fore·clo·sure (noun) /fôrˈklōZHər/
ñ The process of taking possession of a mortgaged property as a result of the mortgagor’s failure to keep up mortgage payments.
When a property is “in foreclosure”, it means that the foreclosure process has begun, but is not yet completed and the property still belongs to the delinquent borrower. Therefore, if the property is tenant-occupied, the rent is due and payable to the landlord (who still has the right to evict tenants for nonpayment of rent).
When a property is “foreclosed”, it means that the foreclosure process has been completed and the property is now either owned by the bank or it has been sold to a 3rd party at a Trustee’s Sale. Therefore, once a property is foreclosed, any occupant (whether it be the previous owner or a tenant) may be subject to eviction if they continue to occupy the premises.
In California real estate, there are basically three different categories of foreclosure properties:
1. Preforeclosure – When the lender files a Notice of Default (“NOD”) on a property. This is the first foreclosure notice issued by the lender, once the mortgage payments are at least 90 days delinquent. Properties in preforeclosure status are sometimes listed as short sales, in an effort to prevent foreclosure. Sometimes properties in preforeclosure status do not foreclose, if the owner is successful in doing a short sale or loan modification or pays the delinquent amount owed.
2. Auction – When the lender files a Notice of Trustee’s Sale (“NTS”) on a property. This can only be done after 85 days have passed since the NOD filing date and the NTS will specify the date, time and location of the Trustee’s Sale at which the property will be auctioned. Properties in auction status can also be listed as short sales as a last resort to prevent foreclosure, but many times they foreclose anyway, even after an offer has been accepted by the seller.
3. Bank Owned / Sold to 3rd – Unless the Trustee’s Sale has been postponed or canceled, the property will either be sold to the highest cash bidder “on the courthouse steps” or it will go back to the bank if the opening bid is higher than bidders will pay. If the property is not sold to a 3rd party and goes “back to the bank” it is then known as an REO (real estate owned) and will eventually be listed for sale on the MLS by the bank’s agent.
New California Foreclosure Timeline (Published March 2011
This information is provided courtesy of the C.A.R. Legal Department (written by Sonia M. Younglove, Esq.)
In California, lenders who intend to foreclose on a property when the loan is delinquent typically use the nonjudicial foreclosure process also known as a trustee’s sale. This process is less expensive for the lender than the judicial foreclosure process. A nonjudicial foreclosure doesn’t require a court proceeding and, thus, is a more expeditious process. From here on, whenever the term “foreclosure” is used, it is referring to a trustee’s sale.
With foreclosures being so prevalent and with so many homeowners being at risk of losing their homes to foreclosure, REALTORS® need to be able to assess whether they have sufficient time to market the property and close escrow before the property is lost to foreclosure. Therefore, this article provides a foreclosure timeline to assist REALTORS® in their assessment of the time remaining before a possible foreclosure occurs.
Several recent laws have impacted the foreclosure timeline. The California legislature added an additional 90-day extension period after the recordation of the Notice of Default (NOD)—California Civil Code Sections 2923.52-2923.55. However, those statutes were repealed effective Jan. 1, 2011.
Another law which expires Jan. 1, 2013—California Civil Code Section 2923.5–affects the foreclosure timeline but only for loans made between Jan. 1, 2003 and Dec. 31, 2007 on residential one-to-four unit owner-occupied properties. This law adds a 30-day borrower contact period before the lender may record the NOD.
“Days” in the foreclosure timeline are “business days,” defined as all days other than Saturday, Sunday, and holidays. See California Civil Code Sections 7.1 and 9 for more information.
FORECLOSURE TIMELINE FOR LENDERS
| Loans Made Between Jan. 1, 2003 and Dec. 31. 2007 on Residential One-to-Four Unit Owner-Occupied Properties | Other Loans |
| DAY 1: CONTACT THE BORROWERUnder Cal. Civ. Code § 2923.5(a) the lender must contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.Note: In the 2010 case, Mabry v. Aurora Loan, the court held that a borrower can file an injunction to postpone the foreclosure sale if the lender doesn’t comply with this law, but cannot overturn the foreclosure sale once it has been conducted. | |
| DAY 31: RECORD THE NODThe NOD must be filed in the county where the property is located. The language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).The NOD must include the lender’s declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property (Cal. Civ. Code § 2923.5(b)).Within 10 days after recordation of the NOD:A copy of the NOD must be mailed by registered or certified mail to the borrower/trustor and to any parties with a recorded Request for Notice as indicated in Cal. Civ. Code § 2924(b)(1). (Cal. Civ. Code § 2924b(b).)Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3). | DAY 1: RECORD THE NODThe NOD must be filed in the county where the property is located. The language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).Within 10 days after recordation of the NOD: A copy of the NOD must be mailed by registered or certified mail to the borrower/trustor and to any parties with a recorded Request for Notice as indicated in Cal. Civ. Code § 2924(b)(1). (Cal. Civ. Code § 2924b(b).)Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3). |
| DAY 116 – 121: RECORD THE NOTICE OF TRUSTEE’S SALEThe Notice of Trustee’s Sale must set forth the date, time, and place of the Sale. It must also include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice. It must be recorded, posted, published, and also mailed by registered or certified mail as well as first class mail to the borrower (Cal. Civ. Code § 2924f).25 days prior to Trustee’s Sale: Notice of Sale sent to IRS in case there is an IRS lien recorded more than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4); 26 U.S.C. 7425(b)).20 days prior to Trustee’s Sale: Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).20 days prior to Trustee’s Sale: Notice of Sale publication begins (must run once a week for 3 consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code § 2924f(b)).20 days prior to Trustee’s Sale: Notice of Sale must be mailed by registered or certified mail to everyone who is entitled to receive a NOD. In addition, the Notice of Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ. Code § 2924b(b)-(c)). | DAY 86 – 91: RECORD THE NOTICE OF TRUSTEE’S SALEThe Notice of Trustee’s Sale must set forth the date, time, and place of the Sale. It must also include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice. It must be recorded, posted, published, and also mailed by registered or certified mail as well as first class mail to the borrower (Cal. Civ. Code § 2924f).25 days prior to Trustee’s Sale: Notice of Sale sent to IRS in case there is an IRS lien recorded more than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4); 26 U.S.C. 7425(b)).20 days prior to Trustee’s Sale: Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).20 days prior to Trustee’s Sale: Notice of Sale publication begins (must run once a week for 3 consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code § 2924f(b)).20 days prior to Trustee’s Sale: Notice of Sale must be mailed by registered or certified mail to everyone who is entitled to receive a NOD. In addition, the Notice of Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ. Code § 2924b(b)-(c)). |
| DAY 135: LAST DAY TO CURE DEFAULTUp to 5 business days before the Trustee’s Sale, the borrower may reinstate the loan (bring the loan current) by paying the missed payments plus allowable costs. Note: If the Sale is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).) | DAY 105: LAST DAY TO CURE DEFAULTUp to 5 business days before the Trustee’s Sale, the borrower may reinstate the loan (bring the loan current) by paying the missed payments plus allowable costs. Note: If the Sale is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).) |
| DAY 141: TRUSTEE’S SALE FORECLOSUREAfter the last day to cure the default, the borrower still has the right to redeem the property but he/she must pay the entire debt, plus interest and costs before the bidding begins at the Sale (Cal. Civ. Code §§ 2903, 2905).At the Trustee’s Sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by Trustee’s Deed. | DAY 111: TRUSTEE’S SALE FORECLOSUREAfter the last day to cure the default, the borrower still has the right to redeem the property but he/she must pay the entire debt, plus interest and costs before the bidding begins at the Sale (Cal. Civ. Code §§ 2903, 2905).At the Trustee’s Sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by Trustee’s Deed. |
Bottom Line: The minimum time for a trustee’s sale foreclosure (nonjudicial foreclosure) is 110 days after the NOD is recorded for most loans (plus 30 days for loans made between Jan. 1, 2003 and Dec. 31, 2007 on owner-occupied residential one-to-four unit properties).
This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit car.org.
Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.’s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m. and Saturday, 10 a.m. to 2 p.m. C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also submit online requests to speak with an attorney on the Member Legal Hotline by going to http://www.car.org/legal/legal-hotline-access/. Written correspondence should be addressed to:
CALIFORNIA ASSOCIATION OF REALTORS®
Member Legal Services
525 South Virgil Avenue
Los Angeles, CA 90020
Souza Realty in Placer County
Souza Realty specializes in Placer County, California real estate: foreclosures, trustee sales and Placer County lots & land. Bob and Leilani Souza are a husband & wife Placer County real estate team actively investing in real estate since 2001, flipping properties as well as holding them for rentals. The Souzas are also experienced in custom home development and are familiar with the entire home building process, from lot selection, floorplan design and permits to where to shop for the best deals on materials and supplies.
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