What is Foreclosure?
The legal process by which a lender will terminate an owner’s rights to a property
and sell it in order to satisfy a debt that is in default.
What is a non-judicial foreclosure?
The legal process whereby a lender or lien holder will foreclose outside of any court process on a property to
satisfy a debt secured by a trust deed or mortgage in the event of a default.
What is a judicial foreclosure?
The foreclosure process in which a lender or lien holder use court action to foreclose. They will file and win a lawsuit.
How long does a non-judicial foreclosure take in the state of California?
The non-judicial process in California can move as quickly as 111 Days.
What is Pre-Foreclosure?
The period in which the lien holder is taking the steps to foreclose. You may think of it as "the foreclosure process".
Will the lender accept mortgage payments or partial payments during the foreclosure process?
Most likely they will not unless you are able to negotiate some sort of agreement to reinstate or partially reinstate your loan. This will depend on who the investor for the loan is.
What is reinstatement?
This is when you bring the loan current including all past due payments including late fees, legal fees, etc. You have a right to reinstate your loan for at least the first 105 days of the foreclosure process.
What is REO?
An acronym that means Real Estate Owned by the bank due to foreclosure.
What is a Deed?
A legal document that conveys title to a property.
What is Title?
Title is the description of all lien holders, in order, for a particular property. It also includes any other encumbrances including easements.
What is a Trust Deed?
The security device that essentially connects your property to your note, allowing your lender to foreclose in the event you do not honor your contract.
What is a Mortgage?
A legal document that you give your lender in exchange for a loan, similar to a trust Deed. This would allow the Mortgagee to foreclose on your property in the event yu do not honor your part of the contract.
In the state of California, lenders use a Trust Deed rather than a Mortgage because the foreclosure laws are more favorable when using a trust deed. Specifically, a trust deed has a "Power of Sale" clause which allows the lender to foreclose without going to court. This also avoids any redemption period after the foreclosure.
What is a Note?
It's a promise to pay back the money you borrowed and includes the various terms of the agreement i.e. interest rate, etc.
What is a Trustee?
Basically, this is a lawyer or title company who is appointed at the time you gave your mortgage to the lender. They are a third party given certain rights on behalf of the lender. One of these rights is the power of sale which they will use in the event you do not meet the terms of the note.
What is an Authorization Form?
Your lender will require anyone who is not on your loan paperwork to have authorization from you in writing giving a third party authorization to discuss or negotiate any details of your loan.
What is an Foreclosure Auction?
The public sale of property to the highest bidder.
What is a Trustee Sale?
When a lender exercises the power of sale in the trust deed and instructs the trustee to follow all the required steps of foreclosure and auction off or sell the property.
What is the Power of Sale?
The power that a trust deed grants to a trustee to sell the secured property if the borrower defaults according to the terms of the trust deed or note without judicial proceedings. They just have to follow the rules the state has set up. That is why it’s important that you know what they are. Federal or state property tax, mechanic’s liens and homeowner’s associations sometimes also have the power of sale.
What is a NOD, or Notice of Default?
To follow all the rules of foreclosure in the state of California, the trustee, on behalf of the lender, must file a notice of default with the county recorder in the county the property is located. Doing so notifies the public that you are in default.
What is Collateral?
The security that you pledge to the lender that secures your loan. This includes the property, land and everything physically attached to the property as defined in your trust deed at closing.
What is a Lien?
An attachment to the “title” of a property. Such as a mortgage, first trust deed, second trust deed, mechanic’s lien, tax lien, etc. All liens must be satisfied one way or another to transfer a clean title to your property.