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 in court (judicial-foreclosure), the lender has chosen one action and may not bring a lawsuit to recover a deficiency on the note;, which would be a second action. The one-action rule is not applicable to trustee sales because the court is not involved.
- 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 (again this is applicable only to judicial foreclosures).
- 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?
