Guide to foreclosures

What is a foreclosure?

Foreclosure is a legal process to force the sale of a property (like your home) to pay a debt.

For example: 

• You take out a mortgage to buy a home and then stops making payments (you default on the mortgage).
• The company that owns the mortgage (usually a bank) can force the sale of the property to cover the remaining debt. 

A home can be foreclosed on for many kinds of debts, not just a mortgage, like:

• a home owner's association (HOA) can foreclose on your home in some cases if you owe HOA dues or other debts. 
• if you have a court judgment that says you owe money to a person or company, that person or company may be able to foreclose on your home to collect the money.

Are foreclosures done in court?

It depends. If a lending contract allows, a lender can foreclose without going to court.

In California, lenders can foreclose either:

• Without going to court (called a nonjudicial foreclosure)
• By going to court (called a judicial foreclosure)

If the mortgage (or deed of trust for the home) has a power of sale clause, a lender can foreclose on the home without going to court. 

Nonjudicial foreclosures are the most common type of foreclosures in California. Most mortgages have a power of sale clause, so lenders can foreclose without going to court (nonjudicial).

What are the differences between judicial and nonjudicial foreclosures?

Nonjudicial foreclosures:

• Take less time (usually about 4-6 months)
• Cost less money, because there’s no court case
• In most cases, if the money from the sale of your home doesn’t cover all you owe, the lender can’t go to court to get an order for the rest.
  • There are a few exceptions related to fraud (like if you lied when you got the loan), or cash-out refinance loans or second liens. Talk to a lawyer if you think one of these might apply to you.
• You do not have the right to buy your home back after it’s sold.

Judicial foreclosures:

• Usually take longer (can take many months, even years)
• Cost more because of court costs and legal fees
• If you still owe money after the sale of your home, the lender can ask the court to order you to pay the debt you still owe (called a deficiency judgment)
• You have time to buy back your home after it’s sold. This is called the right of redemption.
  • If the sale of your home paid off all you owed, you have 3 months to try to buy back your home.
  • If the sale of your home did not pay off all your debt, you have 1 year to try to buy back your home.

⚠️ Watch out for foreclosure scams

Some companies may try to scam homeowners who are behind on their mortgage payments. They offer help, take your money, and then do nothing to help. Both licensed and unlicensed professionals commit these scams.

📌 Get tips on how to avoid scams and how to report them (link opens in a new tab) 

💬 Get help 

• Get free or low-cost legal help
• Foreclosure and mortgage help
• Bankruptcy help