CALIFORNIA FORECLOSURE LAW

Typical Time-Line:

* Notice of Default: (typically filed by lender after 60 or more days in arrears).
* Notice if Sale: (filed 90 days later if default isn't cured).
* Public Auction: (typically held 21 days later).
* Total number of days to cure default is 111 days from the date the
   "Notice of Default" is filed.

In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure:

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the
highest bidder.

Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.

Non-Judicial Foreclosure:

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines:

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold.

The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee's name, address and phone number and a statement that the property will be sold at auction.

The borrower has up until five days before the foreclosure sale to cure the default and stop the process.

The sale may be held on any business day between the hours of 9:00 am and 5:00 pm and must take place at the location specified in the notice of sale. The trustee may require proof of the bidders ability to pay their full bid amount. Anyone may bid at the sale, which must be made at public auction to the highest bidder. If necessary, the sale may be postponed by announcement at the time and location of the original foreclosure sale.

Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.

Scams, Fraud & Deception:

Foreclosure Scams Spread Across the Nation
by Alan Smith

Whenever money and property are involved, you’ll find sharks in the water waiting to prey on people in trouble.

Fraudsters have moved into the foreclosure business, and are literally stealing homes by the thousands, and fleecing owners out of money across the country. They are victimizing people in financial and emotional distress who are facing the loss of their homes in foreclosure.

This new breed of predators uses public records to locate homeowners who are in default on their mortgages. They make contact with the troubled homeowners, and present themselves as “rescuers” who will help the distressed homeowner to keep his or her home and avoid foreclosure.

What they are really after is the house itself, and care little about what happens to the hapless owners after they carry out their schemes.

A recent report by the National Consumer Law Center describes three major variants to the foreclosure rescue scam that result, in the homeowner suffering the loss of money, equity, the home or all three.

A warning signal that any distressed property owner should heed is when the “rescuer” advises the homeowner to not communicate with their lender or with an attorney. In fact, those are the first people a homeowner should contact when trouble looms.

In the first of these schemes, the scammers charge outrageous fees to do simple paperwork, and make a few phone calls, supposedly to the involved lender, and then abandon the worried homeowner after collecting the money, and leaving s/he little time to find another solution. This scam has been reported, so far, in at least five states.

Another involves conning the homeowner into surrendering title to a third party who can cure the default on the mortgage, and then leasing the house back, with an agreement that allows for a repurchase of the home at later date. These deals are deliberately set up so the terms of the agreement cannot be met. The unwitting former homeowner (now a tenant) gets evicted, and the fraudsters walk off with their prize.

The third variant involves outright deceit and criminal fraud. The homeowner is asked to sign a document package that they are told is for new financing, but may in fact, constitute a transfer of title concealed within the pile of papers. A favorite trick is to have the documents conveniently run out of space at the bottom of a page. The signature page follows with no text on it, and is notarized. That page can then be attached to a completely different set of documents, in which the home is transferred to the predators. The distressed owners are out on the street, and never knew what hit them.

Worst of all, they may find themselves still responsible for a loan on a home they no longer own, and be forced into bankruptcy!

We at WhiteRoque Home Solutions are appalled at what seems to be going on at a wholesale level in many states across our country. Yes, we make solid profits as we deal in foreclosure properties, but our process is based on honest and ethical relationships with distressed homeowners.

New Bankruptcy Act Key Changes
by Findlaw.com

Editors Note: The new bankruptcy law that just became effective last month will make it much tougher for troubled homeowners to use bankruptcy to forestall foreclosure. Below, you'll find the most important changes in the law that will impact homeowners in default. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a major reform of the bankruptcy system, was passed by Congress and signed into law by President Bush in April 2005. Changes instituted by this new law took effect on October 17, 2005. Below are some of the key changes that came about as a result of this new bankruptcy law.

Mandatory Credit Counseling

As of October 17, 2005, before filing for bankruptcy most applicants must now undergo credit counseling in a government-approved program. You can get more information on the procedure for pre-filing credit counseling (and a list of approved credit counseling agencies) from the U.S. Trustee Program (a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases).

Stricter Eligibility for Chapter 7 Filing

Under the new law, bankruptcy applicants who wish to file under Chapter 7 must meet certain eligibility requirements under a "means test."

Under the "means test," if your current monthly income is less than the median income in your state, you can file for bankruptcy under Chapter 7. But if your current monthly income is above the median income in your state, and you can afford to pay $100 per month toward paying off your debt, you cannot file under Chapter 7 and must proceed under Chapter 13 (more on Chapter 13 below).

Whether you can afford to pay $100 per month (or $6,000 over a five-year period) is based on a formula that includes your monthly income, your expenses, and the total amount of your debt. Get more information on means testing from the U.S. Trustee Program (a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases).

Tax Returns and Proof of Income Required

Under the new bankruptcy law, people wishing to file bankruptcy under Chapter 7 or Chapter 13 must show proof of their income by providing federal tax returns from the last tax year. If a bankruptcy filer has not paid taxes for the previous tax year, he or she must do so before the bankruptcy can proceed.

More Filings Under Chapter 13

As discussed above, if a bankruptcy applicant is ineligible for filing under Chapter 7 based on the "means test," he or she must file under Chapter 13 instead. There are a number of major differences between Chapter 7 and Chapter 13 bankruptcy, but the main distinction is that under Chapter 13, the debtor enters into a five-year repayment plan in which he or she must pay a certain amount of money to creditors, based on a strict expenses-to- income formula. For a detailed look, see Chart: Comparing Chapter 7 and Chapter 13.

Fewer "Automatic Stay" Protections for Filers

People who file for bankruptcy have traditionally been entitled to certain immediate protections from creditors and others -- including most debt collection and lawsuit actions. These protections are part of what is called the "automatic stay" effect of a bankruptcy filing, because many potential legal actions against the filer are stopped (known as "stayed" in legal terms).

But, under the new bankruptcy law which took effect in October 2005, some of these protections have been eliminated. For example, filing for bankruptcy no longer delays or stops eviction actions, driver's license suspensions, legal actions for child support, or divorce proceedings.

New Priority for Unpaid Child Support and Alimony

Bankruptcy laws provide a system of re-payment priority for people and companies that are owed money (called "creditors"). Under the new bankruptcy law, among the changes in creditor priority is that people who are owed unpaid child support and alimony (i.e. the bankruptcy filer's family members) take priority over any other creditor.

Mandatory Financial Management Education

After the conclusion of bankruptcy proceedings, but before any debt can be discharged, bankruptcy debtors must participate in a government-approved financial management education program. You can get more information on the procedure for financial management education (and a list of approved debtor education providers) from the U.S. Trustee Program (a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases).

The foregoing information does not constitute legal advice, nor does the reading of this information create an attorney client relationship with the reader. For proper application of the information contained in these articles, you are advised to seek the assistance of an attorney whose practice emphasizes landlord-tenant law.

Call us today for a real solution.

Daryl White
661.296.1523
daryl@whiteroque.com


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