In a foreclosure, a secured creditor takes ownership of, or sells, the collateral securing the loan, usually because of a default in payments on the loan.  The most typical example is where a borrower fails to make mortgage payments on a home, and the bank, or other lender, takes possession of the property.

As of November, 2022, the number of foreclosure proceedings started in the U.S. was 20,686, up 98% since November, 2021. Of these, there were more in California than any other state, with 2,244 foreclosure starts in November, 2022.  

The foreclosure process varies by state.  In California, the process takes at least 200 days, with an approximate timeline as follows:

January 1.  You miss your January mortgage payment, and don’t catch it up in the following months.

April 1.  You are now 90 days behind on your January payment.  The lender starts the foreclosure process by recording a NOTICE OF DEFAULT with the county recorder.

July 1.  90 days have elapsed since the Notice of Default was recorded.  The lender can now give you a NOTICE OF TRUSTEE’S SALE, which must set the sale at least 20 days in the future.

July 15.  Your option to reinstate the loan has expired.

July 21.  The lender proceeds with the foreclosure.  The property is no longer yours.

There are 3 possible ways to stop the foreclosure process.

First, you can reinstate the mortgage, by bringing the payments current, at any time prior to July 15.

Second, you can also stop the foreclosure process at any time prior to and including July 20, by filing a Chapter 13 Bankruptcy.  In this case, to keep the foreclosure stopped, you will have to pay the next mortgage payment when it becomes due on August 1, and propose a plan under which you will pay the mortgage payments for January through July over the next five years.

Third, you can file a lawsuit to stop the process. For this to work, you’ll need to convince the court that the bank made a serious error or did not follow the proper steps in the process according to California law.

For a free consultation concerning your options in light of a foreclosure, call (213) 509-1515.