Trustee's Sale
A trustee's sale, also called a non
judicial foreclosure, is the kind of foreclosure that we use
in California. If your are looking at a foreclosure most
likely this is what you are facing. These are processed
without any court involvement. The big advantage to the lender is that the process is much shorter
that a Judicial foreclosure. The advantage to the homeowner is
that they can not come after them for any sort
of deficiency balance without a court
order.
In this type of foreclosure the
process is much shorter than a judicial foreclosure. It
can go as fast as three months and 21 days. However, due
to the recent interventions by the government in California it
is taking much longer. This works to the homeowners
advantage, however the longer you are in the house, usually the longer and more frequent the collections
calls begin to get.
TRUST
DEED
A trustee's sale is the method of foreclosure that is used
when a deed of trust is recorded on the property. In
California we use the trust deed almost exclusively. In
a trust deed the parties are as follows:
- Trustor (This is the
homeowner. The homeowner is called the trustor because
he gives the trustee the trust deed.)
- Trustee (A neutral third party
holding the trust deed on behalf of the bank. He is
the one to whom the trust deed is given, in effect giving
the trustee what is called in the law "naked legal
title". Naked legal title is a fancy way of saying
that the trustee hold title without the usual benefits of
ownership. The most import thing to know about this is
that really in essence, you are giving the trustee the power
of sale. In other words, these are the people who
actually foreclose.)
- Beneficiary (This is the bank that
actually loans the money. The are called the
beneficiary because they receive the benefits of the trust
deed, in terms of money made on the loan, or even because in
a trustee's sale they are the ones who either receive the
property or the funds from the sale of the
property.)
It is important to understand not only the parties, but the
mechanics of the trust deed. You see when you
purchased your home in addition to the other documents that
you signed you signed two that were probably the most
important in the whole foreclosure process:
- Promissory note (this is the
legal document that says you will agree to pay the mortgage
back. It also spells out the terms of the loan.)
- Trust Deed (this is the legal document
that secures the property as collateral for the
loan.)
Notice Of
Default
So using the above information, it is kind of easier to
understand the foreclosure process. when the homeowner
fails to make the payments the bank, at it's option can notify
the trustee that it wishes to proceed with a trustee's
sale. The trustee will then file a notice of
default. This is the first step in the foreclosure
process. It is required to be recorded at the county
recorder's office. Within 10 days of recording the
notice must be sent to the homeowner via registered
mail. This notice gives the homeowner some vital
information. First, it tells the homeowner that the
foreclosure process has begun. It also tell them that in
order to stop it from going further, they need to catch up on
their payments within the next 90 days. If in the
prescribed 90 days no arrangements have been worked out the
lender then instruct the trustee to file a notice of trustee's
sale.
Notice Of
Trustee's Sale
This notice is filed after the 90 day period has passed, but
not always immediately after. Sometimes the lender will
allow more time to elapse. the important thing to know
is that once this notice is filed, it is also recorded with
the county recorder. This notice is required to be posted
on the door of the property and published in a newspaper.
This tells the homeowner on what date the property
will be sold at auction. knowing this date tells
them how long the homeowner has to redeem the property and
stop the foreclosure. Usually this notice is issued 21
days before the sale, although the California legislature has
tried to change this time line, it is still currently in
effect.
So to see how this time line works you should look at the
trustee's sale time line.
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