Non-judicial foreclosure and homeowner rights
This page has information about
- Homeowner's rights in a non-judicial foreclosure
- Where to get legal help and find out about mortgage assistance options
- An overview of the non-judicial foreclosure process
Non-judicial foreclosures are when a lender forces the sale of a home to cover a debt. Non-judicial means they can do this without going to court. But, the lender still must take many steps required by law before they can foreclose.
Your rights and where to get help
California and federal laws protect homeowners during a foreclosure
California's Homeowner Bill of Rights: This law protects homeowners facing foreclosure based on mortgage debt. The Homeowner Bill of Rights has many protections including:
- The lender or company who manages the mortgage account (the servicer) must contact you (or at least try to) to discuss ways to avoid foreclosure before starting the process
- The servicer must give you one person to contact during the foreclosure process
- The lender can't move forward with the foreclosure while your loss mitigation application is pending (called dual tracking)
A homeowner can sue if the lender violates these laws. Federal laws also protect homeowners during a foreclosure.
Get legal help and find out about mortgage assistance options
- Legal help: Find out where to get free or low-cost legal help. There are also non-profit organizations, like the Housing and Economic Rights Advocates (HERA) that offer free legal information.
- Mortgage assistance: Talk to a Department of Housing and Urban Development (HUD) approved housing counseling agency and get more information about mortgage assistance options. Some counties have grant funds (money) to help you. A counseling agency should be able to help you find out about grants.
Lender contacts you to do a foreclosure avoidance assessment
The lender must contact you and anyone else on the mortgage loan to
- Assess your financial situation
- Explore your options to avoid foreclosure (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. If you want, you can authorize a lawyer, HUD-certified housing counseling agency, or another advisor to talk on your behalf with the lender. You cannot be forced to accept any plan that your representative and the lender come up with during that discussion.
30 days after contact, lender can record a Notice of Default
Thirty days after contacting you, if you and the lender have not worked out a plan to avoid foreclosure, 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 this time to try to negotiate a loan modification or repayment plan.
90 days later, lender can record a Notice of Sale
Starting 90 days after the lease was recorded, if you do not pay what you owe, a Notice of Sale is recorded. 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
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 have up until 5 days before the foreclosure sale to stop the process. This is called “reinstatement” of the loan. During the 21-day period after the Notice of Sale is recorded, any person or institution (like a bank) with an interest in your home has the right to redeem the home up until the nonjudicial foreclosure sale/auction. This means that they must pay the entire loan in full.
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 in order to get possession of the home. That process typically takes 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. The process to get those funds is simple.How to get surplus funds
Let the company that sold your home know your updated address when you move. That company is the Trustee listed on the Notice of Sale. Give them your address so 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 also simple. Non-profits, like HERA, can explain the process for free.