Most of the information below was gathered from an interview we did with Randy Newman, President of Total Lender Solutions. They provide non-judicial foreclosure services in 5 states. Visit their profile on our Service Provider Directory to learn more about their services.
California is a Non-Judicial Foreclosure State
California is a non-judicial state, which means that the foreclosure is completed by an auction sale as opposed to a court proceeding. The lender must appoint a 3rd party, the trustee, to handle the foreclosure process.
The foreclosure process in California typically takes around 4 to 5 months, a minimum of 111 days from start to finish. It’s a 3-step process, starting off with a Notice of Default, then a Notice of Sale and ending with an auction sale. There is a 4th step after the auction sale for residential properties (1-4 units).
Step 1 – Record Notice of Default
Once the lender instructs the Trustee to file a Notice of Default (NOD), the trustee will contact a title company to record it in the county in which the subject property is located. Once recorded, the title company will send the Trustee a document called the Trustee Sale Guarantee (TSG). It contains information on which parties need to be notified of the NOD. The trustee will then send a notice to all parties listed on the TSG that a Notice of Default has been filed.
The Borrower will receive a notice by regular 1st class mail as well as Certified Mail. If there are multiple mortgages on the property, all lender will be notified of the NOD.
After the NOD is filed, there is a 90-day waiting period in which the Trustee does not take any action. During this time, the Borrower has the right to bring the loan current to reinstate it, so long as it’s a monetary default. They also have the right to pay off the entire loan balance. If at the end of the 3-month period, the Borrower has not paid off the loan or paid the past due payments (plus penalties), the Trustee will ask the Lender for permission to create the Notice of Sale.
Step 2 – Notice of Sale
Once the Lender grants permission to move forward with the Notice of Sale, The Trustee will determine the date, time and venue of the sale. This information must be recorded in the county clerk’s office, physically posted on the property, and published in a local newspaper once a week for 3 consecutive weeks. The week following the 3rd publication, a minimum of 20 days after the 1st publication, the sale may be conducted.
So long as the default is monetary, and the loan has not been accelerated, the Borrower still has the absolute right to bring the loan current during the 20-day period, up to 5 days before the scheduled sale date. Within the 5 days before the sale, the Borrower has the right to pay off the loan in full and cancel the sale.
Under California law, the Notice of Sale is valid for 1 year. So the Trustee may postpone the sale if requested by the Lender, for up to 1 year from the date of the original sale. If the sale does not occur within that 1-year period, the Trustee has to start the Notice of Sale process over from the beginning.
Here are a few reasons why the sale could be postponed beyond the 20-day publication period:
- Lender works out a payment agreement with the Borrower
- Litigation between the Borrower and the Lender
- Borrower files for bankruptcy
Step 3 – Foreclosure Auction Sale
As with most foreclosure auctions, the property will be sold to the highest bidder who must come to the sale with a certified check to pay for the full bid amount. There is no deposit option.
The trustee will take the certified funds and issue the trustee’s deed within a few days. If the property reverts to the foreclosing lender, the trustee’s deed is sent to the lender the day of the sale.
Post-Auction Process for Residential Properties
In January 2021, California enacted a new law (SB1079) which applies to residential properties (1-4 units) that are sold at auction to real estate investors. The law created a post-sale auction where the property’s tenant or a non-profit organization or a person who plans to occupy the home as their primary residence can place a bid to purchase the home and cancel out the real estate investor’s winning bid. This adds another 45 days to the foreclosure process. We wrote a separate guide to explain how it works. Click the link below to read it.
How to Find Foreclosure Service Providers
If you’re a lender seeking help with a foreclosure, use our website as a resource. Our Service Provider Directory has a list of companies that offer foreclosure services throughout the United States.
- Click Services in the main menu to access our Service Provider directory
- Click Lender Services
- Look for the Filters section, click Foreclosure
- View each company’s profile to learn about their program
- Click the green CONTACT button and reach out to the company directly
The companies listed pay us a monthly advertising fee, so there is no cost to make contact through our website. Please remind each company that you found them on PrivateLenderLink.com.