Foreclosure Process

• In the state of California, foreclosures are carried out both judicially and non-judicially. To determine if your lender can foreclosure non-judicially, check your mortgage paperwork for a power of sale clause, which gives the lender the right to sell the home if you default. After you default, the lender files the complaint at the local courthouse. A judge will hold a hearing to determine whether or not the complaint is legitimate. The sale date is scheduled to sell the home to the highest bidder through a public auction. A typical California foreclosure takes about 120 days.
  
  

Consequences

• A foreclosure will result in serious credit consequences for at least seven years from the date of the first missed payment. As soon as you stop making the payment, your score will feel the effect. Payment history accounts for 35 percent of your credit score. The lender also has the right to file a deficiency judgment against you. A deficiency judgment is the difference between the price the foreclosed home sells for and the amount remaining on the loan.
  
  

Alternatives

• California assistance programs allow you to avoid foreclosure completely. At the first sign of a struggle to make your payment, contact your lender. The lender may be willing to work with you by agreeing to a temporary payment suspension, known as a forbearance. Refinancing at a lower interest rate or modifying the loan can lower your payment. Foreclosure prevention counselors throughout California can help you negotiate with the lender to reach a solution. Keep Your Home California is a statewide program that helps homeowners who encounter a hardship or are unemployed through no fault of their own. The program offers assistance to temporarily cover mortgage payments, reinstate the loan or reduce the principle balance.
  
  

Redemption Rights

• If you are unable to save your home, a foreclosure sale is not the end of the road. The right of redemption allows you to purchase back your home after a foreclosure sale. California rules regarding the right of redemption are complicated. The statutory redemption period is one year. If the winning bid is the entire amount of the loan, the redemption period is shortened to just 90 days. To redeem the home, you must pay the entire balance remaining plus related fees, including interest, attorney fees and court costs.