California is a "Non-Judicial" Foreclosure State
November 21, 2011
There continue to be a number of articles in the news media about the impending glut of foreclosures. In these articles they talk of "judicial" and "non-judicial" foreclosures. These terms refer to the process used by lenders to repossess, i.e., foreclose on a property.
In many ways, we Californians are fortunate because typically in California, lenders secure their loans on real property with a deed of trust. In many states, particularly on the east coast, lenders secure their loans with a mortgage. We may all refer to the loans on our properties as mortgages, but here in California they are really deeds of trust.
Deeds of trust have three parties to the document: the lender (beneficiary), the borrower, and the trustee. The trustee when notified by the lender that the borrower is in arrears on the payments, sends out a Notice of Default to the borrower. The trustee on the original deed of trust was given the right to sell the property. The process is very specific: Trustee sends and records the Notice of Default; the borrower has ninety days to bring the payments current. If the payments are not made current, the trustee sends and records a Notice of Trustee's Sale. This document must be published three times in a local newspaper. The publication will have the amount and the date of sale. The trustee does have the authority to postpone a sale which may happen in a short sale. This is a non judicial foreclosure because the courts are not involved.
With a mortgage there is no power of sale in the document. The lender must go to court and obtain a judgement which authorizes a foreclosure sale. Hence it is a judicial foreclosure. This process requires the lender presenting proof of the debtors lack of payments and can be a much more complicated process. Much of the controversy over foreclosures the past year was over whether the judicial process was properly documented. Our trust deed process is much more transparent and understandable.
There continue to be a number of articles in the news media about the impending glut of foreclosures. In these articles they talk of "judicial" and "non-judicial" foreclosures. These terms refer to the process used by lenders to repossess, i.e., foreclose on a property.
In many ways, we Californians are fortunate because typically in California, lenders secure their loans on real property with a deed of trust. In many states, particularly on the east coast, lenders secure their loans with a mortgage. We may all refer to the loans on our properties as mortgages, but here in California they are really deeds of trust.
Deeds of trust have three parties to the document: the lender (beneficiary), the borrower, and the trustee. The trustee when notified by the lender that the borrower is in arrears on the payments, sends out a Notice of Default to the borrower. The trustee on the original deed of trust was given the right to sell the property. The process is very specific: Trustee sends and records the Notice of Default; the borrower has ninety days to bring the payments current. If the payments are not made current, the trustee sends and records a Notice of Trustee's Sale. This document must be published three times in a local newspaper. The publication will have the amount and the date of sale. The trustee does have the authority to postpone a sale which may happen in a short sale. This is a non judicial foreclosure because the courts are not involved.
With a mortgage there is no power of sale in the document. The lender must go to court and obtain a judgement which authorizes a foreclosure sale. Hence it is a judicial foreclosure. This process requires the lender presenting proof of the debtors lack of payments and can be a much more complicated process. Much of the controversy over foreclosures the past year was over whether the judicial process was properly documented. Our trust deed process is much more transparent and understandable.
posted by shirley harry at 8:28 AM
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