In California, there are two types of foreclosure: judicial and non-judicial. Non-judicial foreclosures are the state’s most common; here are a few basic things that lenders need to know about California’s non-judicial foreclosure process.
Non-Judicial Foreclosure in California: How It Benefits Lenders
Lenders benefit from non-judicial foreclosure in California in a few ways. As the name suggests, no court is involved to carry out the process. If the borrower defaults on the loan, lenders can begin a foreclosure by engaging a property trustee to record a notice of default. The lender is not required to get permission from the courts to sell the foreclosed property to recover any losses from the default. Keeping the process out of the courtroom both speeds up the process and keeps costs down. In addition, borrowers have no post-sale right of redemption in non-judicial foreclosure in California; in a judicial foreclosure, a borrower may be able to buy back the property for up to one year after a foreclosure sale.
Related Post: Understanding Commercial Foreclosure Law for Your State
Important Steps for Lenders in Non-Judicial Foreclosure
California foreclosure laws are extremely complex and lenders can reduce their exposure by making sure that they adhere to the state’s requirements. Following the steps in the process is crucial.
Once a loan goes into default for either a monetary or non-monetary breach, the foreclosure process starts with the preparation and recording of a notice of default. The recording starts the clock: the borrower has 3 months to bring the loan current or pay off the debt. If no action has been taken during those first 3 months, the lender will then instruct the trustee to prepare and record a notice of trustee’s sale. In addition to recording, the notice of trustee’s sale is sent to everyone who was entitled to a copy of the notice of default, published once a week for three consecutive weeks in a newspaper, and posted on both the property and in a public place (typically the recorder’s office). The borrower then has up until five business days before the sale date to bring the loan current (if it is capable of being cured) or up until the time of sale to pay the loan off. If the borrower fails to do either, the property can be sold at auction to the highest bidder.
Finally, the COVID-19 pandemic brought with it massive state and federal relief programs, some of which have directly affected foreclosure proceedings. It’s important for lenders to stay on top of the latest developments, especially regarding foreclosure and eviction relief for borrowers and renters in California.
At Total Lender Solutions, we advocate for lenders looking to maximize recoveries on defaulted loans. For over 15 years, our team of highly experienced real estate professionals and legal experts has transformed complicated foreclosure processes into clear resolutions for institutional and private lenders. We work as a vigorous extension of your team to provide comprehensive foreclosure processing services and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication and persistence when it comes to the foreclosure process ensures that our clients feel confident in reaching a successful outcome.Contact us today.
