The foreclosure process is not a simple one and it can be incredibly difficult for a lay person to comprehend. It’s important for all involved to know their rights when it comes to foreclosure. They should read California civil code 2924 to know what is involved in either a judicial or nonjudicial foreclosure – though the second one rarely happens in this state. That means that most foreclosure proceedings don’t involve the courts.
It can feel awful to miss mortgage payments and have your lender decide to go into the foreclosure process? Is there any recourse that you can take? Can you sell a foreclosure home in California?
Initial Things To Know
If you live in California, you are in a title theory state, which means until you pay the loan in full, the title has been placed in trust. If you do wind up in the foreclosure process due to not paying the monthly mortgage for several months in a row, you should know that California is usually considered to tilt more in favor toward the consumer than the lender. That means there are quite a few options for you to mull over.
One thing that you must know in advance is that California is a state that has a one-action rule. That means the lender cannot take another action against you if the foreclosure is settled in a non-judicial way – they cannot take you to court. Another reason that people tend to prefer the non-judicial way to settle this is because it takes way longer to do it the judicial way. This saves a lot of time and aggravation on many people’s ends.
First Options
When people buy a house and it is not all in cash, then they can either get financing via a mortgage or a deed of trust. Even if it turns out that you fall behind, you can possibly sell the house, since there is a clause in there called “power of sale”, which means you can still list it on the market. A trustee, usually a title company, will act on behalf of the lender for the sale.
If it is at all possible, see if you can schedule a sit-down or phone call with the lender to see if there are any alternatives that you can pursue to stave off foreclosure. Perhaps they can modify some terms or arrange a payment schedule that will be mutually beneficial to the two of you. There are also companies that can buy the home and do the selling for you.
The reason that you want to do this is so that you can keep the stain of foreclosure off of your credit report – it is something that can severely damage your chances of getting another loan in the future if you want to buy something…like a car. Then your credit rating will prevent you from getting a good interest rate, if you get it at all. It’s best to go the extra mile to keep that from happening.
Short Sale
This is where you sell your property and try to use the money to make up the money you owe for the mortgage. You can only sell it for a lower amount that the mortgage balance – you cannot do this for a profit. This will also release you from any further debt to this lender. If this is going on in California, the lender has to approve this type of sale before anything moves ahead.
The thing about a short sale is that it can take a longer amount of time than a foreclosure. Also, this will also impact your credit score, though it is not as bad a hit as foreclosure. The thing with a foreclosure sale is that whoever buys this house will have to pay in cash – they won’t be able to get a loan to pay for it.
Right of Redemption
Let’s say that you were unable to sell the house and it went through the foreclosure process. Some states have something called “statutory right of redemption.” California is one of those, but, like nearly everything else in the foreclosure process… it’s complicated. Typically, after the house has been sold, you could reclaim it by paying the lender the loan and costs within a year. However, if the lender bid the full price of the house, the period of time for you to do that would drop to three months.
You can lose this possible right if there is a judgment against you or the deficiency judgment is waived. Then there is no way that you will be able to get the house back via this method.
Curing The Default
Curing, or remedying the default is also something to consider. This is an option for you after you have received the default notice. You can pay whatever you owe, which is similar to the statutory right of redemption, but it is not a true one.
Take a close look at the terms of your mortgage to see if this is possible. Also, you may have to negotiate on the interest rate – it depends if it would fall on the default one or maybe it might be a lower one. Obviously, the lender would like the higher one.
Deed In Lieu of Foreclosure
In this scenario, you would give up the claims to the property that you are delinquent with the mortgage and give it to the lender. While this may seem like a losing scenario, you will avoid having a foreclosure on your credit record, which will then keep you from having to wait five years to even buy another house. Expect this to take between two and three months.
As you can see, there are many different ways for California residents to be able to work their way out of foreclosure. They have the rules of the state on their side and they can get back to their home ownership sooner than later. It takes some research and knowledge and likely enlisting someone who is very familiar with this territory.
Basically, the thing to keep in mind is that you have until the house is sold at auction to do a rescue of sorts to get money from the sale and also keep your credit score intact, which will help you in the future. When it comes to things like this, you need to take a long view about what could come up for you rather than just living for the moment. The upcoming days will then be much brighter for you and your family.