The California Nonjudicial Foreclosure Process

The two routes, and why almost everyone uses one

A lender holding a deed of trust with a power of sale can foreclose without going to court. That is nonjudicial foreclosure and it is the standard route in California, because it is faster and cheaper.

The judicial route exists and is rarely used, because it carries the delay of litigation. Its one advantage to a lender is that it can preserve the ability to pursue a deficiency, which the nonjudicial route does not.

The sequence and the clock

A notice of default is recorded and served. That starts the process and creates a period during which the borrower may reinstate by paying the arrears plus costs.

After at least three months, the trustee may record and serve a notice of sale, which sets a date. The sale may not occur less than 20 days after that notice.

Those are statutory minimums and not a prediction. Sales are postponed regularly, sometimes repeatedly, and a postponed sale does not restart the sequence. Treating the first date as the real one is safer than assuming it will move.

Reinstatement and payoff

Up to five business days before the sale date, a borrower generally has the right to reinstate by curing the arrears and costs rather than paying the whole balance. That is the most commonly used exit and it is the one with the earliest deadline.

After that window, stopping the sale usually requires paying the loan in full, which in practice means a refinance or a sale of the property. Both take longer than the remaining time usually allows, which is why the reinstatement date matters more than the sale date.

What we do not do, and why we say so

Our firm does not offer loan modification, forbearance negotiation or foreclosure rescue services, and our firm does not take advance fees for those services. Civil Code section 2944.7 separately governs compensation for arranging or attempting to arrange a loan modification or other form of mortgage-loan forbearance involving a mortgage or deed of trust secured by residential real property containing four or fewer dwelling units.

This is worth stating plainly because homeowners in default are actively targeted by people who do take those fees. If someone asks for money up front to negotiate with your lender, that is the point to stop.

What we do is act where there is a legal defect in the foreclosure itself, or a dispute about the debt, the security or the process.

The sequence, with the dates that matter

The lender or trustee records a notice of default and serves it. From that recording, a minimum of three months must pass before the next step. During this period the borrower generally has the right to reinstate by paying the arrears plus costs.

After the three months, the trustee may record and serve a notice of sale, which states the date, time and place of the sale. The sale may not be held sooner than 20 days after that notice is given.

The right to reinstate generally continues until five business days before the sale date. After that point, curing the arrears no longer stops the sale and the loan must be paid in full.

So the two dates a homeowner should write down on receiving a notice of default are the sale date and the reinstatement cut-off five business days before it. Almost every option depends on which side of that cut-off you are on.

Postponements, and why the first date is still the one to plan for

Sales are postponed frequently, sometimes several times, and a postponement does not restart the statutory sequence. It moves the date.

This produces a predictable trap. A homeowner whose sale is postponed twice concludes the process is not really moving, stops preparing, and is then caught by a date that arrives without further warning. Postponement is not a sign of weakness in the lender's position and it is not a negotiation.

Plan against the earliest possible date. If it moves, that is time gained rather than time that was always there.

What to gather in the first week

The notice of default and the notice of sale, if one has been served. The dates on them are the framework for everything else.

The original loan documents: the note, the deed of trust, and any modification agreements. Whether the loan was purchase money, and whether the property is owner-occupied, determines the anti-deficiency position under Code of Civil Procedure sections 580b and 580d.

A full payment history, and your own records of payments made. Disputes about the amount of the default are more common than people expect, particularly where a modification or forbearance was in place.

Any correspondence about a modification, forbearance or repayment plan. Where a lender agreed something and then proceeded anyway, that is a different case.

Where the process can be challenged

Most foreclosures are procedurally sound and challenging them buys weeks at cost. Some are not, and the defects that matter are specific: notices not served as the statute requires, the foreclosing entity not holding what it claims to hold, a payment history that does not support the default alleged, or a modification agreed and then disregarded.

We look at those questions first because they are the ones that produce a real outcome. Where none of them is present, we would rather tell you that than file something.

Separately, our firm does not offer loan modification, forbearance negotiation or foreclosure rescue services and our firm does not take advance fees for those services. Civil Code section 2944.7 applies to modification or forbearance compensation involving a mortgage or deed of trust secured by residential real property containing four or fewer dwelling units.

This article is general information about California law and is not legal advice for any specific situation. If you are dealing with this issue, the facts of your matter will change the analysis.