FORECLOSURE

What is a Foreclosure?

The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property after the owner has failed to comply with an agreement between the lender and borrower called a mortgage.  Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. In California this lien is referred to as a Deed of Trust. 

There are two ways to foreclose in California.  First and most common is a non-judicial process called Trustee sale.  It is approximately a four month process.  It is the quickest and cheapest way to foreclose.  With a Trustee Sale the only recourse the lender has is the property itself.  The other process is a Judicial foreclosure.  It is time consuming and expensive and it is typically done when the property itself will not repay the balance due and the borrower has other substantial assests.  Here the lender goes to court to obtain a Deficiency Judgement to attach other assests the borrower may have.  The majority of foreclosures are done through the Trustee Sale process.

When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs.