| The California home-buying process usually | | | | notifying him or her of their default of the loan. |
| involves the use of the deed of trust, which by | | | | This notifies the owner of the intent of the lender |
| its legal definition involves three parties; the | | | | to follow through on their right to collect on the |
| trustor (borrower), the beneficiary (lender), and | | | | debt. The copy of the notice, which is recorded at |
| the trustee (neutral third party receiving the right | | | | the County Recorders Office of the appropriate |
| to foreclose). The deed of trust usually includes a | | | | county, is mailed to the address of notice as per |
| "power of sale" clause that gives the trustee the | | | | the deed of trust. Recording of the notice of |
| legal right to enforce collection of the debt. | | | | default can vary greatly depending on the |
| Collection of the debt is ultimately enforced by | | | | beneficiary. |
| beneficiary's right to sell the house when the | | | | It can occur anywhere between a week to many |
| borrower fails to make their mortgage payments. | | | | months after one misses their first mortgage |
| Defaulting on one's loan causes the start of | | | | payment. The step that follows next is the stage |
| foreclosure, the process by which the lender | | | | of the foreclosure process in which there is a filing |
| takes over the home in order to recover their | | | | of the Notice of Trustee's Sale. No sooner than |
| principal investment. Once the house is either sold | | | | ninety (90) days after the trustee records the |
| at auction or "repossessed" by the lender, it is | | | | Notice of Default, the Trustee must publish a |
| sold and the former owner must vacate at the | | | | notice of trustee's sale in the local paper and |
| discretion of the new owner. When there is a | | | | simultaneously file that notice with the county |
| power of sale clause in the deed of trust the | | | | recorder's office. No sooner than twenty days |
| non-judicial process of foreclosure is used. | | | | (20) after the notice of trustee sale is filed, the |
| In a non-judicial foreclosure, the trustee must | | | | home may be sold at public auction for the |
| meet a few requirements before he or she sells | | | | amount of the debt plus foreclosure costs. If no |
| the property. In comparison to a judicial | | | | one bids at the auction, the lender assumes |
| foreclosure, Non-judicial foreclosure is quick | | | | ownership of the property, and may dispose of |
| because the trustee does not have to obtain a | | | | that property to recover their cash investment. |
| court order to foreclose, nor is court supervision | | | | A homeowner should keep in mind that with each |
| required in order to sell the house, as is required in | | | | succeeding legal action, that these filings are |
| the judicial foreclosure process. The judicial | | | | formally recorded and become part of the legal |
| process of foreclosure is used when a power of | | | | record. Very often these filings can and do have |
| sale clause is not in the deed of trust. | | | | damaging effects to a homeowner's credit for a |
| In California, the timeline of non-judicial foreclosure | | | | period of seven years. The earlier a homeowner |
| begins when the trustee files a notice of default. | | | | can address the situation, the better the overall |
| This is a letter which is sent to the owner/trustor | | | | result will be regardless of the outcome. |