Gaining a solid comprehension of the foreclosure process in CA is a crucial step when facing a potential foreclosure of your own home.
Before we delve deeper…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Going through a foreclosure is indeed a daunting experience. However, remember that it doesn’t signify the end of everything.
Being well-versed in how foreclosure operates in CA provides you with the essential understanding to navigate through it effectively and emerge from the situation in the best possible condition.
The Basic Stages of A Foreclosure
There are several critical stages inherent to any foreclosure procedure.
The foreclosure process varies from state to state across the United States, with distinct legal nuances.
The methods that various states employ to foreclose on a property typically fall into two categories: judicial sale or power of sale.
Reach out to us at (916) 507-2502 or via our contact page, and we’ll guide you through the specific local foreclosure process in Sacramento, CA.
Regardless of the circumstances, a foreclosure generally doesn’t proceed to court until there is a history of 3-6 months of missed payments. In most situations (though not always), a lender will send numerous notices informing you that you are in arrears – meaning you’re lagging behind in your payments.
Under Judicial Foreclosure:
- The financial institution that provided your mortgage must initiate a lawsuit within the court system.
- You will receive an official court letter demanding repayment.
- Presuming that the loan is legitimate, you will have a 30-day period to make the payment in court to prevent foreclosure (and in certain cases, this period can be extended).
- If you fail to settle your dues during the stipulated payment period, the court will enter a judgment, and the lender can then ask for your property to be sold – typically this happens through an auction.
- After the property has been sold, the sheriff delivers an eviction notice and you are compelled to vacate the property immediately.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender issues you legal documents demanding repayment, and court intervention is not necessary – although the procedure might be subject to judicial oversight.
- Following the designated waiting period, a deed of trust is prepared and the custody of your property is transferred to a trustee.
- The trustee is then authorized to sell your property on behalf of the lender at a public auction (proper notice has to be given).
Every party with a vested interest in the property must be informed during either type of foreclosure process.
For instance, any banks or contractors that have liens against property under foreclosure are legally entitled to recover their dues from the auction proceeds.
What Happens After A Foreclosure Auction?
Upon the completion of a foreclosure, the loan balance is settled with the revenue from the sale.
In certain cases, if the property auction doesn’t generate sufficient funds to cover the loan, a deficiency judgment might be levied against the borrower.
A deficiency judgment refers to a situation where the bank obtains a legal ruling against you, the borrower, for the residual funds that remain unpaid on the loan following the foreclosure sale.
Certain states restrict the amount that can be claimed in a deficiency judgment to the fair market value of the property at the time of sale. However, other states permit the lender to seek the entire loan amount from the borrower.
Here’s a valuable resource that details the laws governing deficiency judgments in each state, as these regulations can vary significantly from one state to another.
In general, it’s more beneficial to avoid reaching the stage of a foreclosure auction. Instead, you could consider reaching out directly to your bank, or work in tandem with a reliable real estate firm like InsightfulREI Buy Houses Sacramento. We specialize in negotiating discounts on the outstanding loan amount to prevent foreclosure.
Expert investors can provide assistance by directly negotiating with banks to reduce the amount you owe in a sale, or in some cases, even completely wipe it out, particularly if your home’s market value is less than what you owe.
If you’re contemplating selling a property around Sacramento, we are here to offer our assistance.
We specialize in purchasing houses in Sacramento CA from homeowners who need to facilitate a swift sale.
Give us a call anytime (916) 507-2502 or
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Other Foreclosure Resources For Sacramento CA HomeOwners: