Foreclosure Timeline

If you are facing foreclosure, see below the timeline your lender might use to sell your property and settle your dept. You'll want to sell your home or find an alternative to foreclosure before the trustee sale. Sometimes it is a good idea to have a short sale buyer prior to Day 121 - Notice of Trustee Sale.

Pre-Foreclosure Period

If you stop making your mortgage payments, your lender may let you miss payments for three, four, or more months before it commences foreclosure.

Day 1 - Lender Contacts Borrower (clock starts clicking here)

A lender must contact the borrower by phone or in person to assess the borrower's financial situation and to explore options to avoid foreclosure. The lender must inform the borrower of the right to meet the lender withing 14 days and give the borrower's a toll-free number for HUD-certified housing counselors. This requirement only applies to certain owner-occupied residential loans made between 2003 and 2007.

Day 31 - Notice of Default

For most owner occupied loans made from 2003 to 2007, a lender may file a Notice of Default (NOD) 30 days after contacting a borrower to explore options to avoid foreclosure. The notice informs the borrow of the default. It must be filed in the county where the property is located and mailed within 10 days to the borrower. Many times you will find this NOD served in person as well (or attached to your front door)

Day 121 - Notice of Trustee Sale

3 months after the NOD, the lender may record a Notice of Trustee Sale, setting the date, time and place of the upcoming trustee's sale. The Notice of Trustee's sale must be recorded, posted, and mailed to borrower, as well as being published in the local newspaper once a week for 3 consecutive weeks.

Day 145 - Deadline to Cure Default

A The borrower may reinstate the loan by paying the missed payments plus allowable costs up to 5 days before the Trustee Sale. This is called the reinstatement period. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire dept, any interest and costs owed at any time before the bidding starts at the trustee sale.

Day 152 - Trustee Sale

California Law allows a trustee sale to take place 20 days after posting the notice of sale, but lenders wait another 11 days to protect against any federal tax liens. At the Trustee Sale the property is sold to the highest bidder at a public auction. The title is transferred to the successful bidder by a trustee's deed. If no one bids on the property, the property reverts back to the original lender. The properties that go back to the lender are known as REO or REAL ESTATE OWNED, BANK OWNED, or BANK OWNED FORECLOSURES.

What Happens if My House Becomes Bank Owned or is Sold to a Third Party?

If your property is sold to a third party in a trustee's sale, the owner will most likely contact you directly to make arrangements to take possession of the property. If you already moved out and the house is vacant there is nothing to do. If you are still occupying the property at the time of the trustee sale the new owner will probably allow you some time to vacate the property- which could be 30-45 days from the trustee sale date. If you refuse to vacate the new owner will most like start an eviction process and you and your family will eventually be removed by the sheriff's department with a court order.

If the property does not sell to a third party and reverts back to the lender, the property will be assigned to a local real estate agent who will make contact with you as well. In this situation, the real estate agent will be working with an asset company (go between the agent and the lender) and will probably offer relocation assistance (or what is known in the industry now as "Cash For Keys"). They usually offer an amount based on the value of your home, your specific situation (small children, disabilities, etc), and other considerations. They can offer more money for a 14 day vacate but most vacate arrangement are for 30 days from the acceptance of the deal.

Since we've represented over 100 Bank Owned homes over the past 3 years, we've seen everything from very cooperative former owners that already had one foot out the door to very uncooperative former owners that rode out the eviction through the legal process. Fortunately, we've only been witness to one sheriff's lockout and let me just say "it wasn't pretty for the couple that were removed and doors and locks were re-keyed so they couldn't get back in."! Their personal belongings had to be removed within 18 days or trashed- it's the law.

The best advice is to don't wait until it is too late to take action. If you are missing mortgage payments and there is no relief in the long term, don't wait until the Notice of Default is filed. That only gives you a minimum of 90 days or so to find a buyer if you try to short sale your property.

Call if you have any questions regarding this process. (707) 853-4864