Your rights in a nonjudicial foreclosure
In a nonjudicial foreclosure:
- a lender forces the sale of a home to cover a debt
- they don’t have to go to to court
- they must take many steps required by law before they can foreclose
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Your rights in a nonjudicial foreclosure
California and federal laws protect homeowners during a foreclosure.
California's Homeowner Bill of Rights protects homeowners facing foreclosure based on mortgage debt. It says:
- The lender or company who manages the mortgage account (the servicer) must contact you (or at least try) to discuss ways to avoid foreclosure before starting the foreclosure process.
- The servicer must give you one person to contact during the process.
- The lender can't move forward with the foreclosure while your loss mitigation application is pending (they can’t engage in dual tracking).
- Loss mitigation is your request to the mortgage services to explore options to help you avoid foreclosure. Examples:
- Modifying the terms of your loan so the payments are more manageable
- Pausing or reducing payments for a while (called forbearance)
- Giving you a repayment plan
- Loss mitigation is your request to the mortgage services to explore options to help you avoid foreclosure. Examples:
Federal laws also protect homeowners during a foreclosure. They have requirements similar to those under California law.
As a homeowner, you can sue if the lender violates these laws.
How the nonjudicial foreclosure process works
Usually, before the foreclosure process starts, the lender sends many letters demanding payment. If they want to start foreclosure, they'll need to follow the steps and timeline below.
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The lender contacts you to see if you can avoid foreclosure
The lender must contact you and anyone else on the mortgage loan to
- Review your finances
- Look at ways for you to keep your home (called a foreclosure avoidance assessment)
They must also tell you that you have a right to ask for another meeting to talk about how to avoid foreclosure. If you ask for you, they must schedule it to take place within 14 days.
⚠️ This is your chance to try to work out a plan to avoid foreclosure.
- You can give permission to a lawyer, HUD-certified housing counseling agency, or another advisor to talk to lender for you.
- You cannot be forced to accept any plan that your representative and the lender come up with during that discussion.
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30 days after contact, the lender can record a Notice of Default
Thirty days after contacting you, if you and the lender have not worked out a plan, the lender can record a Notice of Default in the county where your home is located.
- Recording a Notice of Default marks the start of the formal and public foreclosure process.
- The lender sends you a copy of this notice by certified mail within 10 business days of recording it.
- 📅 You have 90 days from the date that the Notice of Default is recorded to “cure” (fix, usually by paying what is owed) the default.
- You can use these 90 days to try to negotiate a loan modification or repayment plan.
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90 days later, the lender can record a Notice of Sale
Starting 90 days after the Notice of Default is recorded, if you do not pay what you owe, the lender can record a Notice of Sale.
- The Notice of Sale states that the trustee will sell your home at auction in 21 days.
The Notice of Sale must:
- Be sent to you by certified mail
- Be published weekly in a newspaper of general circulation in the county where your home is located for 3 consecutive weeks before the sale date
- Be posted on your property, as well as in a public place, usually at your local courthouse
The Notice must have:
- The date, time, and location of the foreclosure sale
- The property address
- The trustee’s name, address, and phone number
- A statement that the property will be sold at a public auction
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21 days later, the property can be sold
At least 21 days after the date when the Notice of Sale is recorded, the property can be sold at a public auction. At the auction
- The successful bidder must pay the full amount of the bid immediately with cash or a cashier’s check.
- The lender usually bids, in the amount of the balance due plus the foreclosure costs.
If no one else bids, your home goes to the lender. The successful bidder gets a trustee's deed once the sale is complete.
⚠️You may still be able to stop the process.
📅 You have up until 5 days before the scheduled sale to stop the process. You can do this by:
- Paying off all past-due amounts plus fees (called reinstament of the loan)
- Reaching an agreement with the lender (like a loan change)
- Filing a case in court to stop the foreclosure
If you, or a bank or other institution with an interest in your home, can pay off the entire loan plus any fees (called redemption), you can do that up to the day of the sale.
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After the foreclosure
Whoever buys your home can't just change the locks.
- The new owner must serve you with a 3-day written notice to quit (move out).
- If you don't move out in the 3 days, they must go through the formal eviction process in court.
- That process can take several weeks.
If your home was foreclosed on by your HOA, you have more time to regain your home.
- 📅 You have 90 days after the foreclosure sale to pay off any amount owed to regain ownership.
If your home sells for more than you owed on the home you're entitled to the surplus funds. To get the surplus funds:
- Give the company that sold your home (the trustee listed on the Notice of Sale) your updated address when you move. That way they can let you know about any surplus so you can request it.
- If the Trustee is not sure who should get the surplus funds, the Trustee must deposit the funds with the local Superior Court and give notice of where the funds are.
- Claiming your funds from the court is simple. Non-profits, like HERA, can explain the process for free.