California allows mortgages to be foreclosed two different ways; judicially or non-judicially. Most people are familiar with the judicial foreclosure process in which a court issues a foreclosure order allowing a foreclosing lender to repossess a home. Non-judicial foreclosures in California occur without the courts and allow a foreclosure through use of what's called the "deed of trust," which serves as the mortgage. California non-judicial foreclosures also require the trustees assigned deeds of trust to actually carry out such foreclosures.
Deeds of Trust
Though "mortgage" is the common name for California home loans, they're actually "deed of trust loans." Rather than use mortgages to make home loans, Golden State lenders employ two instruments: deeds of trust and promissory notes. The deed of trust is what secures your California home loan. Also, your California home loan has three parties: you as the borrower or trustor, your lender or beneficiary and the trustee assigned your loan's deed of trust by your lender.
Most California home loans are foreclosed non-judicially using those loans' deeds of trust combined with their power-of-sale clauses. Power-of-sale clauses are essentially mortgage borrowers' pre-authorizations to non-judicially foreclose their deeds of trust loans should they default. In California non-judicial foreclosures, the first step is always a lender's Notice of Default, or "NOD," to its borrower. Once a California mortgage lender issues you an NOD, it may eventually instruct the trustee assigned your deed of trust to foreclose your loan.
Recordation Of Assignment
California foreclosure defenses include arguing that deed of trust assignments must be legally recorded when they're assigned to trustees. If a California home loan trustee hasn't been properly assigned the deed of trust, it actually can't foreclose that deed of trust, this foreclosure defense argument goes. Recording a deed of trust assignment is called "recordation of assignment." Unfortunately for California homeowners facing non-judicial foreclosure, California courts say that recordation of assignment isn't necessary to foreclose deeds of trust.
It can be tough to fight off a non-judicial foreclosure because you'll have to convince the courts to accept your foreclosure defense arguments. You have other ways to delay or avoid non-judicial foreclosure, though, including mortgage reinstatement and even bankruptcy. In mortgage reinstatement you catch-up all delinquent mortgage payments, plus lender costs, and the lender reinstates your mortgage. Bankruptcy's automatic stay can temporarily delay any foreclosure actions and Chapter 13 bankruptcy may even let you keep your home.
Seek an experienced real estate attorney if you're going to take your non-judicial foreclosure defense to the courts. Eligible California homeowners seeking mortgage reinstatement assistance may be able to use Keep Your Home California's mortgage reinstatement assistance program. Eligible Golden State homeowners can qualify for up to $25,000 in mortgage reinstate assistance funds through Keep Your Home California's programs. Bankruptcy can also be a complicated process and an attorney can give you the best assistance when filing for it.
About the Author
Tony Guerra served more than 20 years in the U.S. Navy. He also spent seven years as an airline operations manager. Guerra is a former realtor, real-estate salesperson, associate broker and real-estate education instructor. He holds a master's degree in management and a bachelor's degree in interdisciplinary studies.
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