The foreclosure process has been under scrutiny; there have been changes, talk of revisions and there could likely be more changes at any moment.
For specific information regarding your individual circumstances, you should contact a real estate attorney and/or a CPA. Below is a general guide:
- Notice of Default (NOD): Notifies the borrower of their nonpayment (default). The notice can be sent as early as one week after the first missed payment, but most lenders generally wait a minimum of one to two months after the missed payment.
- Notice of Trustee’s Sale: Determines the auction sale date which is a minimum of 90 days after the Notice of Default has been filed.
- Auction: The auction is a minimum of 20 days after the Notice of Trustee’s Sale and may be extended for up to one year. Up to five business days before the auction date, the borrower may reinstate the loan by paying the default (missed payments, late fees, and administrative fees). After the five day reinstatement period the borrower may only redeem the property by paying the entire balance in full (loan balance, plus missed payments, late fees, administrative fees). Investors can purchase the home at auction with a cashier’s check for the amount of the outstanding debt plus the foreclosure costs. At the auction, the property can also be overbid and sold to the highest bidder or due to a lack of anyone meeting the minimum bid, the property reverts back to the lender.
Distressed homeowners should be aware that each legal action causes a negative impact on their credit rating. Homeowners who address the situation sooner rather than later, can often avoid some negative credit reporting. Those facing foreclosure should seek advice from a real estate attorney.
Foreclosure alternatives for distressed Los Angeles Homeowners
Applicable to owner-occupied loans originated between from 2003 to 2007:
Prior to the lender initiating the foreclosure process the lender must attempt to make contact with the borrower either by telephone or in person. If by phone, the lender must inform the borrower of their right to meet face to face within 14 days. The lender must also provide the toll free number of a HUD certified counseling agency.
30 days after the lender has attempted (or has made) contact with the borrower, the lender may now file a notice of default.