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The non-judicial foreclosure process
is used instead of
filing a lawsuit in court to retrieve the amounts owed to a lender with
a
secured loan under a Deed of Trust. The
process follows procedure as set forth in the Civil Code of California. Based on the code, there are specific time
frames and costs associated with the process. This
makes the non-judicial foreclosure
the best economical method for a
lender.
There are generally three stages to
the foreclosure
process:
1.) Notice of Default
– Reinstatement Period
Foreclosure proceedings start
with a Notice of Default (NOD). The
document is recorded at the request of the Lender by the trustee and is
recorded in the county in which the property is located.
The recording of the Notice of Default
gives
“Constructive Notice” to the public. After
the recording of the Notice of
Default, in the State of California,
the borrower
and junior lien holders are given proper notification and the borrower
has 90
days to bring their account current. This
period is referred to as the
Reinstatement Period. This time period may
vary in other states.
2.) Notice
of Trustee Sale
If the borrower does not
reinstate their account within the 90 day period, the lender will
authorize
and instruct the Trustee to record the Notice of Trustee Sale (NOS).
After 21
days of the recording of
the NOS, a foreclosure sale can take place at public auction. The property may be sold to a third party
bidder or revert back to the lender for a specified amount.
Bidders are required to bring
cashier’s checks or money orders to the sale in an amount equal to or
higher
than the lenders opening bid. The
auctioneer will qualify each bidder and the successful bidder will have
to
tender full payment at the sale.
The Notice of Trustee Sale is
recorded at the County
Recorder’s
office in the
county where the property is located. It
contains the date, time, and place where the auction will take place. This notice has to be published in a
adjudicated newspaper in the city where the property is located. The NOS is also posted on the property as a
requirement of law.
3.) Disbursement
of
Funds
After the auction is completed, the
property will either sell to an outside third party bidder, or
revert to the Lender/Beneficiary. In either case, a
Trustee's Deed Upon Sale will be issued and any funds resulting from
the auction will be prepared for immediate payout. |
