Foreclosure Timeline

 

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The above chart depicts the legal foreclosure proceeding timeline which all lenders must adhere to in the state of California.  There are 4 phases:

Homeowner becomes delinquent on payments:  Typically a homeowner can miss about 3 payments before the bank will start the foreclosure process.  During this period the bank will attempt to contact the homeowner and is required to give a 30 day notice in writing prior to initiating the actual foreclosure process.

Notice Of Default (NOD) recorded: After the homeowner misses several payments the lender (typically the first lender) will record a legal NOD against the property.  This is filed at the assessor's office and typically the homeowner receives written notification often via certified mail.  This starts foreclosure the timeclock ticking.  Once this is filed/recorded, the homeowner has 120 daysto correct the situation, i.e., bring the loan current and make up the defaulted payments.  The bank cannot evict you during this time period, although they will  certainly be regularly making contact to try and get payments.

Notice of Trustee Sale (NOS):  At the end of 120 days, the bank can now file/record a Notice of Trustee Sale.  Again it is recorded at the assesor's office.  Often a written notification is posted at the property, and/or a certified letter sent to the property owner.  The Notice will state the date of the planned Trustee Sale and the location (San Diego or El Cajon Courthouse).  It can be no sooner than the 22nd day after the NOS is recorded.

Trustee Sale:  If nothing were to happen to correct the situation (i.e. bring the loan current or complete a short sale) the house would be auctioned at the courthouse steps.  If there were no bids (which is common) the property ownership would revert to the bank on that day.  The property then becomes Real Estate Owned (REO) and is an asset of thelender.  Any second loans or subordinate loans are wiped out at the trust meaning they are no longer attached to the property.  However, if they are refinance loans, HELOCs taken sometime after the property was purchased, or HOA liens, the loan itself changes into unsecured debt and the the lien-holder can go after the homeowner personally for what is owned.  Trustee Sale postponements - We are usually successful in postponing trustee sales in the event we have an active short sale file at the bank, or an active loan modification. 

BOTTOM LINE is that the homeowner has almost a 4 month timeframe when the bank cannot evict them to try and sort out how to proceed.

Short Sale Timing - Ideally a homeowner can start a short sale around the time that they become delinquent on their payments.  This gives ample time to do a sale.  They can stay in the property until the short sale is completed.