How does selling a house in foreclosure work? It differs per location. For example, the foreclosure process varies depending on which state you own your home in. What if I own a home in Los Angeles, CA? How does selling a house in foreclosure work in Los Angeles? In this blog, we will discuss & focus on how the foreclosure process works for California homeowners.
What is foreclosure?
When buying a home, most people do not have the cash to buy the home, so they borrow the money to purchase the home from a bank or a mortgage company. In addition, it is common for homeowners to borrow money against the equity in their property, which is called a home equity loan. No matter the reasons for borrowing money against your home, the lender will almost always put a lien against the property to secure repayment of the loan. If the buyer fails to pay back the loan as agreed to in the terms of the loan, then the lender may foreclose on the property (defaults on the loan). Foreclosure allows the lender to force the sale of the property to pay back the outstanding loan.
What is the most common type of foreclosure?
The most common type of foreclosure in California is the nonjudicial foreclosure process, which can be done outside of the courts. The least common type of foreclosure is the judicial foreclosure process, meaning through the courts. How can my lender foreclose on my property without going through the court system? When a lender puts a lien against your property to secure repayment of the loan, this lien is called a deed of trust. Typically within a deed of trust, there is a power-of-sale clause, which gives the lender the authority to sell the property in order to pay off the outstanding debt in the event the borrower defaults on his/her loan.
What are the main steps in the foreclosure process?
Below are the main steps of a nonjudcial foreclosure process, which is the most common foreclosure process in the state of California.
1. Foreclosure Avoidance Assessment – The lender must contact all of those who are responsible for paying back the loan to assess their financial situation and to discuss the options they have to avoid foreclosure. According to the California Courts, the lender is required to follow these guidelines:
- Cannot start the foreclosure process until at least 30 days after contacting you to make this assessment; and
- Must advise you during that first contact that you have the right to request another meeting about how to avoid foreclosure. That meeting must be scheduled to take place within 14 days.
- You can authorize a lawyer, HUD-certified housing counseling agency, or other adviser to talk on your behalf with the lender about ways to avoid foreclosure. You cannot be forced to accept any plan that your representative and the lender come up with during that discussion.
2. Notice of Default – If you have received your Foreclosure Avoidance Assessment from your lender, but could not find a plan to avoid foreclosure, then your lender has the right to file a notice of default within the county your home is located in at least 30 days after this assessment. Once your lender files the notice of default this marks the beginning of the formal and public foreclosure process. Your lender is required to send you a certified copy of the notice within at least 10 days of filling it with the courts. You then have 90 days from the day the notice of default was filed to make your loan current.
3. Notice of Sale – If you can not pay back what is owed to your lender, your lender then has the right to file a Notice of Sale 90 days after the Notice of Default was recorded. The Notice of Sale indicates to the buyer that the trustee, or the lender, will sell your home at auction in 21 days.
How can I stop foreclosure?
According to the California Courts, You have up until 5 days before the foreclosure sale to cure the default and stop the process. This is called “reinstatement” of the loan. During the 21-day period after the Notice of Sale is recorded, any person or institution (like a bank) with an interest in your home has the right to redeem the home up until the nonjudicial foreclosure sale/auction. This means that they must pay the entire loan in full. If you ask us, selling a house in foreclosure is the best option.
Selling a house in foreclosure
It is better to sell your house for something then let the banks take it for nothing. If you sell your house you can fix your credit and hopefully walk away with a little money in your pocket. When selling your house in foreclosure you need a buyer you can trust. If you are in Foreclosure and need to sell your house please visit SellMyHouseFaster.la or our main site to see what we can do for you.