Notice of Default – California Foreclosure
Facing the loss of your home can be a gut-wrenching experience. Receiving the Notice of Default can throw your life into turmoil and leave you uncertain of what, if anything, you can do to stop the foreclosure and save your home. If you are facing foreclosure, it’s important to understand that you do have options. A foreclosure defense law firm in California can help you explore your options to stop the foreclosure or buy time to get out of default.
Missed Payment and Initial Contact
The first step of foreclosure in California happens when you miss a payment. Your lender is required to contact you and anyone else on the loan to assess your finances and explore your options before foreclosure can even begin. Your lender cannot begin foreclosure until at least 30 days after the initial contact or after doing their due diligence to contact you. The lender is also required to advise you that you have the right to request a meeting to learn ways to avoid foreclosure. If you exercise this right, the meeting must be held within 14 days.
Notice of Default
Once you are officially in default on your loan, a Notice of Default will be filed with the court by your lender. This usually happens once you are 90 days late on your mortgage. Your lender is required to give you notice within 10 days of filing a Notice of Default in California.
When you receive a Notice of Default in California, the formal foreclosure process has begun. The document is official notice that you are in default on your mortgage and it will include options for getting your loan out of default. As an example, you may have the option to make all back payments plus fees and interest.
This document will be public record and may be viewed by anyone, so you will likely begin receiving letters and solicitations in the mail advertising solutions like loan modifications and lawsuits to save your home. Treat unsolicited mail with extreme caution as many come from scam artists and unscrupulous businesses.
Notice of Trustee Sale
When you receive the Notice of Default, you have 180 days to get your loan current or the bank can take the next step in the foreclosure process. The next step, called the Notice of Trustee’s Sale, sets a date for a public foreclosure auction of your home. This can happen no earlier than 20 days after the Notice of Trustee’s Sale is recorded.
You must receive a Notice of Trustee Sale via certified mail and the notice must be published weekly in a general circulation newspaper in your county for at least 3 consecutive weeks before the sale date. The notice will also be posted in a public space and on your property.
The bank must wait at least 20 days after the Notice of Trustee Sale to set the date for an auction of your home. It is still possible to stop foreclosure. The bank or the court can also postpone the sale up to one year.
On the date of the auction, your home will be sold at a public auction. Potential buyers must have a cashier’s check or cash for the amount they will bid and the highest bidder becomes the new owner. If the highest bid exceeds the outstanding mortgage balance, the excess money will go to other liens on the property and then to the prior owner.
In many cases, there are no bidders or the bank is unwilling to accept less than the mortgage amount. In these cases, the bank is considered the highest bidder and becomes the owner of the property. The home will then become an REO property.
How Long Does Foreclosure Take in California?
A non-judicial foreclosure usually takes a minimum of 121 days in California (in the actual foreclosure process), or less than 4 months from start to finish, but the formal foreclosure process will not begin until you are in default for at least 3 months. It is possible for the process to take much longer, however, especially if your lender has a backlog of foreclosures. Across the country, the average time to foreclose reached more than 1,000 days in 2017, although you should not assume you have a long period of time to take action.
From your first missed payment, you are looking at approximately 201 days. This is broken down as 90 from the date of original missed payment, 90 days from the date of Notice of Default, and 21 days from the Notice of Sale to the actual auction date.
Your Rights Under California Law
California and federal law give homeowners many rights when facing foreclosure. Many of these rights come from the California Homeowner Bill of Rights, which was passed in 2013 and later amended to ensure fair and transparent lending practices.
Restriction Against Dual Tracking Foreclosures
Dual tracking happens when the loan servicer who handles your mortgage continues the foreclosure process while simultaneously considering your application for a loan modification or other option to avoid foreclosure. Dual tracking was once common and the homeowner would end up with whichever solution happened first — which was usually foreclosure. Under the California Homeowner Bill of Rights, foreclosure must be paused until your complete loan modification application is reviewed. A 2018 update to the bill also requires that any other foreclosure prevention applications be considered, not just loan modifications.
Single Point of Contact
Your lender must provide a single point of contact when you are trying to navigate the legal system to keep your home. This must be a single team or individual at the bank who knows the details of your case, has access to your paperwork, and can get the decision about your application for a loan modification.
Your loan servicer is required to contact or try to contact you to discuss foreclosure alternatives before the foreclosure process can begin. This means the loan servicer cannot begin foreclosure by filing a Notice of Default until 30 days after you are contacted.
Your Right to Sue
As a homeowner in California, you have the right to sue your loan servicer or lender for violations of some sections of this Bill of Rights. Potential relief in a lawsuit may include economic damages if the trustee’s deed upon sale has been recorded or injunctive relief.
How to Stop the California Foreclosure Process
If you are facing foreclosure, it’s important to consult with a foreclosure defense law firm as soon as possible. Time is of the essence and the sooner you make a plan, the easier it will be to delay or stop foreclosure.
One option is securing a postponement of the sale of your home. This is usually done with a Notice of Default attorney who may help you secure a new auction date to restart the foreclosure process. This can buy you more time to become current on your loan or develop a legal strategy to stop foreclosure.
You can also apply for a loan modification to delay foreclosure. Due to dual tracking laws, your lender must consider your modification application before continuing foreclosure. If your application is approved, the foreclosure will be stopped as long as you stay current with your modified payments.
If your home sells at auction back to the bank, it may even be possible to regain title of your home after the sale, although this strategy usually requires an experienced foreclosure lawyer.
A lawsuit can also be an effective way to delay or even stop foreclosure. To ultimately win a lawsuit against your mortgage lender, you will need to prove that the foreclosure should not occur because the lender did not comply with mediation requirements, violated the California Homeowner Bill of Rights, does not have proof it owes the promissory note, failed to follow all required steps, or made another serious error. If your lawsuit is unsuccessful, it will only delay foreclosure.
If foreclosure procedures have not carefully followed federal and California foreclosure laws, a lawyer may help you challenge the foreclosure. Procedural defenses can also be a defense against foreclosure if the lender has used improper actions, omissions, or falsehoods during the legal foreclosure process.
Contact a California Foreclosure Attorney
Facing foreclosure on your home? Don’t delay because the clock is ticking. A Notice of Default attorney in California can help you explore your legal options to delay or stop foreclosure and help you bring your mortgage current again. Contact us to schedule a consultation with a foreclosure defense lawyer to learn more about your legal options.