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The Process
Judicial foreclosure available: Yes
Non-Judicial foreclosure available: Yes
The lender may use a deed of trust with a power of sale
clause as the mortgage. This permits the lender to foreclose by following a
statutory procedure for sale without the necessity of filing a lawsuit in
court.
Preliminary Notices
Non-judicial Foreclosure
The borrower has three months from the date a notice of
default and election to sell is recorded to perform and cure the default under
the deed of trust. If the borrower fails to do so, then the property will be
sold at foreclosure. Recording A notice of default and election to sell must be
recorded by the deed of trust's trustee.
Mailing
A copy of the notice of default and election to sell
must be mailed certified, return receipt requested, to the borrower and any
owner of the property on the date the notice is recorded. The notice must be
mailed to the last ad dress the lender has, but if the current address of the
borrower is not known, the trustee may send it to the property in foreclosure.
The trustee must send the notice of default and election to sell to the
borrower within l( days of recording the same to anyone who recorded a re quest
for such a notice.
Advertising and Posting
The property must be advertised and posted in the same
manner as for an execution sale.
Cure
The borrower has 35 days from the first day following
the day on which the notice of default and election to sell was recorded to
cure the default. The borrower ma) cure the default by performing under the
loan agreement Usually this would mean paying the missed payments or other sums
due to the lender, but not the accelerated loan balance.
Sale Procedures
Time
The time of sale must be specified in the foreclosure
notice. It should be for a time no less than that which would be specified for
an execution sale.
Place
The foreclosure sale may be made at the trustee's
office, even if the office is not in the same county as the property.
Manner
The property should be sold in the manner required by
law for the sale of real property on execution.
Special Procedures
The court may issue an injunction to restrain waste
(destruction) of the property during foreclosure.
Deficiency
If the foreclosure fails to generate sufficient proceeds
to pay off what remained due on the loan, then the lender may sue for a
deficiency within three months after the foreclosure sale. A hearing will be
held to determine the market value of the property. Notice of such hearing must
be served at least 15 days before the hearing. An appraiser may be appointed by
the court, on its own motion or on request, to have the foreclosed property
appraised to find the market value. At the hearing, the greater of the market
value or the foreclosure sale price must be credited against what remained
unpaid on the loan. The court may award a deficiency judgment for the
difference. The deficiency judgment must be sought within six months after the
date of foreclosure. Even if multiple properties are being foreclosed on by the
lender, the deficiency must be sought within two years of the initial
foreclosure on the first of the multiple properties.
Redemption
A deed of trust sale gives the foreclosure purchaser
clear title free of any right of redemption for the old borrower. There is a
one year redemption on judicial sales. |
