FAQ About Foreclosures

October 22, 2020

Property owners face foreclosures when they fall too far behind their mortgage payments. Here, learn more about foreclosures and what they entail. Your accountant service in Los Angeles can help you navigate a foreclosure, whether you are facing one or wish to purchase a house that has been foreclosed upon. 

What Happens When a House is Labeled For Foreclosure? 

As a general rule, a property owner deals with foreclosure when they are a minimum of 120 days behind mortgage payments. Lenders typically send written notifications and call property owners prior to foreclosure proceedings, encouraging them to pay. Calls usually start 36 days after an account becomes delinquent. When the property owner still fails to make mortgage payments, they receive breach letters detailing the lender’s foreclosure plans. Next, the lender puts the residence up for auction and issues an eviction notice to the current owner. Auction prices are usually lower than what the house would sell for on the real estate market. 

What Are Non-Judicial Foreclosures & One-Action Rules? 

California follows non-judicial foreclosure proceedings, meaning they do not involve the courts in foreclosures. Deeds of trust usually feature power of sale clauses upon signing, which gives the trustee the power to sell the property following a mortgage loan default. The trustee represents the lender in such cases, which makes California different from other states where lenders name trustees. The trustee helps streamline the sale as the property goes to auction. 

Non-action rules in California mean that when a foreclosure occurs under non-judicial guidelines, no one can file a second action to obtain a deficiency judgment. Such judgments occur when lenders cannot sell foreclosed properties and request that courts order property owners to pay their remaining mortgage balances. 

Have Any Foreclosure Actions Been Taken in Light of COVID-19?

According to Rule No. 2 of the Emergency Rules of California Rules of Court, judicial foreclosures have been suspended. They remain suspended “until 90 days after the pandemic state of emergency is lifted or the judicial authorities otherwise suspend the rule.” Extensions provide opportunities for property owners to catch up on their mortgages and subsequently avoid foreclosure proceedings. 

If you require foreclosure assistance at any time, consult the Encino tax consultants at Wallace & Associates. The Los Angeles accounting firm offers foreclosure services among many others.