San Diego Homes

San Diego Homes: The Foreclosure Process

When a homeowner stops making payments on a mortgage the bank, or lender, starts a series of legal proceedings to recover possession of the home. In California, this process is called a nonjudicial Foreclosure. To understand your rights and responsibility in a foreclosure situation, you must first understand the different steps of foreclosure.

The first stage of a foreclosure is missed payments. You are not in foreclosure if you haven’t missed three payments. During this three months, you have the most options. This is the very best time to call your lender to work out payment arrangements, or to list your home on the market for a fast sale.

In California, when a homeowner is 90 days late on their mortgage the lender can start the foreclosure process. At this point, the lender will file a Notice of Default (NOD), which is their legal notice to you and the courts. This stage is called pre-foreclosure. This isĀ  a three month grace period in which you can “cure” the default. How do you “cure” the default? Work out a payment plan that you and the lender can agree on, pay the amount you’re in arrears or sell your home.

If you can’t “cure” the default in three months after the Notice of Default is filed, the lender will set a date for the property to be sold at auction. This is called a Trustee Sale. The Notice of Sale (NOS) is filed at the County Recorder’s office, published in the local newspaper and posted on the front door of the home. This ensures that everyone will know where and when the auction will be. Most often the auction is held in the trustee’s office or on the steps of the county courthouse. The home will be sold to the highest bidder during the auction. Most states require that the payments be made in cash. The lender will take ownership of the house if it wasn’t sold at auction. It is now a bank owned property or (REO), real estate owned (by the lender).

Most often REO’s are listed with a local real estate agent. The homes are then listed on the (MLS), so they can be shown and sold. Some lenders sell their inventory of REO’s at huge auctions held at auction houses or convention center.

I hope this helps your understanding of the Foreclosure process. If you have questions, please feel free to contact Mindi Landry, Escondido Realtor at 760-737-3736.

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