Foreclosure FAQ’s

Experienced Sacramento Foreclosure Attorneys

We get it. You have questions. We have answers.

How are California Mortgages Foreclosed?

The primary method of foreclosure in California involves what is known as non judicial foreclosure. This type of foreclosure does not involve court action. When the deed of trust is initially signed, it will usually contain a provision called a power of sale clause, which upon default allows a trustee to sell the property in order to satisfy the underlying defaulted loan. The trustee acts as a representative of the lender to effectuate the sale, which typically occurs in the form of an auction. Unlike many states where trustees are appointed by lenders, title companies primarily serve as trustees managing foreclosure sales in California.

California has a requirement known as the one action rule. If a foreclosure is completed by non-judicial means, a second action to recover a deficiency judgment is not permitted. Using a judicial foreclosure, a lender may recover a deficiency judgment in certain circumstances. However, this does not apply to non purchase money loans, or loans where fraud is present (overstating income). California non-judicial remedies have stringent notice requirements and the mortgage documents are required to contain the power of sale language in order to use this type of foreclosure method judicial foreclosure is permitted in California and these usually occur when no power of sale language is included in the loan documents.

How Long Does it Take to Foreclose on a Property in California?

Depending on the timing of the various required notices, it usually takes a minimum of 120 days to effectuate an uncontested non-judicial foreclosure. However, these days, we are seeing it anywhere from 120 days to over 24 months with some lenders due to the backlog. This process may be further delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy.

Are Deficiency Judgments Permitted in California?

Only in certain circumstances. A deficiency judgment may not be obtained when a property in foreclosure is sold through a non-judicial public sale or if the foreclosure relates to a purchase money mortgage. Different rules apply to guarantors of such loans. However, the laws surrounding this are complex and confusing. In addition, please note that this applies only to primary residences, and that fraud (such as overstating income on the application, even at the brokers insistence) is a mitigating factor which would allow a lender to pursue a deficiency judgment, either after a non judicial foreclosure, or through a judicial foreclosure. Especially where HELOC or second/third mortgages are concerned. We have assisted many clients in negotiating with their lender when they have come after them for a deficiency judgment after a foreclosure.

How Can I Stop A Foreclosure?

By working with our firm or calling your lender directly you may have several options that we use to stop your foreclosure, get you current again and help you with your situation. Doing nothing doesn’t stop a foreclosure, but waiting too long and doing nothing can affect your chances at negotiating a better way to keep your home, or get rid of it.

If My Home Forecloses, Can My Lenders Come After Me For The Loss?

Yes, depending on the situation and the facts, which is why is important that you work with an experienced law firm, to avoid such a deficiency judgment. You need to hire a firm who not only is experienced in negotiating a work-out for your mortgage, but also knows the laws and rules regarding foreclosure and deficiency judgments, which unfortunately most in the real estate industry and even most attorneys do not know.

Can I Just Deed My Property To Someone And Avoid Foreclosure?

Deeding your property to a third party does not eliminate your obligations related to the loan. Unless the mortgage is paid off when you deed the property, you will almost certainly remain as the party primarily responsible for the repayment of the loan. If the lender eventually forecloses, it will be on your credit record. If you deed your property to a third party you also give up control of the property. It is nearly always a bad idea to simply deed your property to a third party. Do not deed your property to someone without paying off the loan unless you have consulted with an attorney.

What Will a Foreclosure do to my Credit?

A foreclosure on your credit record will negatively impact your ability to borrow money for years, as it remains on your credit report for 7 years. However, short sales, and deed-in-lieu of foreclosures are much less damaging.
For most people, it is well worth the time, effort and money to work with us to help them solve the problem before the foreclosure is completed.

What does a Notice of Default Mean?

If a Notice of Default has been recorded against your property it means your lender has started the formal foreclosure process. In California, a borrower must be a couple of months delinquent before a lender can commence a foreclosure action by recording a Notice of Default. A borrower has over three months from the recording of the Notice of Default to work something out with their lender and avoid the completion of the foreclosure. Once the Notice of Default has been recorded, it is important to act to avoid losing the property and having a foreclosure on your record. Once the Notice of Trustee sale has been recorded, the auction date is typically 3-4 weeks ahead. Typically we are able to postpone and even cancel these if we are already working with the homeowner when they are filed, and we can help homeowners with trustee sale dates that are soon, but the closer they are and the further behind you are in your mortgage the more difficult it can be.
I Have Heard Of Foreclosure Scams, What Should I Look For?

Unfortunately there are quite a few people that might try and take advantage of your temporary misfortune. These people will try and convince you that they can provide a quick and easy solution to your mortgage problem. As a general rule, if it seems too good to be true, it usually is.
Here are a few examples of the scams you could encounter:
-“You need to sell your property fast or you will be ruined.” If you have equity, these scam artists want it. By promising to provide fast cash they solve your problem and they get your equity. On occasion they offer a small amount of money to you – which is normally a signal they are getting lots of your equity.
-“Sign the deed to the property to us and we will take care of everything.” Sometimes called the “Bailout” scam, the investor tells the homeowner that he will be allowed to stay in the home and pay “rent” to the investor until a long term solution can be worked out. Once the owner signs the deed to the property over to the investor, big trouble usually follows. If the investor has the deed, the investor has control. Here is the big kicker – the homeowner who signed over the deed is still responsible for the loan. The investor nearly never makes the mortgage payments and the homeowner gets hit with the foreclosure.
-“For a consulting fee I will work with your lender to find a solution.” It is almost always illegal in the state of California for anyone (except your lender or approved HUD counselor), to collect a advance fee as payment for making arrangements for a loan modification with your lender. See California Civil Code Sections 2945-2945.11 and SB 94 code for details.
Working with Real Estate Agents/Brokers:
Working with Real Estate Agents/Brokers: Many people are using real estate agents/brokers these days to negotiate their short sales, and this is great as many of them (but not all) are excellent at what they do, however we do recommend using an attorney in the process.  Either to assist with the negotiations for an approval if needed or to review the contracts and approvals sent by the lender to make sure your legal interests are adequately protected. Real estate agents are not attorneys and are also subject to liability for guiding their clients in the wrong direction or not informing them of any legal liability they may be facing, so utilizing an attorney helps all involved, real estate agent and homeowner. We work with realtors all the time.
Will A Short Sale Stop a Foreclosure? While the Short Sale itself does not stop the foreclosure, lenders normally work with us and delay the foreclosure if necessary, if they receive a legitimate Short Sale offer within a specified time frame, but this also depends on each lender and how far behind the homeowner may be.

If My Lender Has Started A Foreclosure, Can I Still Sell My Property?

Absolutely, In fact typically your lender would rather you sell the property than allow the foreclosure to continue. Your lender does not want to take your property through foreclosure. Even if you have no equity in the property, the lender wants to find a solution. This is precisely why lenders agree to a Short Sale and accept a discounted payoff to fully satisfy the loan. In a Short Sale, the lender in nearly all cases pays all the closing costs – including title fees, escrow fees and the real estate commission.

Should I Speak with my Lender When they call?

It is best that you not avoid calls or letters from your mortgage company, particularly if a foreclosure is pending. If you are being represented by our firm you can let them know that we are representing you and they can contact us to discuss your matter with us, but you are free to speak with your lender as well.  Please be aware that the people who call (collection calls) from your lender are from the collection department, and not the work-out departments. Therefore they have very little documentation on your file, in fact a lot of the times these calls are outsourced and they are calling from India to try to collect on the loan or get you to make a payment and they can also give confusing and conflicting information.  The departments you want to speak to are the foreclosure or work-out departments depending on lender/servicer.

We are experienced Sacramento Foreclosure Attorneys and Sacramento Foreclosure Prevention Attorneys. We are a unique and powerful combination and can help you with your real estate legal issues.  We have helped thousands of people with pressing real estate issues find solutions and relief through the use of short sales, deed in lieu of foreclosures, strategic foreclosures, mortgage debt settlements and legal real estate review and advice.  

Our real estate attorneys have achieved proven results and can give you the great legal advice and strategy needed to get you the results you want. Contact us today to schedule your complimentary attorney consultation by clicking HERE or by calling 916-999-1376. We look forward to helping you with all of your Sacramento Foreclosure real estate needs.