How Does Foreclosure Work?

The rate of foreclosures for May 2022 in the US was about 1 out of every 4,500 houses. The first step in the foreclosure process is usually a notice of default from your lender. This notice means that you have fallen behind on your mortgage payments, and will state how much you owe and what the next steps are, including hiring a foreclosure attorney to assist with the process.

In California, under the Homeowner’s Bill of Rights, the lender or servicer has to contact, or attempt to contact, the borrower to discuss foreclosure alternatives before starting a foreclosure by recording a Notice of Default against your property.  

Specifically, a servicer has hold off for 30 days after contacting the borrower—or meeting the contact attempt requirements—regarding foreclosure alternatives before recording a Notice of Default which is the first official step in a California foreclosure.

The California, Homeowner’s Bill of Rights contains several key provisions, including:

• a prohibition on dual tracking
• the servicer has to appoint a single point of contact for borrowers
• the lender or servicer has to contact, or attempt to contact, the borrower to discuss foreclosure alternatives before starting a foreclosure, and
• homeowners get the right to sue over violations of the law.

Foreclosure is an unfortunate challenge to deal with. There are many requirements that need to be met during the foreclosure process. If you’re currently facing foreclosure, you may be wondering how the process works, and if you need assistance from a foreclosure attorney.

In this blog, we’ll discuss more about the foreclosure process and what to expect if you’re in a foreclosure situation.

What Is a Foreclosure?

Foreclosure is the legal process of seizing and selling a property when the owner fails to make mortgage payments. Foreclosure can be a difficult process to navigate, especially without a foreclosure attorney if you’re unfamiliar with the law.

The first quarter of 2022 reported an increase of foreclosures at 39% above the prior quarter, the end of 2021. If you’re currently facing foreclosure, it’s imperative to understand what’s happening and what your options are.

What Does the Foreclosure Process Entail?

As previously mentioned, the foreclosure process typically begins with a notice of default (in California 30 days after contacting the borrower—or meeting the contact attempt requirements—regarding foreclosure alternatives before recording a Notice of Default) from the loan provider or institution. Once you receive a notice of default, you’ll have a designated amount of time to catch up on your payments or negotiate a new payment plan with your lender–in California that period of time is 90 days from the date of recording the Notice of Default.

If you’re unable to do either of these things, the lender may then file a notice of sale, which means they are planning to auction off your home. Before your situation becomes too complex to handle on your own, it’s best not to wait until the last minute to hire a foreclosure attorney who can advise and represent you with your foreclosure notice.  In California, once a Notice of Sale is recorded a homeowner has 20 days from the date of recording before the house is sold at auction to the highest bidder or if no bidder exceeds the lender’s default amount owed, plus the outstanding mortgage amount, the lender may take the property for itself and hold it as part of its own real estate portfolio.

What Are Some Ways to Avoid Foreclosure?

If you’re currently facing foreclosure, there are a few ways you can avoid the messy process:

1. Sell Your Home: You can try selling your home before it goes into foreclosure, if necessary. 
2. Negotiate a Payment Plan: You can try to negotiate with your lender to come up with a new payment plan that works for both parties.
3. Refinance Your Mortgage: Another option is to refinance your mortgage loan. This means you would take out a new loan with different terms in order to make your payments more manageable. A loan modification alternative would permanently change the terms of your mortgage loan.

All of these options can be very detailed and complex, so for the best result, you should have a foreclosure attorney on your side. They’ll help you understand your best course of action in your specific circumstance.

Get the Help You Need with a Foreclosure Attorney

Foreclosure is a difficult process to navigate on your own. Let the attorneys at Mellor Law Firm help. We have helped many homeowners through the foreclosure process and can provide you with the representation you need. You don’t have to go through this difficulty on your own.

Contact us today for an assessment and allow us to guide you through the process.