How Does the Foreclosure Process Work?

What happens if you fall behind on your mortgage payments? I’ll go over the default and foreclosure process today.

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We are starting to see a shift in the market. As rates go up, prices come down. Some folks are starting to get a little behind on their mortgage payments, which could cause them to enter a default or foreclosure situation. 

This information mainly pertains to California, as each state is a little different. 

Come up with an action plan and find out if you can do a short sale.

In California, the lender can decide whether or not to start the foreclosure process. If you get behind on your payment, the first formal step the lender will take is to issue a notice of default, or N.O.D. The letter will let you know that you are behind on your payments and that they are starting the foreclosure process. 

If you cannot cooperate and make the current payment due to a life situation, such as loss of job or loss of a family member, then you have a justifiable hardship. In that case, you have 90 days to cure the notice of default. If you cannot do that, you will receive a notice of trustee sale. When that is recorded on your property, things get really serious. 

The trustee notice of sale is recorded at the county office, so the county knows that the foreclosure process has begun. If you cannot catch up on all of the payments, which include any penalties or attorney fees, within 21 days, then you really need to come up with an action plan to get out of that property or do a short sale. 

Hopefully, you won’t make it to this last step. However, if you are unable to make your payments current within 21 days, a sheriff will knock on your door to escort you and your family out of your property. 

Do not let it get to this step. If you are struggling with your mortgage payments or know someone who is, give us a call. We would be glad to help you come up with a plan that is best for you and your family. 

As always, please do not hesitate to reach out to us with any other real estate questions. I'd be happy to help.

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