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California foreclosure basics

Homeowners facing financial problems and the risk of loan default may lose their property under foreclosure. Property owners, however, may protect their foreclosure rights through civil litigation in California.

A lender usually has a lien on a home or other property when the homeowner takes out a home equity loan, borrows money through a mortgage or refinances their mortgage. Most lenders foreclose on a mortgage through nonjudicial foreclosure. For this to occur, the deed of trust must contain a power-of-sale clause that secures the mortgage by allowing the trustee to sell the home to liquidate the unpaid balance when the borrower defaults.

The lender loses the right to obtain a deficiency judgment against the homeowner under nonjudicial foreclosure. However, this is quicker and less expensive than undertaking judicial foreclosure.

A judicial foreclosure requires the filing of a lawsuit for a court order of foreclosure to sell the residence. This process is used when the mortgage or deed of trust lacks a power-of-sale clause. The property is usually auctioned off to the highest bidder.

These foreclosures are rarely utilized but allows the lender to obtain a deficiency judgment. The homeowner also has the right of redemption allowing the repurchase of the home for one year from the successful bidder.

Homeowners have rights to notice and to explore options to avoid foreclosure with the lender at a conference that must be held within 14 days. A borrower may not be forced to accept any plan that is negotiated in this conference. The foreclosure process cannot commence within 30 days of the first contact from the lender. If no resolution is achieved, the lender can record a notice of default in the county where the property is located. Homeowners have 90 days to attempt to cure the default.

If the loan is not liquidated, the lender must issue and serve a notice of sale. It must provide information on the sale. A borrower has up to five days before the sale to liquidate the default and stop the sale.

An attorney can help homeowners negotiate a plan to liquidate debt and preserve their ownership. They can also help assure that homeowner's legal rights are protected during this process.

Source: California Courts, "Foreclosure," Accessed Aug. 1, 2017

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