The meaning of a California foreclosure
A foreclosure is basically a term used to describe a trustee's sale proceedings. It describes the procedure, which is followed in enforcing a creditor's rights on a debt, which is secured by any lien on a property that happens to be in default. In California, lenders can foreclose on deeds of mortgage or trust in default, through either a non-judicial or judicial foreclosure process.
Judicial and non-judicial California foreclosures
The process of a judicial foreclosure involves filing a lawsuit to obtain a court order to foreclose when there is no "power of sale" clause present in the mortgage or deed of trust. After the court declares a foreclosure, the house to be foreclosed is auctioned off to the highest bidder. The benefit of this process is that the lender may seek a deficiency judgment and in some circumstances, the borrower has up to one-year time for redeeming the property.
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In the case of a "power of sale" clause existing in a mortgage or deed of trust, the non-judicial process of foreclosure is used. The clause "power of sale" in the deed of trust or mortgage pre-authorizes the sale of property to pay off any balance on a loan in the event of a default by the borrower. In such cases, this power, which is given to the lender to sell the property, can be executed either by the lender, their representative or a trustee.
Power of sale California foreclosure guidelines
In the case of the deed containing the power of sale clause that specifies the time, place and term of sale, the procedure has to be followed at the specified time and place. If not, the non-judicial power of sale method of a foreclosure is carried out.
Here, the notice of default has to be recorded in the county the property is located at least 14 days prior to the sale and, has to be mailed by certified, return receipt requested post to the borrower at least 20 days before the sale. It has also got to be posted on the property 20 days before the sale and in one public place in the county it is to be sold in. This notice has to include the time, location and property of the foreclosure sale, the trustee's name, address, phone number and a statement that the property is being sold at an auction. The borrower then has 5 days before the foreclosure to cure the default and thus stop the process. The sale can be held on any business day between 9a.m. and 5p.m. at the location specified in the notice. Anyone can bid at the sale, but the trustee requires proof of the bidders' ability to pay their full bid amount. If necessary, the sale can be postponed by an announcement at the place and time of the original foreclosure.