Foreclosures:

Failure to make payments results in the foreclosure of the mortgage. Foreclosure allows the mortgagee to declare that the entire mortgage debt is due and must be paid immediately. This is accomplished through an acceleration clause in the mortgage. Failure to pay the mortgage debt once foreclosure of the land occurs leads to seizure of the security interest and it's sale to pay for any remaining mortgage debt. The foreclosure process depends on state law and the terms of the mortgage. The most common processes are court proceedings (judicial foreclosure) or grants of power to the mortgagee to sell the property (power of sale foreclosure). Many states regulate acceleration clauses and allow late payments to avoid foreclosure

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What is a Foreclosure?

Foreclosure is the process for enforcing lender rights once the obligation secured by a deed of trust is in default.

1. Initial Steps:
A. The note, deed of trust and information on the default are forwarded to the trustee.
B. The notice of default and other necessary documents are prepared.
C. The notice of default is then recorded and the foreclosure time line begins.

2. Default Period.
A. A trustee sale guaranty (TSG) is ordered from a title company.
B. The required 10 day and one month legal mailings are sent to the borrower and the junior lien holders.
C. If the loan has not been reinstated or paid off within the three-month default period, the lender then authorizes the next step in the foreclosure proceedings.

3. Publication Period and Trustee's Sale.
A. The trustee will prepare, record and arrange to post the notice of trustees sale.
B. The notice of trustee's sale must be published once a week for three consecutive weeks in a newspaper of general circulation near the property location.
C. The borrower or junior lien holder may reinstate the loan at any time up to five business days before the sale date.
D. If the loan has not been reinstated prior to five business days before the sale, the beneficiary may demand that the entire unpaid obligation be paid in full during that five-day period.

Foreclosure and Trustee's Sale Timeline Day Number Event

Foreclosure Tips For Your Success!

Click on any of the following "Foreclosure Tips" for a specific expert tip on how to buy foreclosures. Bookmark this page, for your future reference. We add new tips frequently to help you better succeed in buying foreclosure properties.

Tip #101 DON'T BE STUCK WITH A "TAJ MAHAL"!
Tip #102 DEBT-TO-VALUE RATIO IS THE NAME OF THE GAME!
Tip #103 DON'T COUNT ON THE COUNTY ASSESSORS VALUE!
Tip #104 CHECK, CHECK, CHECK AND CHECK AGAIN!
Tip #105 LET THE IRS MAKE A BETTER DEAL FOR YOU!
Tip #106 WHAT YOU SEE IS WHAT YOU GET!
Tip #107 EASY COME, EASY GO!
Tip #108 FREE DATA SOURCES?
Tip #109 COME ALL YE REALTORS.
Tip #110. . . Coming Soon!
Check back with this web page for the latest foreclosure tips.

The Foreclosure Process:

The Notice of Default Time Period

This time period begins once the notice of default has been recorded.

The California Civil Code requires that a copy of the notice of default be mailed within 10 days of its recording to all persons who are entitled to notice. This includes the original Trustor at the address shown on the deed of trust, at his / her last known address and to anyone else who has recorded a request for notice. The civil code also requires that a copy of the notice of default be mailed to certain entitled parties, such as junior lien holders, within one month of the notices recording. All mailings to the trustors and new owners are sent by certified and first class mail.

A Trustees Sale Guarantee (TSG) will be ordered from a title company at the time the Notice of Default is recorded. The TSG provides the information needed to proceed with the trustee's sale process and guarantees the accuracy of that information to the trustee and beneficiary only.

The property owner, or a junior lien holder, may cure the default by paying all delinquent amounts, including all costs associated with the filing of the default. This may be done at any time up to five business days before the scheduled sale date which is set in the publication period.

Curing a Default

Many foreclosure proceedings are resolved during this 3 month Notice of Default period. The borrower, or anyone with a subsequent interest in the property, may pay the beneficiary or his authorized agent the amount necessary to cure the default.

This amount will include delinquent payments, advances and the fees and costs associated with filing the Notice of Default and other necessary documents. Once all of the delinquent fees and costs are paid, a Notice of Recision is recorded. When the Notice of Recision is recorded it cancels the Notice of Default.

The Publication Period

If the default is not cured within the 3 month Notice of Default period, the the the trustee prepares, posts, records and publishes the Notice of Trustees Sale.

A copy of the notice is published in a newspaper of general circulation once a week for three consecutive weeks. The notice is also posted on the property and recorded at the County Recorders office.

If the property owner wants to reinstate the loan during the publication period, the beneficiary must allow him / her to do so up to five business days prior to the date of sale, unless the loan is all due and payable pursuant to the terms of the note. The beneficiary will also instructs the trustee to make the opening bid on the beneficiary's behalf. This will usually be for the total amount of the debt secured by the deed of trust, plus any advances, trustee's fees and expenses.

The beneficiary may instruct the trustee to make a deficiency bid. A deficiency bid is one which is less than the amount of the debt and is used when the beneficiary does not want the property back and / or the value of the property is less than the debt due on the note.

The Trustee's Sale

The date of the trustees sale is established at the time of the Notice of Trustees Sale is prepared.

The trustee's sale is a public auction sale and is open to all qualified bidders. Bids are made orally and everyone who wants to bid must first qualify with the auctioneer by showing the amount and type of money intended to be used in the event of a successful bid.

The Notice of Trustee's Sale designates the type of funds required, usually cash, cashier's check or bank check. The acceptance of the bid is not final until the total amount is paid to the auctioneer by the highest bidder.

The beneficiary does not need any money to make the opening bid. However, if the lender plans to bid over the opening bid he must have enough money to pay the difference between the amount of his balance due in his final bid. The sale is complete when the highest bid is received and the auctioneer accepts it and declares the property sold.

Postponement

There are many reasons why a trustee's sale may be postponed. As an example, a bankruptcy or other legal proceedings may prevent the trustee from conducting the sale on the scheduled date.

The beneficiary is entitled to three separate postponements for their own reasons. The beneficiary and the property owner can agree on as many postponements as they wish. If there is a bankruptcy or legal proceeding, the sale can be postponed as many times as necessary to obtain a court order to allow the sale to take place.
If a sale is postponed for any reason, an announcement must be made at the sale location

After the Sale

A Trustees Deed Upon Sale is prepared after the sale is completed. This deed transfers title to the successful bidder or beneficiary. The deed must be signed by the trustee, acknowledged by a notary public and recorded. After the deed has been recorded it is forwarded to the party who purchased the property at the Trustees Sale auction.

There is no right of redemption after a trustee's sale. The successful bidder is entitled to immediate possession of the property.

The one exception is the right of the federal government (IRS) to redeem the property, if a federal tax lien has been recorded against the property and is subsequent (junior to) to the deed of trust being foreclosed. In this case, the government must reimburse the successful bidder, with a full payoff with of the amount the bidder paid at auction, plus interest calculated for the period of the bidders ownership. Note: a senior lien by the federal government must be satisfied like any other senior lien and does not become discharged by a trustee's sale.

The federal government (IRS) redemption rights elapse four months after the Trustees Sale. The state has no right of redemption.