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What different types of foreclosures are possible in California?

California residents will likely be intimidated by the sheer mentioning of the word "foreclosure" as it is frequently associated with losing one's home and being left with nothing. However, there are different types of foreclosure and a variety of protective strategies that a person can use to defend him or herself against it. Understanding foreclosure is imperative to dealing with it. There are two kinds of foreclosure in the state. They are non-judicial and judicial.

With a non-judicial foreclosure, it is done outside of court. This is the most frequently used foreclosure in the state. It is used when there is a power-of-sale clause in the property's deed or trust that provides security to the loan and allows the trustee to sell it to pay the balance when the lender requests it. This is usually done when the borrower does not make the payments that are due for the property. The lender who uses non-judicial foreclosure will surrender the right to a deficiency judgment. A deficiency judgment lets the lender receive the financial difference between what the borrower owed and what the property was sold for when auctioned. This is generally preferred by lenders because it is not as expensive as a judicial foreclosure.

A judicial foreclosure is when there is a lawsuit for the lender to be able to sell the property. It will be used if there is no power-of-sale clause. Once the court has ordered that property be sold, it will be auctioned and available to the highest bidder. In California, it is rare for there to be a judicial foreclosure. This type of foreclosure will let the lender receive a deficiency judgment. However, the owner will have the right of redemption allowing the buyback of the home after it was auctioned. This can be done within one year of the auction sale. This takes a longer time and is more expensive than a non-judicial foreclosure.

People who are confronted with the foreclosure on their home should be aware of how to deal with the situation. Often, there are options for negotiation and addressing the issues that led to the lender taking the steps to foreclose. Before panicking and thinking that there is nothing that can be done, discussing the matter with an attorney who is experienced in a wide variety of civil litigation cases including foreclosure can help to try and find a solution.

Source: courts.ca.gov, "Foreclosure -- Types of foreclosures," accessed on March 28, 2017

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