off" by your lender and sold to an aggressive collection company for pennies on the dollar - they can come after you with an aggressive collection action. Also, there are potential tax consequences. There is State and Federal debt forgiveness laws - but if you pulled monies out and went shopping, buying cars, and education or another home with the money instead of improving the home - those amounts are taxable. Thus, filing Bankruptcy is a valid option because debts forgiven in a chapter 7 Bankruptcy are not taxable. And to get the Best result - short sale during/after the bankruptcy and avoid the damage to your credit from a foreclosure and stay in the property longer so you will be able to save sufficient monies to get a truly fresh start. REThink Short Sale Solutions offers these services, and has expertise in working with her teams of Bankruptcy Attorneys to achieve the optimal, protected result for you.
My house sale date is June 7th, 2010. When should I leave the property. We dont have a place to move in to yet. I am still trying to apply for 2nd try modification. I know that I should leave the property since its not worth it paying it no matter what. But I just need more time to move. Advice...
If the property does go to sale on the 7th you will be contacted by a representative of the bank (usually a real estate agent assigned to the property) or an investor (if a 3rd party investor should purchase the property at the trustee sale). They will be conducting the occupancy check at this time to determine who lives there and start the process to negotiate a cash for keys or determine is they need to start the eviction process. If you have an active modification in process they may be willing to postpone. If you are considering filing BK then that would provide a postponement of the sale as well. Good luck!
what happens when the owne takes gets a loan for more than what the house is worth at the ;present time and with these funds purchases a new home with the finds and desides to walk away from the payments on the loan. Is this legal? can the bank go after the owner or take the new property. This property was purchased by the proceeds from a equity loan on the previous home.
This was commonly known as the "buy and bail" but as you can imagine the lenders quickly closed the loopholes that allowed people to get new loans on homes without requiring them prove that they could afford the payments on both homes. This is largely why it is so hard to get a home loan today and stated income loans have completely disappeared. Some folks did appear to get away with this but we haven't seen this since the latter part of 2007.
Does filing for bankruptcy after the foreclosure auction date stall the eviction process at all?
If the trustee sale has been held and the property has been sold and the trustee has filed, posted and published all documents correctly then the filing of a BK will have no bearing on the sale.
I have been foreclosed upon my vacation home. Can they place a lien/or go after me on my primary residence.
You will definitely want to talk to a tax advisor. There are huge differences when it comes to primary residences and second/vacation homes when it comes to the potential tax consequences (especially if you have done a cash out refi on the vacation home). It will also depend on the state and the current foreclosure laws in your state. In CA we have a one action rule. If you only have one loan and the lender forecloses on that loan through a non-judicial foreclosure that is their one action and they cannot pursue a deficiency judgement on that loan.
Thank you for the information. I was worried as I own my current home with my partner and don't want his ownership threatened. The lender on my other (foreclosed home) was originally Countrywide before Bank of America took them over. I need to try to find my loan documents from about 5 years ago and see if it anything about a non-judicial foreclosure.
Unless your lender dragged you through a court trial on a Judicial Foreclosure, you had a Trustees Sale and a standard foreclosure - invoking the one action rule on your 1st Trust Deed (loan). No need to consult your loan paperwork for that one.
In CA there is the One Action Rule. If there was just one loan and the lender has foreclosed then they have taken their one action. Judicial foreclosures are rare in CA and you would know if the foreclosure was a judicial foreclosure because it would have gone to court and a judge would have had to rule on the foreclosure.
My question is the same as was submitted by Jini - 02/02/2010 - 4:00pm but I never saw an answer. I would be in a similar situation so I need to know.
my daughter is facing foreclosure. Her mortgage lender was bought up by a large bank. If she has a business checking account at that bank (unrelated to the home) can they attach her checking account to pay for the losses on the mortgage?
No. If the lender forecloses on the property through the non-judicial foreclosure process they cannot come after your daughter or attach any bank accounts. This is assuming there is only a first mortgage and their is not a lis pendens filed (lawsuit) on behalf of the lender.
We have not paid our mortgage in over 13 months but are still waiting to receive our notice of default from B of A. We actually want this sooner rather than later as we want to start the rebuilding process. Why is it taking so long?
This is a great question! We are in unprecedented times in terms of the delays in the foreclosure process. Not only the delay in filing the Notice of Default but the delay in filing the Notice of Trustee Sale as well as the unexplained postponements of the sale and now the increase in the number of cancellations. We can only speculate that this is a result of the government foreclosure prevention measures as well as the banks using the foreclosure process as a form of balance sheet management. If they do not have to take the loss until they foreclose or approve a short sale there may not be a rush on their part to do either.
You are very wise to understand that although this allows you to live essentially rent free you are really delaying your recovery process as well. In the coming months this may be why short sales become more attractive since the homeowner can then take some control of the situation.
We have numerous homeowners that have contacted us about cancelled sale dates. They move out do not have a modification or a short sale being considered and the lender cancels the sale. This leaves them still responsible for the home and delays their credit rebuilding process.
There is nothing "normal" about the foreclosure process right now.
Is there any right to redeem my home after a California non-judicial foreclosure, if I can show fraud by the bank that foreclosed?
There is no redemption period on California. That said, you can file a lawsuit to have the sale rescinded. You would want to consult with an attorney on the merits of your case as quickly as possible.
I pay a monthly PMI (property mortgage insurance) does this have any impact during a foreclosure? Secure a non-judicial foreclosure? Anything?
PMI is for the sole protection of the lender. If they foreclose on the property then the PMI insurance covers the losses that the lender may have suffered. If you are in a non-judicial foreclosure state this will not impact the foreclosure process. If you were attempting to short sale your property then in addition to the lender approving the short sale you would also need approval from the PMI company.
I live in California. I am current on all credit cards and mortgages. Main house fixed loan is 105k, home value 65k and LOC is 95K. 3 years ago I applied for LOC in order to pay for investmnt property. House 2 has no technical note since used line from house 1 current value of house 2 is 35k. Made mistake of not going through escrow on house 2 and prior owner has 2 liens total 25k that i will be responsible for once sell. I am considering a BK on credit cards and to walk away from both loans and would put house 2 under Bk to keep it secured frm BK and attempt to sale once BK is filed. Can that be done? Wells... owner of both loans is not aware of house 2.. because remember, paid cash for it. If I allow forclosure on house 1 to be rid of both loans, will a foreclosure and BK show up on credit report? Should short sale be considered? I dont want a Foreclore on report because would like to purchase home again in 3 years but fear that Fannie Mae and Freddie will make harder if foreclosure is on credit report. Please advise
You would need to consult with a bankruptcy attorney. A BK will absolutely appear on your credit report as will a foreclosure. You would need to disclose ALL liabilities and assets in a bankruptcy and would not be able to sell a home without the approval of the court one you have filed. Your ability to qualify for a new home loan will also depend on the chapter that you file. You may also want to consult with a loan officer to talk about current loan guidelines and qualification so that you can make an informed decision.
I have a loan with B of A and have fallen 6 months behind. Over the past year and half I have been trying to work out a mortgage modification. I am now wanting to get out and the bank is not foreclosing. Should I just vacate? What kind of responsibility do I have. Can I request that the bank file a default?
Hi Phyllis, If you do not have any secondary financing or junior liens or loans you may want to contact B of A about a Deed in Lieu of Foreclosure. This would allow you to sign over the property to the lender and walk away (provided the bank would accept the Deed in Lieu). We are not seeing many of these in CA but we have seen some in Arizona so it may depend on the location of the property.
We are in unprecedented times in terms of the delays in the foreclosure process and although it appears to be a novel concept to live in a house payment free it does take an emotional toll. Not only does it create stress but it delays the restart of the new chapter in your life and your ability to start to repair your credit. If you want to be a homeowner again the sooner you start to rebuild your credit the faster you will qualify for a new home loan.
Until the bank forecloses or accepts a Deed in Lieu you are still responsible for the property. If you do not get any response from your lender you may want to try to reach out to your elected officials. Please let us know how this works out. We are certain that there are many others in your situation.
We own two homes. We can no longer afford both. We want to leave CA and move to our other home permanently. My husband's job is being transferred to the other state. We are unsure how to handle our CA home. We owe about $258k and have a HELOC of 95K on it, but our home is only worth about $270K right now. What should our first step be? We are current on both mortages right now, but once the transfer comes through that will not continue. And if we do a short sale or foreclosure can the lenders take any savings or pension money we have? Never thought we would be in this situation at 60 years old.
Hi Suzanne,
It sounds like you could be a good candidate for a short sale. There are several variables that an experienced Realtor can look at and verify that statement. The biggest variable is who your lenders since some are easier to work with than others. You have a legitimate hardship with a job transfer so that works in your favor.
Find a realtor in your area that specializes in short sales and has a proven track record. You may also want to consult with your tax preparer to discuss potential tax ramifications. You are doing the right thing in asking questions. With the new HAFA program you may be able to negotiate a short sale and possibly even protect your credit rating. If you do decide to go the route of a short sale you will want to read the short payoff agreement carefully to make sure you are getting a full satisfaction release. Regardless of what you do, short sale vs foreclosure, they will not "come after" your retirement. If you decide to let the property go to foreclosure sale you could potentially still owe your Heloc if the 1st forecloses.
Make sure you do your due diligence and consult with licensed professionals that examine your specific situation before you make a decision.
Check out these people, www.beforeclosed.com. This adds a whole new meaning to airing your dirty laundry in public. ...
We bought our main home at the height of the market and it is now worth about a third of the original price. We have an ARM with a second and obviously no equity and interest only payments for the past 3 1/2 years. Due to five serious hospitalizations with a shattered leg, broken pelvis and broken hip, then having our second home burned by an arsonist (still in litigation and under foreclosure due to losing our renters), about 20K in credit card debt, we are now drowning! Currently, we have never been late, nor missed a payment on anything but the burned down home, but can no longer make the huge mortgage payments on our primary home. We have no choice but to let the house go and rent for a while. My concern is: we hope to pay off our medical bills and credit cards, then save for a few years while renting, then start all over again. There is no 401K nor retirement funds. We are in our 60's and see no other way out. IF WE DON'T PAY THE MORTGAGE AND THE MONEY SAVED FROM RENTING vs. PAYING THE MORTGAGE INTO THE BANK , CAN THE LENDER OR ANYONE, COME AFTER OUR BANK ACCOUNT OR WILL I HAVE TO WITHDRAW LARGE SUMS OF MONEY TO KEEP UNDER MY MATTRESS? this is awful! (we tried to refinance, but they won't budge.. go figure..) We were hoping to hang on and sell out in a few years, but due to medical and other happenings, we are barely making it. any help would be appreciated.. thanks..
Hi Robbie,
You sound like you could be a good candidate for a short sale. Certainly your hardship as outlined would qualify you. It also sounds like your loans are purchase money loans (the loans you took out when you purchased the property) which means these are non-recourse loans. It sounds like you may be a candidate for bankruptcy. Your best bet would be to consult with a BK attorney, a tax advisor and a Realtor that specializes in short sales. Once you have examined all options you will be able to make an informed decision. Although you indicate that you have tried to refi have you contacted your lender regarding a modification? You may want to try that angle as well. If you fee that you could use the help of a housing counsellor and are reluctant to contact your lender on your own you can find a list of FREE HUD approved counsellors by going to makinghomeaffordable.gov.
Post new comment