Here is a summary of foreclosure laws and rules for the State of California:
- Both judicial and non-judicial foreclosure are available, but the non-judicial deed of trust sale is overwhelmingly preferred.
- California has a one-action rule, in which a lender must elect one action to take against the borrower if the borrower defaults. If the lender forecloses the deed of trust out of court, the lender has chosen one action and may not bring a lawsuit to recover a deficiency, which would be a second action. If the lender chooses to sue the borrower and obtain both a foreclosure order, and if the proceeds of the judicial sale of the real estate are not sufficient to repay the loan balance, then a deficiency for the balance is allowed. Such a suit is permitted as the lender's one action.
- California lenders rarely elect judicial foreclosures.
- You can expect two legal notices: Notice of Default and Notice of Sale. After the notice of default is published, the lender cannot proceed further with a foreclosure for at least 90 days. The Notice of Sale will arrive by registered or certified mail at least 20 days before the date of sale.
- The minimum number of days a foreclosure can take: 135 (non-judicial)
- Debtors may reinstate up to five days before non-judicial foreclosure sale.
- No deficiency judgment is permitted after a non-judicial foreclosure or for a foreclosure on a purchase money loan. If the foreclosure is judicial, a deficiency judgment is allowed if the foreclosure was not a purchase money loan. California’s one-action rule requires the lender to foreclosure and sues for a deficiency at the same time. If the lender elects to foreclose only, it can’t elect to sue for a deficiency later on.
- Starting June 15, 2009 lenders must give homeowners an additional 90 days to modify their loans. There are a number of conditions that must be met. (1) The loan must have been recorded between January 1, 2003 and January 1, 2008. (2) It must be a first mortgage or deed of trust. (3) A notice of default must be filed. (4) The lender must not be exempt. You can find out whether your lender is exempt here. (5) It must be the homeowners principal residence. The law states you must be living in the property at the time the loan becomes delinquent. A lender to be exempt, basically, must have had an existing loan modification program in place that meets certain requirements. You can read the entire bill here. (The law expires on January 1, 2011 unless extended.)
If you are interested in reading the actual statutes relevant to mortgage and foreclosure in California those laws are available online.
Learn more about what the above procedures and rules mean. Review the homeowner foreclosure guide on this website.
What are California's foreclosure laws?
Judicial Foreclosure
Can a second mortgage company, such as Specialized Loan Servicing, commence judicial foreclosure in CA after a lender enacts a non-judicial foreclosure of the first or senior mortgage, e.g., can second obtain a deficiency judgement or collect on a loan, if the owner no longer occupies the property and was not in default at the time occupancy ended?
AIG billing on foreclosed house
We had a 1st and a 2nd in California. It was beyond our means to save the home and despite 7 offers in a short sale, the bank opted to foreclose instead. Our credit report says the first was paid in full. The 2nd says that it was a settled for less than owed and foreclosed. However, we had insurance we were unaware of and they paid the 2nd off completely. Now the insurance company is billing us monthly for the full amount. (AIG) Can they do this?
Subrogation right of private mortgage insurer (PMI)
Although you pay the insurance premium, the private mortgage insurer (PMI) is insuring the lender against your default. The PMI pays the lender and comes after you for the difference. This is the concept of subrogation. However, you should have been told you were buying private mortgage insurance. Have an attorney review the PM insurance documents and the papers you signed at closing. If the payments to AIG are too onerous you may need to consult a bankruptcy attorney.
percent fees to be charged
if you win a tax deed under the right of redemption, what is the law re: what percent i can charge on the tax note that i know own
California Foreclosure Law
Question: Has there been any change to the foreclosure law in California since many banks aren't able to get all their money back from foreclosing on the home?
California's anti-deficiency laws haven't changed
California's anti-deficiency laws remain unchanged. Banks are taking huge losses because homeowners are walking away from their homes. Remember, banks can still seek a deficiency judgment if you have a second mortgage, e.g. a line of credit secured by your house. Speak with your lender or consult an attorney about your specific situation.
Foreclosure Rules
Question: If the lender is a private lender, and they chose to take a deed in Lieu of foreclosure, does this constitute their one choice and are they then unable to go back and sue later for a deficiency?
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