Foreclosure Process

Foreclosure is the legal process in which the mortgage holder legally takes back the property securing the loan. Most California foreclosures are Nonjudicial Foreclosures. The following is a timeline for a typical California Nonjudicial Foreclosure. It is very important that you inform our San Jose bankruptcy lawyer if you received a notice of default or how many mortgages payments you have missed during your free bankruptcy consultation.

Special Notes

Lenders may not seek a deficiency (the difference between what the property is worth and the amount owed) judgment if (1) the foreclosure is nonjudicial or if (2) foreclosure is on a purchase money obligation (no refinances).

Junior liens (second mortgages or lines of credit) do not reattach to the property once it has been foreclosed upon. If the highest bid is not enough to cover the first mortgage payoff, then all junior liens will be wiped out completely. This helps borrowers by encouraging the junior lienholders to bid up to fair market value for the property at the foreclosure sale, or else lose out.

Day 1

- Notice of Default is filed with County Recorder’s Office
- Notice of Default starts the foreclosure process
- Usually mailed to homeowner by certified mail within 10 days of being filed
- California Nonjudicial Foreclosure takes 120 days from start to finish

Day 1 – 90

- Reinstatement Period
- Junior lien holders, second mortgages or lines of credit are sent a copy of the Notice of Default within 30 days of the filing of the Notice of Default
- Foreclosure process is dormant for 60 days unless the loan is reinstate or brought current by the homeowner
- A homeowners may reinstate their loan up to five days before a nonjudicial foreclosure sale

Day 90 - 111

- Publication period starts
- Notice of Trustee's Sale is published in an adjudicated paper in the county in which the property is located
- Notice of Trustee’s Sale is published one time per week for three weeks
- Trustee’s Sale Date is 21 days from the Notice of Trustee Sale was first published
- If there is tax lien against the property, 25 days prior to sale date a copy of the Notice of Trustee Sale is sent to the IRS
- Notice of Trustee Sale must be mailed certified, return receipt requested, to the borrower at least 20 days prior to sale
- Notice of Trustee Sales is posted on the property at least 20 days prior to sale and posted in one public place in the county where the property is to be sold
- 14 days prior to the Sale date, the Notice of Trustee Sale is recorded in the county in which the property is located at the County Recorder’s Office

Day 111 - 120

- Property is auctioned off to the highest bidder, the full amount must be paid for in cash/cashier's check
- No bidders: property will automatically revert back to the mortgage holder
- Homeowner may reinstate their loan up to five days before a nonjudicial foreclosure sale