Understanding the Southern California
FORECLOSURE MARKET California has a non-judicial system to carry out a foreclosure of a deed of trust. No court procedure is required for a lender to sell the property to satisfy the debt. The judicial process is available, but rarely used. The following are steps that outline what is involved in a non-judicial foreclosure: 1. PAYMENT MISSED: Usually after the third missed payment the lender will initiate a foreclosure. This is done by issuing Declaration of Default and Demand for Sale which is passed onto the foreclosure trustee. 2. DEPOSIT DEED OF TRUST AND NOTE WITH TRUSTEE: The lender (beneficiary) deposits the deed of trust and note with a foreclosure trustee. If there has been an assignment of the deed of trust, this assignment must also be deposited 3. THE TRUSTEE MUST EXAMINE THE DOCUMENTS for any special provisions other than those provided by law. 4. THE TRUSTEE PREPARES THE NOTICE OF DEFAULT, which must set forth specifically the nature of the breach by the homeowners. Example: “Failure to pay the January 2005 and subsequent payments.” 5. THE NOTICE OF DEFAULT must be executed (signed) by either the trustee or the beneficiary 6. THE TRUSTEE WILL CAUSE THE NOTICE TO BE RECORDED in the county where the property is located. The notice does not have to be notarized 7. THE TRUSTEE OBTAINS A TRUSTEES SALE GUARANTEE (TGS). This informs the trustee of all persons who have filed a request for notices of default and sale, all other persons legally entitled to notice by mail, whether the owner of any interest is either bankrupt or in receivership, and whether there are any subordinate Federal Tax Liens. 8. 10 DAY NOTICE BY MAIL is made by certified or registered mail, return receipt requested, to all parties specified in the Trustees Sale Guarantee. 9. SERVICE OF PUBLICATION If the Deed of Trust does not have sufficient information to mail Notice of Default to the trustor, then it must be accomplished by hand delivery or published in a newspaper of general circulation in the county where the property is located. If published, it must be published once a week for four weeks, commencing no later than ten (10) days from the date when the Notice was recorded. 10. REINSTATEMENT WAITING PERIOD The beneficiary must wait three (3) months from the recording of the notice of default before he proceeds any further. During this time, the trustor may reinstate the mortgage by catching up the back payment plus the costs already incurred in the foreclosure proceedings. When foreclosures proceedings are stopped by the reinstatement, a Rescission of Notice of Default is recorded by the trustee to clear the record of the notice of default.
12. PUBLICATION OF THE NOTICE OF SALE The trustee prepares and publishes a notice of sale in a newspaper of general circulation in the county where the property is located. 13. NOTICE OF SALE POSTED. The notice must be posted in a conspicuous place both on the property and in at least one public place in the city where the property is to be sold. The trustee should then prepare and have executed an affidavit of posting. 14. MAILING THE NOTICE OF SALE. The trustee should mail, by certified or registered mail copies, the notice of sale to all those entitled to receive both the ten day and the one month mailings. 15. RECORD THE NOTICE OF SALE. The trustee must record the notice with the county recorder at least fourteen days prior to the date of the sale. 16. TRUSTEE’S SALE: the Trustee’s sale is an auction. • The trustee reads aloud the complete notice of sale. • Announces the amount of the opening bid (usually the value of the unpaid principal and interest on the trust deed being foreclosed, along with any advances and trustee’s fees paid). • The amount of the opening bid is dictated by the Beneficiary. • If there are bids over the opening bid, the successful bidder must pay” at the drop of the hammer”, either in cash, money order, certified check, or cashier’s check. • The trustee does not guarantee title nor express an opinion as to the condition of title. 17. PREPARATION OF TRUSTEE’S DEED. This deed may be delivered to the highest bidder at the close of the sale and the payment of the bid price, or the trustee may record it as a courtesy. 18. ENDORSEMENT OF NOTE. The trustee must place on the face of the note the amount of the indebtedness and the amount for which the property was sold. 19. DISBURSEMENT OF SALE PROCEEDS. Should the property sell for more than the amount of the fees, and principal and interest owed, the proceeds of the sale shall be paid first to any junior lien holders, and when satisfied, to the trustor or current owner of record. In the State of California the sale cuts off all rights of redemption. The purchaser has right to immediate possession. After the required three (3) day notice, the new owner may evict any person remaining on the premises by unlawful detainer procedures. The purchaser receives all fixtures and improvement, whether installed before or after the commencement of foreclosure.
11. FINAL CHECK BEFORE NOTICE OF SALE IS ISSUED. After three (3) months have elapsed, the trustee contacts the beneficiary to confirm that the default continues and has not waived or impaired.
Gene Bleecker Sales Representative
Cell: (661) 510-5628 Gbleecker@calcounties.com Main Office: (888) 282-5885 Open Orders / Customer service: (661) 259-2771