Tuesday, February 23, 2010

The Process Involved With California Foreclosures Made Simple

By Brad Johnson

California, being a consumer friendly state, has a complicated set of rules for buying a property. Consequently there are also complicated rules for CA foreclosures. The state is referred to as "title state" which means the property title remains with the lender until the loan is completely paid. The loan document operates as a trust deed, often referred as mortgage. When the trust deed is initially signed, it will contain, power-of-sales clause, which allows the trustee (lender) to sell the property to recover the defaulted loan.

In a deed of trust there is also a clause empowering the third party to get the rights to implement the collection of the entirety of the debt. This means that the third party has the authority given by the lender for him to sell your property in the event that you default on your debt payments and face foreclosure.

When you default on your mortgage loan, the foreclosure process begins. There is a 20-day notice period in which the borrower must get a notice of pending foreclosure. During this process the lender will take over your home in an effort to recover the principal investment. Once your home has been either sold or in some cases repossessed by the lender you must then vacate the home.

When there is a non judicial foreclosure then the trustee actually will have to meet a variety of different requirements before they are allowed to sell your home. This type of foreclosure is actually a fairly quick process because the trustee of your loan does not need to obtain a court order to seize the property nor do they need to have a court ordered supervision when they go to sell their house. This type of process is generally used if you do not have a power-of-sale clause in your deed of trust contract.

In the absence of a power-of-sale clause in the loan document, judicial foreclosure is permitted in California and involves the court's final judgment of foreclosure. The property is then sold publicly; a recorded document is issued in the interest of public notice that the property is being foreclosed upon.

A non-judicial foreclosure can happen from one week to a couple of months after you fail to pay the first payment on your mortgage. Once the process has started, you no longer have the right to try and halt the proceedings.

What you need to realize is that once legal action is brought against you, it becomes part of your legal record. It will also have a very big impact on your credit for years. During this time you may not be able to obtain another home loan. Also, other loans and credit lines will be affected.

So, as you can see, the foreclosure process in California is very strict. Your best bet would be to make all your mortgage payments on time each month. Lets face it - no one wants to have their home foreclosed.

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