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?
1)The lender does assume liability but they will treat your issue as they don't and tell you to point your finger at the Originating Broker that has gone out of business long ago. A forensic audit can be useful if the timing is right. What i mean by that is there are statutes of limitations to go after a lender for TILA/RESPA Violations. That statute is 3yrs. So, Today being the 6th of December, 2011; Any loan funded prior to 12/6/08 would have survived the statute of limitations. And therefore, relieved of any wrong doing at the time of origination. What you want to have looked at are the foreclosing documents (if your in Foreclosure) and have a Mortgage Scene Analysis done to determine the procedural irregularities that may have occurred during the Foreclosure process from the point of Notice of Default to the Notice of Trustee Sale. At Lighthouse Consulting Group we analyze these documents and can find the Fraud in Foreclosure. give us a call and we'll look at your situation if it meets your specific needs
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 your daughter has a checking account with that bank, it may be in her best interest to close her account with them since many times, the bank will raid her account and take everything to recoup their loss. This happened to someone I knew and he had to fight the bank to get part of his money back.
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/
If you do not plan to retain the property then i say, stay as long as you can. I hear as much as one to two months, but remember were playing a different foreclosure game then ever before. The percentage of foreclosure sale has gone up and the banks don't know what to do because of it. Remember you have to get a 3 day notice to quit before you get a court order eviction. This is the sticky area. At this point you are no longer in the driver seat, but i think the banks or new owner will try to workout a departure date with you.
If you do not plan to retain the property then i say, stay as long as you can. I hear as much as one to two months, but remember were playing a different foreclosure game then ever before. The percentage of foreclosure sale has gone up and the banks don't know what to do because of it. Remember you have to get a 3 day notice to quit before you get a court order eviction. This is the sticky area. At this point you are no longer in the driver seat, but i think the banks or new owner will try to workout a departure date with you.
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
Once the date of trustee sale has been set and the home sells at auction how long do I have before I need to move out of the home, I am a California homeowner.
If the property goes to trustee sale there are only 2 outcomes. It goes back to the bank and becomes bank owned or it is sold to a 3rd party investor. Either the bank or the investor will make contact with you to determine what your plans are. If you are the former owner they are only required to give you a 3 day notice and then they can start the eviction process. Typically they will try to negotiate a cash for keys which means you will leave by a certain date and they will pay you a sum of money to leave the property in a reasonable condition. If you are a renter they are required to give you a 90 day notice to vacate or honor the terms of the lease agreement provided it was signed prior to the Notice of Default.
There are 3 outcomes. The 3rd is when the bank rescinds the trustee sale and proceeds to evict you via an unlawful detainer.
Hi Cindy,
A sale can be rescinded but that would mean that you still own the property. If the sale was rescinded they would not evict the occupants if the sale was rescinded (unless there was a huge miscommunication).
Thank you Michelle. There was a huge communication problem because that is what happened to me.
this is interesting thanks for the share.
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 think a BK can have an impact on the sale because it is placed in the courts for it to be determined if the property now belongs to the BK estate and that is the time to file an adversary proceeding if there is a federal question in truth in lending or anything related to the mortgage and the servicing of the mortgage. I filed a BK two days before the sheriff was scheduled to come to the house and remove me. That stopped the eviction.
Hi Cindy,
You are correct. I have since been told that a BK can effectively stall an eviction. In the case I am aware of the eviction was finally granted months later so as a stalling tactic it can be effective. If you have another case that is questioning the validity of the trustee sale then this could provide you additional time while you attempt to have the sale rescinded.
There is a hitch to it all. On the first page of the BK papers in a small box towards the bottom asks if I contacted my landlord and the amount of money I paid towards rent. If I had not checked that box and depositing $85 (nothing that sets the amount to deposit) the sheriff would have removed me. The sheriff said that they are not honoring the stay that is automatic upon filing a BK unless there is rent deposited with the court. I think it's confusing because I did not consider myself as a renter. I thought that the sheriff should be required to stay the writ of possession until it is determined by the court that the sheriff can proceed.
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.
Doesn't the one action rule mean the lender can choose to do a nonjudicial foreclosure which blocks them from coming after the homeowner for the residual debt, the amount owed after subtracting the foreclosure sale proceeds and all the fees and if they do a judicial foreclosure then they can go after the homeowner for the balance?
Hi Cindy,
The One action rule applies to the non-judicial foreclosure process. If the lender chooses a non-judicial foreclosure then that would be their one action and they could not attempt to collect on any part of the loss. Their one action would be the trustee sale and that's it.
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.
Post new comment