Pre-foreclosure is the period during which a homeowner is in default on their mortgage payments, but the property has not yet been sold at a trustee’s sale. It’s a critical stage in the foreclosure process where the homeowner still has options to prevent the loss of their home.
The pre-foreclosure process begins when a homeowner fails to make their mortgage payments for a specified period, typically 120 days. The lender then records a Notice of Default (NOD) with the county recorder’s office. The NOD serves as a formal notice that the homeowner is in default and that foreclosure proceedings may commence.
The Notice of Default is a public document that lists the property’s details, the amount of the past-due payments, and the date the default occurred. It gives the homeowner 90 days to cure the default by paying the overdue amount plus any applicable fees and penalties. If the default is not cured within this period, the lender may proceed with the foreclosure process.
If the default cannot be cured, the lender will issue a Notice of Trustee’s Sale (NOTS). This notice is published in a local newspaper and posted on the property itself. It sets the date and time of the foreclosure auction and gives interested parties an opportunity to bid on the property.
The trustee is an agent appointed by the lender to oversee the foreclosure process. Their duties include recording the NOD, publishing the NOTS, conducting the foreclosure auction, and delivering any proceeds from the sale to the lender.
In California, there is a redemption period following the foreclosure auction. During this time, the homeowner can still redeem the property by paying the full amount of the judgment plus any costs and expenses incurred by the purchaser. This period typically lasts for 11 months after the trustee’s sale.
Pre-foreclosure can be avoided through various strategies. Homeowners can work with their lender to modify the mortgage terms, enter into a forbearance agreement, or explore other loss mitigation options. It’s crucial to contact the lender as soon as financial distress is anticipated to explore these possibilities.
Understanding the pre-foreclosure process in California is the first step towards preventing a foreclosure. By staying informed about the timeline, legal requirements, and potential solutions, homeowners can take proactive steps to protect their home and financial future.