If a borrower is not able to make monthly payments on a mortgage, the lender or other lending institution has the choice to waive, meaning the mortgage is canceled and a requirement for full payment is made. Since the foreclosure usually means the loss of an asset for the owner (the house) and for the creditor (the loan), both parties are interested in delaying it as long as possible. The deadline for foreclosure is dependent upon the policies set down by the lender.
Redemption Period
For a period of time following a monthly payment is missed, the lender will extend a grace period to permit the borrower to compose the arrearage in principal and interest payments. This is also known as the redemption period. By law in California, the creditor can’t issue a Notice of Default, and so start the foreclosure process, until a minimum of 60 days has passed since the due date for which payment was not made.
Factors
The 60-day minimal isn’t acted upon in several instances. For logistical reasons, banks using a massive backlog of student loans may be unwilling to initiate foreclosure instantly. In addition, the lender has an interest in working out the arrearage with the borrower instead of foreclosing on the house. In some regions where the foreclosure rate is large, the redemption period could extend to six months or longer.
Novel Stage
The book period starts after a Notice of Default is issued. The creditor must provide a 20-day notice to the borrower prior to it may sell the property. The notice of foreclosure must be mailed to the borrower and some other person or company holding a lien on your house. It must be submitted on the grounds of this house and at a public place, usually a newspaper.
Repayment
The borrower still has a opportunity to”heal” the default by paying all arrearages. There is a deadline, however, of five days ahead of the submitted date of the foreclosure sale. In the event the loan isn’t brought current, the creditor has the right to market the house at auction 21 days following the issuance of this Notice of Default.
Foreclosure Sale
The creditor could schedule a foreclosure deal during normal business hours, from 9 a.m. to five p.m.. The location of this sale must be published on the Notice of Sale. Normally, a third-party trustee such as a title company manages the auction of the house to the maximum bidder. The borrower has the option of postponing the auction, however just for a single day.
Judicial Foreclosure
California has established an alternate foreclosure proceeding called judicial foreclosure. This occurs when a lender files a civil lawsuit seeking a last judgment against the defaulting borrower. The creditor records a document called a Lis Pendans, declaring its intent to repossess your house and sell it at auction. Lenders follow this process if there is not any”power of sale” language at the mortgage, which gives the creditor a right to the nonjudicial foreclosure proceedings outlined above.
Delaying Tactics
At any location in the foreclosure process, the borrower can delay the proceedings by filing suit in court for a live or filing a bankruptcy petition, in which the outstanding assets are liquidated to the benefit of unpaid lenders. Bankruptcy does not bar a creditor from finally foreclosing on and repossessing property.