What Are Bank Foreclosures?
When a homeowner fails to make monthly mortgage payments bank foreclosures occur. The amount of payments that are a bank permits prior to a foreclosure is dependent upon a number of factors, but a bank is entitled to begin foreclosure proceedings after one payment.
The foreclosure process permits a lender to attempt to recover their investment . During foreclosure, the lender tries to market the property–usually at an auction–to pay the expense of the loan. A bank foreclosure refers to a foreclosure began by a financial institution on a property where they are the lender. Other types of foreclosure include homeowners’ association (HSA) foreclosures–foreclosures began by HSAs when homeowners fail to follow HSA principles –and VA foreclosure, which occur when the Veterans Affairs Bureau (VA) measures in on VA-underwritten loans to prevent bank foreclosures but takes ownership of their land with the intent to sell it.
Power of Sale Clause and One Action Rule
Along with the principles concerning foreclosures put out in your mortgage agreement, state law governs how your bank can pursue foreclosure. In California, there is a”one action” rule, meaning your bank has just one shot at pursuing one for nonpayment on your mortgage. If your mortgage agreement has a”power of sale” clause, which allows your bank attempt an auction sale of your property without going through the courts (non-judiciary foreclosure), and the bank sells your home for less than the outstanding amount of the loan, they cannot come after you for the difference because the auction home is their own”one action.” However, without a power of sale clause–or even if your bank believes they may face a loss–the bank can get a foreclosure order, which lets them market your property sue you for any deficit. That court order is regarded as one action.
California law requires your bank to notify you of the intent to sell your property by certified letter, return receipt requested, at least 20 days prior to the auction. They need to also post a note of this auction on your property 20 days. The notice of sale must be posted in a minumum of one place in your city, and the county courthouse must be advised prior to the purchase. You have to reach an understanding with your bank to prevent the foreclosure proceedings.
Keeping Your Home
You have the right, Following your property has been sold by the bank. This is called Right of Redemption. You have to think of the cash is dependent upon how much your house was sold for. Under California law, if your bank offered the property to pay your mortgage off then you’ve got three months to attempt to buy back your property to that price. If your bank took a reduction at the purchase, then you’ve got 12 weeks.
The best way to prevent a foreclosure is to work with your bank as soon as you start falling behind in your mortgage. California law gives you 90 days prior to foreclosure proceedings are started by the bank to receive current on your loan when you receive a Notice of Default from your bank. Utilize this opportunity to attempt to work with your bank to prevent losing your property.